Almost exactly two years ago, I posted a blog on the topic “Why startups get stuck” that talked about the many challenges startups face as they scale. Now, that was at a much different time, when raising capital was “easy” and the focus by most startups was growth at all costs. Oh, and wait, ChatGPT and the AI juggernaut did not get unleashed.
My, how much changes in two years! Today's economic climate is a much tougher one for startups– unforgiving markets, a focus on profitability, deep layoffs, capital crunch -- the works. It’s particularly challenging for Enterprise software companies - even in a friendlier economy, building software that meets the demanding needs of the Enterprise is a complex, expensive business and success is never guaranteed. The complexities of addressing an Enterprise’s complex requirements around systems of record, technically challenging integrations, complex undocumented business process and managing large volumes of data (that are often highly regulated and sensitive) requires a blend of software plus services to tailor solutions that will successfully support their needs.
Now, take that and multiply that complexity with the opportunity and risk of AI – as if enterprise entropy around economy/layoffs isn’t enough, enterprise CXOs now have to suddenly prioritize their AI story, something they didn’t even consider just a few months ago. Anecdotally, CPOs and CTOs across companies are spending as much as 50% getting their AI story right. And they’re justified to do so, given the risk of sudden and dramatic changes in the marketplace from upstarts that started with AI on day 0.
With these kinds of complex requirements, most Enterprise software teams are stretched to a breaking point already just to keep up with the backlog of requests from existing customers. Now they are asked to implement a 10-15% headcount reduction AND at the same time come up with new product innovation using AI to keep up with market and competitive changes AND also deliver the features that will help drive the growth objectives that the board and stakeholders expect. Delivering on all of these objectives may seem like an impossible puzzle to solve..
Well, it turns out however that the answer in today’s turbulent times is actually the same as it was two years ago – you need to rigorously re-evaluate your Product/Market Fit (P/MF). Past success and growth are no guarantee for future success and growth - the market and competition are incredibly dynamic and can disrupt the successful product / market fit and business models of the past. This is truly a reminder of the quote by the Greek philosopher Heraclitus, that the only constant is change – and those Enterprise software teams which continue to execute on their existing product plans without anticipating change often can hit plateaus and struggle.
Disruption can come from anywhere and the tuned Enterprise P/MF model that once helped you succeed may stop doing so, as newer startups (and tech disruptions around AI/ML) find newer ways of servicing the market. This requires that companies reinvent themselves and brace for a re-discovery of a second P/MF -- and assuming you are successful, eventually, a third, fourth, etc.. The only way to “Future-proof” yourself is by having the processes and tools for continuing to optimize your P/MF, to continue to chart your path into the future through times of uncertainty and change.
At Tachyon Solutions, we have first-hand experience going through this cycle of change as operators at enterprise vendors (like Kony and K2) and dozens more leading software firms. We have developed a tried and tested methodology for vendors to adopt. Our P/MF Diagnostic Workshop is a practical, rapid exercise that walks through the various components leading to an optimized P/MF (across Product, Market, Channels, Business-Model).