The link between innovation and product-market fit.
Why would someone pay you for a product or service? Answer: product-market fit.
The increased pace of technology innovation means that innovation in business is key to thriving in the 2020s and will become essential to surviving the 2030s and beyond. The 2020s and 2030s will be characterized by innovative leaps (which are many incremental innovations noticed at one time) similar in size to the adoption of the Internet. With any sizeable innovative leap, the ripple effects force companies to innovate or risk falling behind, and many companies are feeling this pressure now with Generative AI. The rise of AI and its inevitable intersection with robotics and the world’s infrastructure (both physical and digital), in addition to other technology innovations, create a pace of technology innovation unlike any time we have seen before, meaning the pressure on businesses to innovate will also be unlike any time we have seen before.
Why does technology innovation force businesses to innovate? Businesses are forced to innovate because technology innovation creates space in markets wherever businesses refuse to adopt key technology that has market demand, allowing new gaps to be filled by other businesses. This change is best observed through the lens of product-market fit. Product-market fit is a yes or no question, with the answer addressed at the time of sale. Product-market fit is to what extent your solution (in the form of your product, including its price) matches the problem the market demands at that time. To be a successful business in the long term, you need continuous product-market fit, meaning your solution matches the problem the market demands and has the flexibility to ensure that you have the same or better fit in the future in the ever-changing market.
Continuous product-market fit is about maintaining and improving the relationship between product and market. Markets are not static; they are dynamic. Therefore, you must work to continue to match product and market. A neglected product-market pair is almost always noticed by the market, and if left unaddressed, a new market alternative will step in to complete the pairing. Innovation in a capitalist economy is the matchmaker between product and market. Like a tailor matches clothing to the wearer, innovation matches the product to the market. Therefore, innovation is the product-market tailor, as it serves to improve and maintain the fit. In the same way tailoring is a skill, so is innovation. Innovation is a skill to be taught and refined.
If you’d like to support my writing on innovation, please consider pledging. It means I can continue helping as many people as possible learn the skill of innovation. Thank you so much for being one of my early supporters, and as always, remember you can innovate through anything!
Sincerely,
Alec Kauffman, Founder of Annovation
Lastly, if you have any feedback on the post or publication, or you’d just like to chat, feel free to message me using the link below.