Finding product market fit when servicing large organizations

Past editions of Equilibria Club discussed a lot of ideas to improve large scale cooperation, from voting systems to law improvements. But what does it take to actually bring those ideas into reality? The value of the ideas ultimately depends on whether or not they are adopted by large organizations such as multinational companies or governments. In today's article I discuss several general challenges and potential solutions to make this happen!

If you want to grow a business, customer feedback is essential. You're selling to humans, and that's how you change the world: by influencing human decision making. That's why ycombinator's motto is: make something people want. That's also why Amazon's number one leadership principle is Customer Obsession.

Collecting actionable customer feedback is hard though. You have to figure out which problems your customers are experiencing, as well as how well your solution is resolving their problem. Preferably your customers let you know about their opinion by giving you some tokens of appreciation (i.e. time and money). But there are also other leading indicators which can help you find your way, such as users spontaneously telling others about the product or service you're offering. Superhuman founder Rahul Vohra wrote an excellent article on how surveying and segmenting can help you to identify product market fit.

There are many reasons why this is difficult, including the fact that people can be biased and inconsistent. Your prospective customers will not always clearly tell you what their problems are.

If the customer is not a person but an organization, things get even more complex. Groups of people can collectively be even more biased and inconsistent than they are individually. As a rule of thumb, the larger the organization, the less legible the decision making process, and the less likely you're able to gather proper feedback from this system. Whether you're dealing with a large enterprise or government entity, Big Deals can be hard to pull off.

Here are three big challenges which you may encounter: there are fewer clients, sales cycles take longer, and processes are unique.

Challenge 1: fewer clients

Whereas some companies can take a shotgun or "numbers game" approach to business by trying to aggregate as many clients as possible into their sales funnel, you don't have this luxury when you sell to larger clients.

Processes are likely to be high-touch, and you have to make the few chances count. There is also opportunity here: you can make a difference by showing a great level of care and interest to the interactions.

It may be a good idea to increase your number of clients anyway by broadening your scope. You can actively combine your work on a Big Deal with other Smaller Deals. This can give you the financial (and emotional) runway to persist and land the big deal.

Challenge 2: long sales cycles

Central to learning is to have good feedback loops. Feedback loops are everywhere in society, from business to military tactics. Short feedback loops are the preferred way forward, but they can be hard to find or create.

There are many different feedback loops which you may encounter in your business, but its important to take the customer feedback loops the most serious if you want to grow:

The mental model this built for me was that iteration speed was a defining characteristic of successful companies, and that contact with the customer — and growth — was worth many times its weight in internal stability as long as customers were appropriately shielded. (source)

As my friend David Furlong said, the job of a startup founder is to shorten the feedback loop. Unfortunately, the feedback loops in larger organizations will take longer. You need to speak to more people, more departments and maybe even across more locations. Even if things take a little bit longer than with small organizations, if you manage to stay focused on the right things, you can still have a large impact.

Long sales cycles imply another approach: parallelization. When there are diminishing marginal returns to a particular cycle, make sure that you have multiple cycles running in parallel. Beware that you don't spread your resources too thin though.

Challenge 3: understanding the decision making process

Most large organizations have well-defined procurement and tender processes in place. There is a large variety of them, ranging from asking about specific products to supply, to open-ended market consultations.

What if your solution doesn't fit in the existing decision making process? What if the organization doesn't know about the product (category) yet? To answer these questions, you will need to identify and reach "sponsors"/"cheerleaders" of your product in the organization. These can make a request to kickstart the relevant procurement and tender processes.

The available bandwidth for adjusting the existing processes may vary a lot from organization to organization, but also from moment to moment. Processes and decisionmakers have limited resources, so you may need to passively wait for the opportune moment. You can even go further and actively coordinate with other stakeholders in order to deliver messages at the right moment. There are a lot of strategies for interaction here, ranging from identifying shared goals to building a coalition.

Many questions remain: Who are the key decision makers? How do you reach them? What are their incentives? Can you prove the worth of your proposition? Do they need a demo or pilot to prove the value? This is where I believe that there are no general rules any more, and it is up to you to thoroughly learn about the organization and to analyse the situation at hand. Cogno AI wrote a wonderful guide about selling to enterprise clients which gives some very useful pointers.

Conclusion

Despite the difficulties involved in finding product market fit, businesses around the world manage to successfully launch new products every year, both to small and large clients.

If you want to let your product or service be used by a large enterprise client or even a supranational government, be thoughtful, work on multiple deals in parallel, and prepare for a long ride! It can be incredibly impactful.