Do you have a million-dollar business Idea in mind and don’t know HOW to proceed? Whether it is worth, investing time, money and effort?
This is the question that haunts many entrepreneurs and demotivates them from working on their business Idea. The best way to start when you have a business idea in your mind is to think of the problem it is trying to solve.
In this blog, you will figure out the WHAT of problem, WHO of problem, HOW of identifying and validating the problem. I will be explaining this with the help of interesting examples and correlations.
This blog gives an in-depth view of the first step mentioned in my previous article: Came up with a great Business Idea? What Next?—Which is about 6 steps to validate a Business Idea. Here we will go through 3 steps to identify and validate the problem.
So, you have a new business idea in mind. The first step is to figure out the problem that it is trying to solve. There are many ways in which one can look at the problem.
I will come up with a simple and unique approach of looking at it. This approach will help you in identifying and figuring out problems in a logical way.
So WHAT is a problem? A Problem is any deviation from Standard/Ideal. This definition will solve our purpose for now.
To explain it, I will be viewing our life proceedings from a process point of view. Let us call it Life Process. Every activity we do is part of it and helps shape it. With every event or activity, we try/want to achieve something. We will name the result of activity as Resultant. Problem occurs when we cannot achieve it.
I will be defining two states here. The State defines our condition, status, experience, and standing. One is the state which we are experiencing currently. Let us call this Current State. The other state is the one which we expect/prefer to experience, will name it as Ideal State (Standard).
With states defined, you can always calculate the difference between them at any particular Event or Happening. The difference is the problem which we need to figure out and solve. It can be positive, negative or zero. We need to focus our attention on those Negative deviations.
Kindly have a look at the graph below to have a better understanding of what I am trying to convey here.
I am assuming the behavior of both the states to be linear to make things simpler. The behavior shown here is just for the sake of explanation. Kindly don’t go into its technicalities. The activities that we perform or events that take place in our life, forms the X axis, while their result forms the Y axis.
This graph will vary from person to person. At the first event, we can see that the person experienced the unexpected (positive deviation from Ideal State), while at the 3rd event we can see that he experienced some type of problem (negative deviation from Ideal State).
For example, UBER was established to solve the problem faced by people in hiring a cab in San Francisco. People had to wave their hand until they can hail a taxi in snow, rain, wind and even after boarding the taxi they had to negotiate with driver for change and tip. The overall experience of Taxi hailing was frustrating. We will call this state of people as their Current State. People wanted something better, they wanted a better experience. Their expectations or wants define the Ideal State. UBER just narrowed the gap between the two states and thus solved the problem.
The above explanations demand us to look at the problem from a different perspective. Following things define the WHAT of problem:
We should not only look at the Problem, but also the Event that triggered it and Expectation of the audience from the result of that event (Ideal State).
For UBER the problem is the pain experienced by people in Taxi hailing, the Ideal state is on-demand and cheap Taxi-hailing service and the Event is the act of person looking for Taxi.
To Do: Write the Problem down, State the assumption of Ideal State and note down the Event that triggers the problem. These assumptions will be validated in the last stage i.e. WHO of problem.
We have defined the WHAT above, It’s time we dig into it and break it down further.
WHAT is divided into categories based on the Intensity of the problem (extent of deviation from Ideal State) and Frequency (number of occurrences of Event):
From the process point of view, these problems are the usual, historical, quantifiable variation in a system. All problems which come within X deviation from the Ideal State. We will call this X, Tolerance limit.
Though we experience them, they don’t affect us psychologically. These are the problems that we don’t mind, don’t think about.
From the process point of view, these are problems which occur outside X deviation from the Ideal State.
We experience these problems, they affect us psychologically. These are the problems that we mind, we think about, we hope that a solution existed for solving them.
From the process point of view, these are problems which occur routinely. The frequency of its occurrence is more than Y.
These are the problems which we experience frequently in our day to day life. The Event that triggers their occurrence happen at least daily. These form part of our habit.
From the process point of view, these are problems which occur rarely. The frequency of its occurrence is less than Y.
These are the problems which we experience rarely. The Event that triggers their occurrence happen rarely. These don’t form part of our Habit.
Take a look at the below graph to gain a better understanding of the theory explained above:
This chart is a day’s picture of Male, White, 25–30 years of age, Bachelor, living in San Francisco, working as Manager, earning $40,000 per year and who loves to party.
The Ideal state, Current state, and Tolerance limit is of the profile described above. This data comes after doing in-depth research on your target audience, which will be done in the next stage.
Here we can notice that the Event of going anywhere be it office, home, or for the party is giving rise to key and routine problems. While in other cases like Getting ready or Working in office, problems experienced are common and non-routine problems. UBER just identified and solved the key and routine problems.
To Do: Categorize the identified problem in categories defined above.
We have defined and categorized the WHAT of problem. It’s time we validate things we have defined, let’s define the WHO.
States defined above namely Current and Ideal depends upon a lot of parameters such as WHO of the person, WHAT of his/her ability, beliefs etc.
For simplicity, these parameters have been grouped under the below mentioned Standard Customer Market Segmentation Categories:
To Do: Define the WHO of your problem with the help of the resources mentioned above.
We have defined the WHAT and WHO of the problem, it’s time we validate them. Kindly follow the following steps for market segmentation and problem validation:
After the above exercise, you have at least 30–40 responses with you. It’s time we analyze them. The following steps will help you analyze them:
After performing the above exercise, the relationship between Event, Problem, Target audience and Ideal State will be pretty much figured out. You can always iterate to refine your results and understanding. All of your assumptions are validated now.
To Do: Note down the Event that triggers the Problem, Expectations from the result of the event, the problem and Target audience.
Now you have enough data to make the graphs explained above. The graph will help you visualize things in a better way as it will give you a unified view of every parameter figured out till now. It will help you in analyzing the existing data and predicting trends for similar market segments.
The Art of Making Graphs: Select the profile. Draw the series of events that takes place in a day of the defined profile, on the X axis. Draw a horizontal line at some distance from X axis for each event, to signify his/her Ideal State. Draw a horizontal at Y distance from Ideal State line. Y depends upon the intensity of difference between the two states. See whether it should fall beneath, above or at same level w.r.t Ideal State line. This line will be your Current State line.
The next steps that you’ll need to take will involve searching for existing solutions for the problem that you have identified in this step. For a quick look on the remaining 5 steps, check out Came up with a great Business Idea? What Next?.
Also shared on the Startups.co Medium Publication.
Hi, my name is Neeraj Joshi, Heading Product at Spinny, the largest dedicated portal for pre-owned cars in India. I am a serial entrepreneur and likes to share my learnings on Products and Startups. You can always find me on LinkedIn.
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