➤ Poor product-market fit is an overwhelming reason for product and startup failure, but it can be avoided by following a solid product development roadmap.
➤ Taking the time to thoroughly complete a Market Requirements Document (MRD) early in the development process will provide you a touchstone that will ensure your product will succeed in the market.
➤ Using a comprehensive template that includes all areas of development and being specific when writing requirements will most effectively guide your development, while also providing a product foundation in your quality management system.
A Top Reason for Startup Failure – Poor Product-Market Fit
Startups have a long road to travel in their path from idea to success and approximately 90% fail along the way. There are many paths to failure with each company experiencing their own collection of challenges. When asked about the top reasons for failure, 38% of previous founders blame a lack of market fit, the second highest response to running out of money.1 That percentage increases when we consider other categories of product failure including getting outcompeted, having poor product quality, ignoring customer needs and feedback, and mistiming the market. In biotechnology and other life sciences, many scientists believe that scientific failure leads to business failure, when in fact an overwhelming reason is a poor transition from scientific proof to impactful product. So how can that transition be made smoothly?
There is a standard product development formula that commercialization scientists follow to launch impactful products that meet the needs of the market while providing a profit for the company.2 At the core of this step is understanding of two key questions: does your product solve an important problem? And how much will people be willing to pay for the solution?
While these questions can be overwhelming, taking the time to fully understand the answers is essential for determining product potential.
To answer these questions effectively, startup founders and product development teams must conduct thorough market research. While comprehensive market research reports can be expensive and may exceed a startup’s budget, there are cost-effective methods to gather valuable insights:
Customer Personas: Develop profiles of your target customers, including their job titles, pain points, and purchasing power. In the life sciences, it’s crucial to consider both the scientific users and the economic buyers, as they may have different needs and concerns.
Voice of Customer (VoC) Interviews: Conduct formal interviews with a mix of customer personas, using standardized questions about your product. To obtain the most unbiased results, consider conducting anonymous interviews separate from sales purposes.
Competitive Analysis: Identify your competitors and analyze their offerings. Look for gaps or areas where your product can outperform them to differentiate your solution and provide additional value to customers. Remember that competitors may include alternative solutions customers are currently using, even if they are not direct competitors.
Capturing Product Details that Ensure Product-Market Fit
The most common way to make sure that you capture the what, instead of the how, is through the MarketRequirements Document (MRD). The MRD serves as a roadmap that captures customer needs and allows not only the marketing team, but the entire commercialization team, to navigate the product development process. By documenting the results of market intelligence such as competitive analysis, technical fit and results from voice of customer, the MRD will provide the answers for the rest of the commercialization team – for the technical team to further define specifications, for the production team to understand manufacturing and shipping and for the regulatory team to setup the appropriate processes.3 The most important result of this exercise being that everyone from product to marketing to manufacturing to sales will be aligned and have clarity on the goals and deliverables.
Many people, especially busy leaders, may feel that the work that goes into drafting the MRD is a distraction that will take away from critical development time. However, a comprehensive definition of requirements is the most important for busy teams as it provides:
Clear communication between various stakeholders involved in the product commercialization process as a central reference point that ensures everyone understands the customer requirements, marketing objectives and target audience.
Alignment with business goals as a framework to identify how the product will contribute to the growth and success of the organization.
Focus and direction by identifying and prioritizing the most important features, benefits, and messaging for a product that ensures commercialization efforts are concentrated on activities that will yield the best results.
Efficient resource allocation by prioritizing resource time, budget, and personnel effectively while avoiding wasteful spending or scatter-shot approaches.
Collaboration and coordination by bringing together input from various departments so that the product strategy aligns with the product features, customer needs, and market trends.
Measurement and evaluation by establishing the metrics and key performance indicators (KPIs) that will be used to evaluate the product performance and success of commercialization efforts.
The MRD plays a vital role in steering your team to only the most meaningful product activities so you can be laser-focused on achieving positive outcomes. Organizations can increase the effectiveness and efficiency of their efforts to ultimately improve results and business success. Ultimately saving your team an enormous amount of time while ensuring that scope creep doesn’t change the ultimate market acceptance of your product.
The Overlooked Key to a Successful Scale-Up. (2023) Harvard Business Review.4
Requirements and Format Guide the Process
This MRD blueprint can be the difference between a company that succeeds in launching a validated product that satisfies customer expectations, and one that is stumbling down a bumpy road without the information and feedback to meet the market needs.
Specific areas that will need to be addressed include:
Intended Use: the problem or gap you are trying to resolve and how your product achieves this. Anyone in your organization that reads this section should be able to understand what is being developed.
Competition: how will your product outperform the competition. This may include speed, cost or specific features that will set your product apart.
Target Market & Users: the types of customers that will be buying and using your product. Be specific to include who will purchase it, what type of work they do, what is the expected experience or education level of the user and what is needed such that it can be used properly.
Capabilities & Features: high-level functional requirements that describe “what the product will do,” performance requirements that indicate “how well the product will do this and how can we measure that,” and customer requirements that detail ”what will be provided to the user as part of the product and what does the user need to provide,” or “what is the final output of the product?”
Logistics: requirements that address limitations on COGs related to production and service, specifics on how the product will be delivered to the user and data security or user access needs.
Pricing & Cost: how much customers are willing to spend and what is the margin required to meet business goals.
Regulatory & Safety: definition of Global region and industry with specific requirements for safety measures (physical to user, data integrity, environmental, etc.), product labeling, quality management, and other domains.
Support: the needed level and type of training and the type of continuing support users will need.
If you have completed gathering sufficient market information, you should easily be able to organize the information and define “must-have” requirements for a successful product. However, experience in understanding how to do this comprehensively can make the exercise easier and more useful.
A Final Word About the MRD
The beauty of the MRD is that it acts as a one-stop-shop to drive product development, marketing, and sales teams, establishing a cohesive and customer-centric approach throughout the commercialization process. Because it’s based on market analysis and customer insights, it helps in defining the product’s value proposition, target audience, and positioning within the market. The MRD also considers competitive analysis and trends, helping to identify opportunities for differentiation and competitive advantage.
Finally, an MRD helps in minimizing the risk of developing a product that doesn’t resonate with your target customers or falls short of their expectations. Without an MRD, a startup can really miss the mark on meeting the market need and delighting potential or current customers.
Additional Tools for Establishing a Good Product-Market Fit
Market Research
Market Research: Helps you to understand the needs, pain points, and preferences of your target audience. A high-level understanding of the market and size is generally sufficient to understand the potential of the product. For every industry and case, there are available market research reports but these are generally very expensive and outside the budget of a startup. While convenient, they are often not necessary and limited funds can better be spent elsewhere.
Customer Personas
Customer Personas: Understanding the titles, desires and buying potential of your customers is important to understand the pain points they face. In life sciences, most founders speak to other scientists to understand the scientific problems they face. And this is important. But a commercial company must also consider the economic buyer who will have different pain points such as budgeting and disruption to operations that a new product could create. Remember in the life sciences, you have a number of customers that have spent a great deal of money to validate processes and they need to have a real economic reason to change.
Voice of Customer (VoC) Interviews
Voice of Customer (VoC) Interviews: Going beyond casually asking questions of other scientists and academics, it is important to conduct more formal interviews with standardized questions about your product. The interviews need to contain a mix of the customer personas created above and should be considered separate from other purposes such as sales. Depending on the stage and the market knowledge of your company, it might be beneficial for these to be anonymous to receive the most un-biased results.
Competitive Analysis
Competitive Analysis: Understand your competitors and analyze what they are offering. Many startups feel like their technology is so innovative that they don’t have competitors. Not only are there always competitors, there are often different types of competitors. It’s important to look at anything customers are doing that is different from the product offering – even if that difference is only that customers will not change. Look for gaps in their products or areas where you can outperform them to differentiate your offering and provide additional value to your customers.
Pricing Strategy
Pricing Strategy: Ensure that your pricing aligns with the perceived value of your product. If your product is significantly superior to the competition, you might be able to charge a premium. On the other hand, if you are targeting price-sensitive customers, a lower price point might be more appropriate. However be aware that if the only differentiator to your technology is price, it is very likely that your competitors will just lower their prices to meet yours.
Product Market Fit.
Partner with StimulusBio to unlock the secrets to building a product that people truly want. By mastering the art of the MRDs and leveraging the expertise of the StimulusBio team, you’ll be well-equipped to navigate the complexities of the life science industry and confidently bring your groundbreaking product to market.
