The Most Common Blindspots of Purpose-Led Entrepreneurs
Finding a Product-Market Fit has been one of the main emphases in the first month of ThePowerMBA, the new business ed tech that’s revolutionising our access to business education. (I’ve written more about it here.)
A Product-Market Fit is about crafting a service/product designed to actually meet a need in the world. It sounds obvious. It sounds easy. But it’s often overlooked. And it’s especially important to know about if you’re a purpose-led entrepreneur.
Why?
Becauase if you’re purpose-led, you tend to be really passionate about a particular problem that you want to solve. Climate change. Animal welfare. Mental health. Toxic work cultures. These are the problems that keep you up at night, that you can’t imagine not wanting to contribute to somehow.
This passion is a tremendous asset. It will be your ‘WHY’: pulling you forward when things get tough, keeping you focused on the bigger purpose.
But as I’ve seen first-hand in my coaching work, this passion can also be a huge blind spot.
It can prevent you from actually creating something useful: something that somebody will truly want or use.
I’ve seen two blindspots in particular:
1. Your awareness of the problem (e.g., carbon emissions) can feel so urgent that you want to fix everything at once. It’s hard to narrow down to a particular contributor (e.g., within climate change) and decide to focus on that. It never feels like it will have enough impact, or happen fast enough. As a result, you struggle to identify a specific enough problem that you want to tackle.
2. At the other end of the spectrum, you can be so passionate about a very specific solution to a problem that you struggle to get truly objective about whether people actually want whatever you’ve dreamed up (e.g., whether they’ll use a behaviour change app aiming to reduce food waste and the associated carbon emissions). As a result, you don’t learn enough about how your customers think and act, and so your service/product (no matter how much you love it!) doesn’t really get off the ground.
In both cases, you never find a Product-Market Fit.
And as a result? You fail to make the difference you want to make.
Seeing The Product-Market Fit in Context
In our first month at ThePowerMBA, we’ve covered a huge amount of content, and I’m only focusing on a tiny part of it in this post. A central focus of what we’ve covered so far, however, has been the Business Model Canvas (BMC).
This was originally devised by Alex Osterwalder at Strategyzer, and is a beautifully intuitive tool aimed at capturing, on a single page, the key operating structure of any business.
On the Canvas, the Product-Market Fit is smack bang in the middle: straddling the space between your value proposition and your customer. When your value proposition exactly addresses something your customer is looking for, you have a Fit:
The Business Model Canvas, designed by Strategyzer AG, with my edits.
You start to look for your Fit through conducting quick and easy experiments, interviewing prospective customers, and testing your assumptions (a topic for a different post). While you do this, you’re also aiming to sketch out different business models, and explore them to see which one(s) might work best.
These are all things you don’t always know at the beginning, or that might change as you go along. As with so much in innovation, it’s an iterative process.
How Much Impact Could You Have?
As you’re exploring your Product-Market Fit, you’ll also need to reasonably estimate the potential size of that market. Again, this is especially important for purpose-driven changemakers, as the market size will cap your growth (and impact). Now, I know that not everyone wants to create something at scale with a lot of impact. However, if you do, this is really important to spend some time on.
There are two ways to estimate your market size, which ThePowerMBA takes you through.
One of them is ‘top down’: researching the total available market (Total Addressable Market: TAM). You then estimate the potential segment of it that you could realistically reach (Serviceable Available Market: SAM), then convert (Serviceable Obtainable Market: SOM).
The other is ‘bottom-up’: looking at your current data (e.g., hours currently spent on sales calls and the % of those calls that convert) and extrapolating your realistic market size from that.
Screenshot from ThePowerMBA, ‘Angles of Analysis: Market Sizing (& TAM SAM SOM.)
It’s best to cross-estimate your market size from both perspectives, to help you be as accurate as possible.
Key Takeaway
While being purpose-driven in business can be enormous asset, it can also blind you to the necessity of finding a Product-Market Fit. You might be so passionate about your (yet untested) solution, or so overwhelmed by the size of the problem, that you don’t create a service or product that specific customers will actually find helpful.
Make sure you take the time to truly understand your intended customers and the market potential for your idea. This will help you create as much impact, and make as much difference, as you can. After all, that’s why you’re trying to create something new in the first place, right? So let’s make it count!
Something to chew on: If you’re purpose-driven with a big idea, what blind spot do you need to be most aware of: overwhelm at the size of the problem, or over-attachment to your solution? What one action can you take to rebalance your approach?
(P.S. Want a practical case study to help make this real? Here’s a post that gives you just that!)