Understanding the Problem is Half of the Solution

(I originally wrote this article back in 2000 when I was Entrepreneur in Residence at the Carleton University Tech Venture program)

If you have ever spent any time with entrepreneurs you know that there are no bounds to their creativity, vision and their ability to market innovative solutions. To many people, entrepreneurs seem to have a have the capability for coming up with “eureka!” discoveries as if it were some kind of magic. Their ideas can come during one’s sleep, during a conversation, while driving or literally anywhere for that matter. But while entrepreneurs have great skill in seeing opportunities that others miss, entrepreneurs are also notorious for having blind faith in ideas they are passionate about, and pursuing them regardless of the return on the investment in time and effort. Successful entrepreneurs, on the other hand, increase their chances of success by launching ventures only after careful forethought about a significant problem that needs to be solved and how they can position themselves to be the ones to deliver the solution. The first step in this process is to understand everything you can about a problem itself.

So how do you research the problem and what do you need to know? Click here to continue reading this post…

You need to conduct broad research on some basic elements that you must know about the problem: what is the problem, those that have experience its impacts, how are they currently addressing it, and what is the value you can place on your potential solution.

What is the problem – This is the critical first step of determining whether a substantial problem exists. You must profile the problem in terms of when and where it arises, those it affects and other related problems. What are the symptoms and the causes? For business, is the problem tied to the performance of the company or a specific business agenda? What is the nature of the problem in terms of costs, time, inability to comply with legal requirements, lost market share, etc? Resist the common temptation to identify an application of a technology rather than a real problem. For instance, before word processors were commonplace, one might have argued that businesses had a problem because they could not create electronic documents, but it would be more appropriate to recognize that without electronic word processing, businesses were wasting time and money, preparing and distributing paper based files.

Who has the problem –You will need to profile the people that have the problem in order to further understand the size of the problem. Define when and why they experience the problem. Try as much as possible, to categorize the people affected by the problem. Are different problems experienced in different geographies or in different seasons? Are they a consumer or a businessperson? Are the problems specific to one or a number of vertical industries? Often in business the person that experiences the problem directly (ie. technology user) is different from the person that owns the business problem (i.e manager) so you must be careful to identify and profile them separately. For instance, a traveling employee may not be able to function properly without effective remote computing solutions, however the manager of a group of the traveling employees is the one that is responsible for guiding the team to achieve its business objectives and has the budget to ensure this. This key distinction here is that a potential solution may be designed for a user, but sold to the owner of the problem. Finally, attempt to determine the number of people that have the problem across the different categories.

How is the problem currently being solved – Another critical element to understanding the opportunity to introduce a new solution to an existing problem is to understand the gap between existing solutions and one that properly addresses the problem. To understand this, look at how people are currently addressing the problem. What is the range of alternative solutions? Are people living with the problem because there aren’t any solutions or because they can live with the problem and focus on other bigger problems? Have people created their own solution or work around? Have businesses created a solution in-house or are they working with a combination of external suppliers. To what extent are the current solutions acceptable in addressing the problem? Many solutions that a solve problem are a business failure because they are too complex, too expensive or require people to significantly change their behaviour. Have people and businesses tried unsuccessfully to solve this problem in the past? Why did the efforts fail?

What is the cost of the problem – The cost of the problem gives valuable insight into the value of an effective solution, but is often overlooked by entrepreneurs who are racing to address an unmet need. For business can the problem be quantified in terms of lost time, costs incurred or lost revenue? With a solution to the problem, could a business become more competitive and expand market share? And what value would they place on these achievements? With a solution, would the business avoid penalties associated with failure to comply with laws and regulations? For a consumer problem, can you determine the price that they are prepared to pay for a solution because it saves them time or money or because it brings them new prestige and status? Try to come up with a hard dollar value associated with each customer who experiences this problem and then multiply it by the number of people that experience the problem and you can derive the cost of the problem to the industry.

To answer these questions, be sure to do broad research and ensure that you are collecting different perspectives and accounting for divergent opinions. Be sure to read trade publications, search the Web, visit conferences, talk to existing solution vendors, follow industry analysts, and most importantly, speak to potential customers who can become your first prospects, once you have enough of a solution to market. Also be sure to speak to both end users of the technology and those that might buy and deliver it to the end user. In a business this might mean the manager, and for a consumer this might be a channel or a reseller.

All of this research might seem like a lot of work for an entrepreneur who is engineered to rapidly pursue opportunities, but it is important to keep in mind the old adage that understanding the problem is half the solution. You are seeking to discover whether there are enough people prepared to pay a significant amount of money to make it worthwhile to invest the time and energy solving the problem you are focused on. Once you have established that this is the case through thorough research, you can confidently evolve your understanding of the solution and move a step closer to launching a successful startup.

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