12/8/2013

Product Market Fit in the Social Sector

I believe that the life of any startup can be divided into two parts: before product/market fit (call this BPMF) and after product/market fit(“APMF).

Marc Andreessen

One of the key tenets of the start-up world is finding the product/market fit. It means you are in a good market with a product that can satisfy the market.

This does not change when you are in the social sector. One of the best ways to create a new program, or rethink your program is to view it as a business and use the business model canvas to sketch it out. If you are not familiar with the business model canvas, check this video out.

Now that you are back from watching the video and/or reading the blog post on business models and social change, lets look at the main aspect of the canvas that I think is important to think differently. That is the customer segments (CS).

Customer segmentsCustomer segments

In the social sector, there are three kinds of customers. 

  1. your target group: the people for whom you are creating change for

  2. financial supporters: the target group generally does not pay anything or if it does it’s not enough. There are other people or organisations that need to see value in what you are doing for the target group and who will pay for it.

  3. other supporters: because you are always creating change in an ecosystem and there will be others who need to be part of this change process

This is the key in terms of understanding customers” in the social sector and creating value for them.

The next step once you articulate your customers and their problems, is developing value propositions for them.

Value propositionsValue propositions

As you would have three different customer segments, you will need to have three different value proposition (VP). 

Why should somebody from your Segment A, your target group (people with disabilities, single moms needing support to parent, older people wanting to live at home) care about your product or service? What is the problem that you are solving? How do they select yours compared to others?

The second step is customers in segment B. The thing about financial supporters, especially if they are organisations like government, or foundations or philanthropists, it is key to understand what is the problem that they want to solve? Why are they interested in the space in which you are trying to create change? How does creating change for not one person but 100 or 1000 or 10,000 people create value for the financial supporters?

The same with segment C. What is the value for them?

Once you are able to find and create these three different value propositions then you are starting to get traction in creating a viable business model. The fit between the CS and VP is key. It is much more complex in the social sector but once we start to think differently in terms of creating value for segments B & C, then the rest of the stuff makes much more sense.

CS Vp FitCS Vp Fit

Once this is on the way, we are well on the way to the rest of the business model.

Business Models 1Business Models 1


Humanomics


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