99 problems but not 1 worth solving

Understanding the problem you are trying to solve lays the foundations for innovative business models

Businesses that manage to scale over the long-term, solve real problems, and as a result, they offer customers a strong value proposition. Business owners, starting out, often make the avoidable mistake of not forensically understanding the problem they wish to solve and testing the underlying assumptions that a solution is based on.

After interviewing potential customers and receiving positive feedback through market research, an inexperienced founder becomes emboldened that he has identified a problem — one that is shared by many — with the potential to reshape an industry. He builds a product, bootstraps his way to market, and even enjoys some initial success. But, a business based on false hypotheses and biased assumptions is not sustainable.

Solve problems, not symptoms

Often, founders and innovation teams try to solve a symptom of the real problem. As Chris Myers, co-founder and CEO of BodeTree outlines:

“If you react instinctively and without deep thought, you’ll find yourself mistaking that symptom for the problem itself. When this happens, any solution you implement acts as a temporary and often misguided fix.”

One approach, made famous by Toyota, is the five whys, described by the architect of the Toyota Production System, Taiichi Ohno, as “the basis of Toyota’s scientific approach. By repeating why five times, the nature of the problem, as well as its solution, becomes clear”. This is an ideal starting point for any business initiative, whether it is a new digital project or a startup.

Understand the root cause of the problem

Regardless of the framework you use, you need to be sure that you understand why the problem exists, and why nobody has solved it yet. There are many useful tools to unroot the cause of the problem many of which Six Sigma outlines here.

At this point, you can estimate who would be willing to pay for to this problem to be solved, and what they perceive solves the problem for them. With this information, you are in a strong position to create a product, that at a minimum, will be valuable enough for customers and worth building a business around.

Test assumptions

Almost all startup founders have read The Lean Startup and understand that they need to test the assumptions that a business idea is based on. Failing to understand the reasoning behind these assumptions is risky business. One of the classic assumptions is assuming that there is a need for the product or service. But defining a need is tricky. Han Gust, Head of Venture Building at FoundersLane, speaks in more detail about defining unmet needs as a starting point for disruptive innovation.

What if Steve Jobs had said I know people want touchscreen phones, without testing his assumptions. What he did, in fact, over a two and a half year period, was unravel unmet needs by thoroughly testing his assumptions — and it paid off.

Common mistakes

• Not taking the time to validate assumptions about what customers feel about the problem is a common pitfall. Many hypotheses of failed businesses are formulated with prerequisites about the problem, for instance, people don’t want to use keyboard buttons like on the Blackberry.
• Jumping to conclusions based on confirmation bias happens because founders often need their idea to be the solution, as they are emotionally attached to it. They fall into the trap of offering customers a value proposition — that has a clear advantage — without contextualising it. And, they neglect to properly explore all of the layers of the new customer journey and what the customer has to give up to undertake it. As a result, they miss the chance to understand the strongest value proposition. By not looking at the requirements for the solution, the opportunity to find genuine white space is impossible.

Validate then iterate

Once a set of assumptions have been tried and tested, you are in a position to start iterating. Build-measure-learn, the startup mantra that revolutionised fast-moving innovation, promoted the idea that you don’t have to go big and fail big, you can take small steps to change your path until you can ensure that you are on the right path or at least understand early on that you are heading for a dead end.

What if you could know before you go through the trouble of validating the small steps along the way, you could anticipate the dead-end before you?

If you understand that a problem is real, and you can validate your assumptions around how you understand the problem space, eventually you can craft the solution requirements for solving the problem. When you have a clear overview of the solution requirements, you can start innovating around those, and innovate all possible solutions that fit within the solution parameters.

“If I had asked people what they wanted, they would have said faster horses.”

~ Henry Ford

What did Ford mean with his famous quote? His take on the process of innovation is that you need to look at the requirements of what people need to solve the problem; in his case of getting from A to B faster. By understanding the best way to solve the problem instead of giving people what they think they want, you can truly be innovative and not stuck building faster horses.

Once you craft an understanding of all the solutions that fit the requirements, you can validate these before you even start building a product. To do this, it is necessary to understand what the underlying values of the solution are, and what you are asking your customers to give up, in order to adopt your solution.

In essence, by adopting any new solution you give up something, be it time, money, or your routine way of performing the task. In the end, your solution needs to clearly indicate that it provides more value than the status quo to the customer to stand a chance of succeeding. By understanding this, you can probe into the mind of your customer and get an indication of whether you are on the right path, from the offset.

Once this is clear, you can start building the solution and start measuring the impact of the solution and learn from what you measure. By continuously iterating on a path that was initially validated, you stand a much greater chance of achieving success than by blindly choosing one approach.

Please reach out if you are leading digital change at your company and want to find out what is possible.
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