Startup problems are constant. Problems persist, endure, and annoy. Problems are rarely solved, just generally mitigated. Problems are consistent and a business’s best friend. Businesses don’t sell goods and services, they sell responses to problems. Hunger is a problem that food fixes. Thirst requires water. But here is where it gets interesting; while problems persist the solution for that problem can change.
People need to travel long distances. At first the answer was walking. Then it was horse powered conveyances. Then it was trains, planes and automobiles. Tomorrow it might be hyperloops. Whatever means or solution is embraced in the future, the problem of transportation remains ever present. It’s a constant, and for an entrepreneur where there are far too many variables, constants can be comforting.
A skilled entrepreneur is adept at finding problems to solve. New business ideas are plentiful, knowing what problems need to be solved and can be profitable is rare. This post will help teach you not only how to find those problems, but how to study them. Problems are the constants of the business world, understanding them completely will always pay off. Problems can be the guiding principle that will inform all your decisions.
The purpose of a business is to find customers; the product is merely the means to achieve that end. The problem you seek to solve is the way your startup engages and converts people into customers.
The quandary is that people are very bad at describing their problems. People, like entrepreneurs, tend to express their problems as potential solutions. Instead of describing the circumstances in which they ran into difficulties, people ask for what they think they want or need to address those conditions.
When confronted with a problem, people will frame their response to that issue based on prior solutions that solved similar problems. People will generally not think outside of that frame to consider alternatives unless prompted or pushed.
This realisation provides several important insights that help guide entrepreneurs to finding problems to solve. First, this is not something that can be done with an online form or a predetermined script. You need to engage your potential customers one-on-one so that you can follow up. The first answer they are going to give you is not going to provide the information you need. Since the majority of people do not consider the circumstances of their problem, it is going to require several iterations of probing questions to get where you want to go.
The second insight involves the size of the first problems your business tries to solve.
As an entrepreneur building your first prototype, you do not have the resources to engage a lot of people to find a problem that will speak to large customer base. In time, you might build an answer that addresses a problem that everyone has. First, you need to find a problem that addresses a problem a much, much smaller subsection of the population has.
This subsection must be defined by several characteristics to narrow the field and to increase the likelihood that you find a universal problem for that group. You shouldn’t try to find a problem that plagues small business owners – that is too big a group. You should try to find a problem that plumbers that employ less than ten people would have. There is a greater chance that you will find a problem that all small business plumbers have in common than finding a problem that plagues all small business owners.
Clayton Christensen, in his book the Innovator’s Solution, reframes how we think of problems.
“The basic premise is that people hire products to get a job done. If you can uncover the job, it puts you in the right context for creating a solution.”
Jobs are not simple “tasks,” but speaks to the motivations that people have when trying to address the situation. It is not enough to merely correct the situation; you must satisfy the motivation.
The Job of a Milkshake – Which one to sell ?
One of the best examples of how to think of a problem as a job is the milkshake problem. A few years ago, Christensen was asked by a major fast food chain to help them increase sales of their milkshakes. Before going to Christensen, this chain tried to do everything to improve the milkshake itself. They had convened focus groups and tried thickening the shake, making it thinner, changing the flavour profile, pretty much everything you could do to find “the perfect shake.” Despite their best efforts, none of the changes translated to more sales.
At first, Christensen and his team looked for the problem through traditional lenses. The assumption was people want milkshakes to solve the problem of desiring a cold, tasty treat with a meal and the competition was other milkshakes. That line of analysis didn’t get them anywhere. They decided to spend a few days at one of the restaurants and analyse the circumstances where people bought milkshakes.
The results stunned them because the data showed that the fundamental assumptions about what triggered milkshake purchases were all wrong. The assumption was that people bought milkshakes along with other food, like burger and fries, as part of a meal later in the day. Christensen’s team found that 80 percent of all milkshakes were bought before 10 am. The people who bought those milkshakes bought nothing else and immediately exited the store.
Christensen’s team then spent the next few days interviewing people who bought milkshakes before 10 am to inquire why they made the purchase that they did. It turned out that those people were trying to address a completely different problem than what the fast food chain was trying to fix.
The majority of people were buying milkshakes because they wanted something to fill them up until lunch, that only required one hand to consume, and could break up the boredom on their ride to work. The milkshake’s competitors weren’t just other milkshakes, but breakfast foods that could be consumed on the go such as bananas, muffins and granola bars.
By removing the lens of what was the perceived problem, Christensen and his teams found the truth of the motivations behind the customer’s choices. It is customer’s motivations that define a problem; what do people hope to achieve and what keeps them from achieving it. If you can assume nothing and ask the right questions to understand motivations, you are well on your way to understanding problems.
Read more about Clay Christensen’s Milkshake Marketing.
Once you have identified the customer base you wish to serve and their motivations, the next step is to find the contexts in which those people face the problems that challenge them most. Problems do not exist in a vacuum. It is generally the circumstances that exacerbate situations to turn something from a mild annoyance to a problem that must be solved. Take the milkshake story as an example. Hunger and boredom are general problems that people feel periodically throughout the day and can be solved different ways. In another set of circumstances, these problems might be best solved with a bowl of popcorn and a Netflix account.
It is the conditions of having to make a morning drive to work, combined with the need to have enough sustenance to get you through the day to lunch, that makes the problem the milkshake so specific and challenging to solve. The greater the number of complicating circumstances, the narrower the range of possible choices get, heightening the stress to try to resolve the issue. The circumstances trigger needs in the customer base; if you can understand what event trigger needs, then you have the basis for a strong, sustainable business model.
Once you have a grasp on the relationship between people, circumstances and problems, you need to “get out of the building” and talk to people. This is why it is vital that you narrow down your original target market to a very narrow subset of people. You won’t find what you are looking for by asking simple questions and taking the responses you get at face value. You have to follow up and dig deeper to find customer motivations and what they are doing when the frustration with a particular problem manifests. That takes time.
This is harder than it sounds and requires patience and strong communication skills. Since people tend to express their problems in terms of the solution they think they need, it is very difficult for them to discuss problems in terms of context, triggers, and personal motivations. They might have a hard time finding the words to express those ideas in terms you can use.
You might feel the need to help them find the right words, but there is a risk here too. You are not a disinterested party like Christensen and his team. You have an idea of what problem you want to solve and how you want to solve it. In your effort to help your customers articulate what you need, you might guide them to saying what you want. While that might be gratifying in the short-term, it will be devastating in the long-run when you build a product no one buys.
Finding the balance so you help people articulate what you need without coaching them to say what you want is a challenge that you must be aware of when conducting your out of the building interviews. But if you do it right, you will be richly rewarded with the foundation for a strong business plan.
In the lean startup method, a key component is measuring the right thing. Measurement helps inform you whether you are on the right track, or whether you need to pivot. In the later stages, measurement is quite easy. If you have a product to sell, you can measure your progress based on the amount of traction you have. Whether people are repeatedly buying your product or service is a good measure of how well you are doing.
Traction, as traditionally defined, does not work when you are looking to define the problem. The goal is to define the problem before you build the solution to mitigate the risk of building the wrong thing. But having a metric in mind before you start problem finding is critical, because it keeps you honest. If your idea does not match the reality of the problems your customers face, then a good metric will break through the cognitive dissonance and force you to pivot.
There is no single metric that works in this case; whatever metric you choose is dependent on how you structure your experiment to discover the problem. In the early stages of problem finding, focus on building a low-fidelity MVP to help reveal the contours of the problem space. Develop a story about a set of circumstances that might speak to your potential customer base and begin to share it in conversations.
Unfortunately, the early stage testing will probably not allow for strong qualitative evidence to support that you have the right problem. The metric you need to use in the early case testing is enthusiasm in your test base. If, when you are telling your story about what you think the problem is, you consistently get enthusiastic responses, that is your early metric. If you believe the enthusiasm for your problem description is great enough, build another low-fidelity MVP more focused on that problem story to test among a larger group of people. Your understanding of what you think the problem is should provide you with a quantitative metric for testing that MVP and provide the verification you need that you have the right problem.
Never fall in love with the solution you create for the problem you are trying to solve. As horse drawn carriages taught us, solutions change but it is the problem that lasts. Business is filled with uncertainty, but consistency of problems can provide security to your business if you understand those issues in the proper context and aren’t afraid to pivot to a better solution to satisfy your customers. Understanding problems can be a difficult task, but richly rewarding. If you are an entrepreneur that wants to learn how to find a problem worth solving, then consider reaching out to CobbleWeb. Our experience and drive will help you to not just generate new business ideas, but to build a successful organisation.
Originally published March 16, 2018, updated May 23, 2019