Product Marketing
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April 24, 2019

Problem-Solution Fit: When it’s the Right Time to Pivot?

By Aggelos Mouzakitis

Wondering what the problem-solution fit is?

In this article, I am going to teach you everything you need to know about it.

From the problem-solution fit definition, to concepts, examples, and practical applications of the term.

You’ll find it all here.

So, without any further ado, let’s dive right in.


Chapter 1: What is the Problem-Solution Fit?

Chapter 2: What is the Difference Between Problem-Solution Fit & Product-Market Fit?

Chapter 3: How to Measure Problem-Solution Fit?

Chapter 4: When to Pivot (or Persevere)?

Chapter 5: Final Thoughts

Chapter 1: What is the Problem-Solution Fit?

Let me kick things off by giving you a clear explanation of problem-solution fit. 

Here is the problem-solution fit definition:

The problem-solution fit is the stage at which a startup business has a core group of happy and reference-able customers.

What is the meaning of problem-solution fit? 

Reaching a problem-solution fit means that: 

  • You have already built an MVP (minimum viable product),
  • You have found your early adopters (people to use your MVP),
  • You have managed to solve a problem that your early adopters have,
  • You have managed to charge enough for your solution so that users are happy.

The problem-solution fit is one of the most critical parts of the Lean Startup methodology. 

It is what Steve Blank calls customer development and it is the second stage towards finding a product-market fit. 

The Lean Startup, a book written by Eric Ries discusses the importance of running lean and adopting methods that will help you learn and adjust fast. 

To get to problem-solution fit, you first have to identify a problem worth solving. 

Is this a real problem? Are there potential customers for this problem—real customers who would pay for that solution? What are the possible solutions to that problem? Could a new product solve that problem or the existing ones are solving it already? 

These are all questions you should try to answer. 

And, of course, these questions will have an effect on critical aspects of running your business, from your marketing strategy, your business plan and overall approach. 

Have no doubt about it: reaching a problem-solution fit is essential for every startup.

Why is that? 

Because it shows us that our product has the potential of scaling, and getting to product-market fit. 

Of course, as I’ll show you later, getting to problem-solution fit, and getting to product-market fit are two different things. 

For now, keep in mind that reaching a problem-solution fit is the first step toward success. 

A logical question arises here:

How many customers are considered to be “ok,” and indicate a problem-solution fit.

Even though there is no widely acceptable benchmark, I’d like to use the analogy that John Dawes from the Costanoa Ventures is using:

  • 6–8 for an enterprise,
  • 20–30 for mid-market,
  • 50+ for SMBs

These numbers are NOT definitive and apply to businesses that have found a product-market fit.

But, they can help you get an idea of what is considered to be normal.

The customers you are serving should be loyal to your products or services, and should not be looking for alternatives.

How can you measure that?

That’s something I’ll cover in Chapter 3; for now, let me tell you what’s the difference between a problem-solution fit, and product-market fit.

Chapter 2: What is the Difference Between Problem-Solution Fit & Product-Market Fit?

As per Steve Blank, startups have to pass through 4 stages while in the Customer Development process. 

Roughly speaking, these 4 stages include: 

  • Conducting customer interviews (with a communication tool like Skype)
  • Identifying what the customer segment you are going to target is
  • Defining your value proposition and start selling

But, what are these stages and how Steve Blank categorizes them? 

According to Steve Blank, the Customer Development process consists of the following stages:

Image Source: Steve Blank

As you can see, there are two main categories when it comes to Customer Development:

  1. Iteration
  2. Execution

Every stage of the four you can see in the above image is important and necessary for a company to reach its ultimate target: find a problem-solution fit.

In my experience, 9/10 VC-backed startups manage to get to a problem-solution fit.

However, they fail to get to a product-market fit.

“Yes,” I know that (once again) you are wondering:

Why is this happening?

It can be because of several reasons, but the most important one is the fact that the scope of business is changing, and most founders don’t seem to get it.

Simply put, they are so attached (and even obsessed) to their initial idea, that they don’t seem to realize that the market has changed.

Finding a problem-solution fit is (relatively) easy.

Getting from a few happy customers to a widespread set of customers that resonate with your product, is not easy.

So, let’s make things a bit more precise, by giving a plain explanation of what is product-market fit.

The product-market fit is characterized by:

  • High level of satisfaction by a large set of customers,
  • High retention rate and low churn rate,
  • Revenue (and product) growth,
  • High product usage interval.

When you find a product-market fit, you are growing, and you have loyal customers who enjoy your products and services. (You can use product-led growth to get there faster.)

When you reach a problem-solution fit, you’ve just got out of the building with your MVP, and have a few customers that have found a solution to their problem.

As I hope it is evident by now, the two concepts are different from one another.

Most companies reach a problem-solution fit, not all of them reach a product-market fit though.

At this point, a question pops up in your head:

This is what I am going to show you in the next Chapter…

Chapter 3: How to Measure Problem-Solution Fit?

Similar to measuring product-market fit, you can measure a problem-solution fit. 

When I say “measure,” I don’t mean that you’ll get a grade from 1 to 10, rather than asking questions that will tell you if you are there. 

But, before I dive into how you can measure problem-solution fit, let me describe you can you can use the Problem-solution Fit Canvas, a powerful template that helps you turn real problems—problems worth solving into solutions. 

The Problem-Solution Fit Canvas was developed by Daria Nepriakhina, in the context of other—similar canvases like the Business Model Canvas or the Lean Canvas by Ash Maurya. 

All these canvases are following the Lean Startup path and can help you organize your thoughts and, business ideas early on. 

Here is how the Problem-Solution Fit Canvas looks like: 

Image Source: Daria Nepriakhina

The good thing about the Problem-Solution Canvas is that literally everyone can use it. 

And, you have to use it if you want to have chances of reaching a problem-solution fit. 

But, how are you going to measure, to identify whether or not you’ve reached a problem-solution fit?

Similar to measuring product-market fit, you can measure a problem-solution fit.

When I say “measure,” I don’t mean that you’ll get a grade from 1 to 10, rather than asking questions that will tell you if you are there.

To measure problems-solution fit, you need to conduct problem-solution interviews.

What does that mean?

It means that you need to jump on calls with your early adopters and ask all the tough questions.

“Yes,” I know that most businesses do that with a simple survey sent by Email.

I don’t mean to be blunt, but this is NOT the right way.  

Especially when you have just a handful of paying customers, you need to get personal.

I see many tech startups—and even established businesses—measure customer satisfaction with just an NPS survey.

The worst part?

They send the survey to people who:

  • Haven’t indicated any monetization behavior,
  • Haven’t shown engagement with the product,
  • Haven’t got any value out of the product.

The result is collecting feedback that is (at least) inaccurate or is not enough to tell us what people think about our product.

So, I want you to trust me on this.

To understand whether or not you’ve reached a problem-solution fit, you need to get personal; you need to jump on calls and let your customers tell you how they feel.

What are some common problem-solution fit questions?

Here are some of the most critical ones:

  • What do you think of [product]?
  • Would you say that [product], helps you with [their problem]?
  • What do you think of the pricing of [product]?
  • How often do you use it (and why)?
  • What prevents you from using it more (and why)?
  • How likely is it that you would recommend this product to your friends or colleagues? (NPS)
  • How would you feel if you could no longer use [product]? (Supplementary to NPS)

And, some additional questions, that focus on the optimization of the product:

  • What is the best (and most useful) feature in your opinion?
  • What would make you tell your friends about it?
  • What do you think are some missing features?
  • What motivates you to keep using [product]?
  • What is the hardest part of using [product]?
  • How can we improve [product]?

Most of these questions can be used in other stages as well.

My advice here is this: don’t limit yourself, ask all the questions that you consider to be important.

You don’t need to follow the norm.

After all, what you are looking for is the honest feedback of your customers, so that you can:

  1. Further engage them with your product,
  2. Get more customers to try your product.

Thus, do whatever necessary to collect feedback that you can later use to refine your strategy.

Chapter 4: When to Pivot (or Persevere)?

All the things I shared with you end up here.

You measure the problem-solution fit to find out:

Persevere means that you are on the right path, that your customers are happy with your product, and are willing to stick with it.

Let’s think about it for a moment: why do companies pivot?

Pivot means that the feedback you collected shows that your early adopters are either:

  • Unsatisfied with your product, but they want to keep using it because it solves their problem,
  • Uninterested about your product, since they have other needs to cover.

In the first case, you need to work on your features, and product experience.

In the second, you need to change your strategy.

At this point, you may be wondering:

What are the signs it’s time to pivot your business?

Some additional signs of the need for pivot are:

  • Your growth has stalled,
  • Your Product Usage Interval is low,
  • Your Churn Rate is higher than the industry average,
  • Your Lifetime Value (LTV) is low and shows no signs of improvement.

Pivoting a startup business is NOT easy.

But, pivoting is necessary, plus it’s the only thing that can keep your business alive.

And, the only way to understand whether you should pivot or not, you have to measure your problem-solution fit.

This process allows you to understand what your customers believe about your product.

The better the insights and feedback you collect, the better the decisions you will make.

To be clear: pivot is not better than persevere.

Examples like Segment has shown us that a pivot can save your business, and help you find a product-market fit.

Image Source: Segment

My advice is this: if the data shows you that you are in the wrong way and you need to pivot, then go for it.

Chapter 5: Final Thoughts

So, there you have it.

Now, you have a solid understanding of what the problem-solution fit is, and why you should care about it.

Remember: getting to problem-solution fit doesn’t mean that you’ve found a product-market fit.

The problem-solution fit, merely is one of the stages toward finding a product-market fit.

It is a very critical stage in every startup’s life, and you have to measure it so that you know when you’ve reached it.

Now I want to hear it from you.

Have you managed to find a problem-solution fit yet? If yes, how did you measure it? Let me know by leaving a comment below.

People Who Read This Article Also Read:

  1. Jobs To Be Done Framework: The Essential Guide
  2. Product-Market Fit Myths and Facts (You Wish You Knew Earlier)
  3. How to Measure Product-Market Fit: A Simple (But Complete) Guide
Aggelos Mouzakitis

Aggelos is the founder and Growth Product Manager of Growth Sandwich. He is among the first Customer-led experts in the world, leveraging advanced, Jobs-to-be-done customer research to orchestrate and guide Growth for B2B SaaS companies. A- and B- series SaaS are hiring him to organise, design and execute programs that infuse the whole company with qualitative data, empathy and the necessary knowledge to address any growth dilemma. In the last 4 years, he has worked with more than 100 SaaS companies and trained literally, thousands through my physical and online courses.