Our Report TL;DRs serve up a quick look at recently-published reports, and academic research, worth paying attention to, and sharing with your team. Important note: our editorial team and contributors select these. The firms and universities producing these reports don’t pay to be featured.
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Report Title
Commitment and Learning in Ventures’ Pursuit of Product-Market Fit in Digital Health (PDF version here) — Boston University and National University of Singapore
Published
November 21, 2024
Most Useful For
New ventures leaders, product developers, intrapreneurs
Data Sources and Methods
Longitudinal case study of five software-based ventures in digital healthcare, from 2009 to 2017.
Key Findings
A new research report has shown that in markets with complex ecosystems (think healthcare), the use of lean and agile methodologies may be less helpful than previously thought.
The research, published by a BU professor and research associate in Singapore, looked at the complexities involved in finding product-market fit for new technologies.
Noting that the conventional wisdom is to deploy lean startup and agile methodologies to iterate quickly, the authors found that the process of delivering minimum-viable products to get feedback and validate ideas actually didn’t work as well in markets with complex ecosystems, like financial services, where multiple players — banks, merchants, carriers, phone companies, etc. — are highly interconnected. In those sectors, “interdependence between actors and domains effectively limits the utility of the prototyping and learning-by-doing methods.”
The study had three key lessons for innovators:
- Learn Before Lean — According to the researchers, successful companies started with “broad prototype-free exploration.” Deeply understanding customers and prospects first enabled the most successful companies to “gain deeper insight into the product and the specific value it might provide.” While, of course, the lean startup approach does involve customer exploration, the research report advocated for a much deeper dive before any prototyping takes place. According to the authors, companies that failed to conduct this deep dive — and chose to prototype instead — invariably spent time iterating repeatedly. In doing so, they struggled to understand why each iteration wasn’t getting traction, instead of stepping back to fully understand the broader market opportunity.
- Focus on the Alpha Prospect — The researchers found that companies that eschewed prototyping built stronger relationships with an “alpha” prospect, for whom they were then able to deliver a more customized, tailored, polished prototype that met the customer’s specific needs. So rather than developing lightweight prototypes that allow for rapid feedback, the winning strategies involved avoiding prototypes, learning more broadly, and then delivering higher fidelity products.
- Don’t Be Afraid to Walk Away — Finally, the researchers found that successful companies weren’t afraid to walk away from those alpha prospects if they didn’t quickly become customers. Those more successful companies were able to take their learnings and pivot to new products based on the intel they’d gleaned from the alpha prospect. The companies that had prototyped first had less-informed products that weren’t able to be repurposed or pivoted to other solutions.
According to the authors of the report, while agile and lean-startup methodologies are still a viable approach in many situations, the process of creating lightweight prototypes may not be appropriate for markets with complex ecosystems. Those more complex markets “reduce the ability of prototypes to provide insight into the broad opportunity landscape and may even limit their ability to discern the viability of a given opportunity.”
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Questions to Discuss with Your Team
- Are we balancing exploration and commitment effectively?
- How can we ensure we are exploring broadly across potential products and markets without prematurely narrowing our focus or overcommitting to a single option too early in the process?
- How do we approach the development and use of prototypes?
- Are our prototypes providing meaningful learning, or are they leading to shallow insights? Should we consider alternative approaches to gather deep insights before prototyping?
- Do we understand the real-world value and potential impact of our products?
- Have we invested enough in understanding the specific needs and challenges of our target markets to identify and articulate the unique value proposition our products offer?
- Are we leveraging our learning to guide strategic pivots?
- How effectively are we using insights from initial market engagements to redirect our exploration and identify alternative opportunities that may be more promising?
- Are we clear and deliberate in narrowing opportunities?
- Do we have a structured process for comparing alternative product-market pairs and iteratively winnowing options based on clear traction and metrics? How are we reallocating resources to focus on the most viable opportunities?
