The Problem with the Problem-Based Approach

A lot of today’s start-up resources, such as the lean methodology, advocate a problem based approach where a business should identify a problem that a customer has and solve that problem better than anyone else. These problems can be identified through careful observation or even conducting customer interviews, recently popularized by the lean movement (I will comment on this at a later date).

Although this seems to be a good way to identify some business opportunities, I argue that by exclusively taking a problem-based approach, you miss opportunities to which there is no obvious problem/solution dynamic. You may not see a problem with the current state of affairs or a customer might not be able to identify a problem that they have with a particular product or service. Thus if you identify an opportunity and go to your target customers to validate your idea, they might give you a false negative. This is the danger of relying on the problem-based approach where you seek validation from customers.

This is especially true when you are trying to change consumer behavior. Customers may be so used to doing things in a certain way that they may not see it as a problem, even if it is inefficient and costly when compared to your way. I had this happen to me when I was working on endlessprotein.com, an application that would automatically ship you your supplements so you would never run out. We did the math and it was far more cost and time effective to buy from us as opposed to a physical retail location. We took the problem-based approach and our idea was immediately invalidated from customer interviews. Our target customers were so used to doing things the same way for decades that they saw no problem with it and thus our idea was invalidated. Of course this was not the only issue at hand but I look back and wonder what it could have been if we had not used a problem-based approach but instead relied on the market data that had brought us to the idea in the first place.

I’d like to use amazon.com as another example. Jeff Bezos saw the opportunity of bringing retail to the internet. After looking at various verticals, selling books was the most compelling entry point for a variety of reasons. If he had gone out and asked academics what problems they had with buying their books they might not have seen anything wrong with the way they did. If he packed up his things and called it quits after his customers could not identify a problem, we would not have Amazon today.

Thus, your customers can be dead wrong and you should have other sources to validate your opportunity. Sure, it’s great to get feedback from your customers for improvement but don’t throw an idea away just because they are stuck with some relatively bad behavior and don’t know any better. Instead, show them how your kick-ass product makes their current way of doing something look inferior after you’ve identified the opportunity.

I personally like looking at market data and asking a lot of good questions to find opportunities. A good resource on how to do this is The Innovator’s DNA.

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