Why you need product-market-impact fit
If you’re leading a business then you’ve probably heard of product-market fit and hopefully achieved it – it’s hard to build a business without it.
If you’re reading this then chances are, you also want your business to make a meaningful difference, not just lots of money. For that you need product-market-impact fit.
Product-market-impact fit – what it is & why it’s important
An impact-led business is built around a specific social or environmental problem. It is clear on the role it plays in addressing that, and ideally that is through what it does as a business.
Why? Because businesses usually have the greatest impact when they draw on all their skills, experience, assets, reputation and networks to address a problem.
When your impact activities are separate from the core business then the potential for positive change is limited. You might donate a percentage of profits to charity or volunteer a proportion of your time – but the impact of these are constrained because the core business demands the greatest investment of time and money.
Impact is separate (like in the diagram below) and there’s a risk that it can be seen as a distraction or nice-to-have.
However, when positive impact is embedded into your products / services then positive impact and commercial success become mutually reinforcing. Integrating impact into your core business model (like the next diagram) means you are leveraging all your skills, networks, assets and time to make a difference.
Any tensions between scaling impact and financial success are dissolved. The whole business is aligned on objectives and priorities, and you can deliver impact at scale.
When designing products / services and working out how to deliver them, an impact-led business thinks about the specific real world problem it’s addressing and the impact it wants to have. It weaves this into the design. It’s not just looking to achieve product-market fit, it’s also looking at how it can achieve impact through what it does every single day. It’s looking for product-market-impact fit.
Some examples
Elvis & Kresse
Elvis & Kresse make handbags and other luxury items from reclaimed waste that might otherwise have ended up in landfill.
They are a successful, growing business that has strong ethics integrated into what they do and how they do it. The business is financially sustainable because it is selling products people want and are willing to pay for. Doing good and being a successful business are perfectly integrated and entwined. They reinforce each other and complement each other. The better the business does, the more waste is diverted from landfill.
Bates Wells
Bates Wells is a purpose-driven UK law firm.
Doing good is very much part of Bates Wells’ day-to-day legal work. They use their skills as lawyers to have an impact – through client work, pro bono advice and collaborations that are working towards wider system change. Bates Wells’ impact reports are full to the brim with great examples of how positive impact is integrated into their core business.
COOK Trading
COOK sells frozen ready meals, made the way you would at home.
Through their RAW Talent programme, they provide opportunities for people who are often excluded from employment – e.g. after time in prison, homelessness or addiction. The stories from people who are on the programme are moving and demonstrate the impact on each person’s life. They also demonstrate a huge level of commitment and engagement – levels of employee engagement that many businesses would love to achieve!
The better the business does, the more employment can be provided and the more people are postively impacted. Meanwhile, this creates a pool of talented, committed workers for COOK in an industry where recruitment can often be challenging and where staff turnover is high. It’s a win-win. Social and commercial success are integrated and reinforce each other.
Applying this to your business
The starting point for achieving product-market-impact fit is getting clear on the specific environmental or social problem that your business wants to address. This is where we start when we help businesses create an impact framework through our Amplify solution.
Finding product-market-impact fit can take time because it adds an extra dimension into most of the business advice that’s out there. Finding that sweet spot that integrates all three elements takes a bit of test-and-learn.
But the results can be so rewarding! When you find a way of building a financially sustainable business that scales its impact as it grows – there’s beauty and magic in that.
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