Product/Market fit at large Financial Institutions

I had an interesting realisation today regarding prioritisation at a startup vs a large Financial Institution.

As any startup mentor will advise, the key point to early growth is product/market fit. Without that, one is essentially producing a product that isn’t quite right for the market in which it is aimed…
In a startup, this is comparatively (?) easy to measure – one is either making sales or not. In a large FI, it is much harder to measure as the reasons for a project are less clear:
  1. A senior stakeholder may have mandated the project. Political power determines which projects are greenlit and which aren’t – not product/internal market fit.
  2. The “sunk cost fallacy” whereby a project continues because it has already started, and money has already been spent.  As Mr Magnus Magnusson would put it: “I’ve started, so I’ll finish”.
  3. Unclear or conflicting business priorities lead to a senior technologist making a call over what to do next – often based on which technology he or she is most excited about at that point in time.
  4. Perhaps most nefarious of all – crappy systems that would die if allowed, but are kept alive due to a single user/desk who don’t realise the cost it is incurring due to ineffective/inefficient/incorrect chargeback models.  For this point specifically, I am sure that if we could do front-office P&L net of fees AND net of (true) internal costs, the behaviour towards tech projects would change.
The first reason includes cases where the senior technology manager can allocate budget to projects that improve his or her political standing, but is not aligned with business objectives.  Conversely, one must be careful of not preventing “pure” tech projects to be approved, purely because there is no short-term business benefit.
Net result is that technologists are not necessarily working on a project or product that would be paid for in the real world, and users have a product they wouldn’t pay for forced down their throat. Obvious now I say it, but less obvious at the time when you’re 6 months into a project from hell!

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