June 23, 2020

Evaluating Your Core Capacities to Validate the Problems Your Business Will Solve

Entrepreneurs working through a problem.

We talk often in this space about problem validation: taking pains to understand the problems your target customers are experiencing and the solutions they’ll actually use. That’s because solving problems is the core function of every successful business. Perhaps for that reason, it’s also a function that many first-time entrepreneurs (and more than a few seasoned veterans) take for granted. It’s not that it doesn’t occur to them that their product should solve a real problem; rather, as with so many fundamentals of good business, too many people assume they know exactly what their customers need instead of finding early, relatively inexpensive ways to test their assumptions against reality.

Good ideas are not immune from this error. In fact, the more perfect the idea seems at the start, the more vulnerable the entrepreneur is to assume the market will see things the same way. In the next two posts, we’ll describe a systematic approach to problem validation that cuts through assumptions and connects with real customers and real problems. Doing this well requires that you understand what kinds of solutions you are positioned to offer as well as the unique ways your target customers experience a given problem. In reality, of course, these two factors–your capacity to solve problems and your customers’ specific needs–must be in constant dialogue. But the analysis has to start somewhere, and this post will focus on how you should evaluate your own unique resources as a problem-solver.

3 Questions for Validation of Problem & Solution When Developing a Business Plan

Effective entrepreneurs adopt an experimental mindset, seeking out opportunities to fail early and inexpensively in order to test their assumptions about what customers really need. In the same way, the name of the game in problem validation is narrowing things down–getting very specific about which problems you are best positioned to solve, and for whom, which means taking an honest look at your own limitations as well as your strengths. Below we will suggest three strategic questions to help you narrow down your big idea according to your own “core capacities,” the distinct skills, resources, or opportunities you can bring to bear on a specific problem.

1. What problem (or set of problems) am I uniquely equipped to solve, while staying true to my identity?

If, like many entrepreneurs, your journey begins with an idea for a product, you may start by asking, “What problem would this product solve?” And there’s certainly value in that question. But it’s important to resist the instinct to reverse engineer the problem validation process to lead you back to a specific product idea. The product you have imagined may well be a solution to a real problem, but you may not be well positioned to deliver the solution to the people who need it.

Say for example that it was you and not Mark Zuckerberg (or the Winklevoss twins, depending on who you ask) who had the idea for a new kind of social media platform. Could you have built Facebook? What advantages would Zuckerberg have had over you in 2004, even if you knew exactly how the next 16 years would play out? You may or may not have had access to a closed community of young, net-savvy college students, all of whom shared a single email domain, nor indeed to a database (lawfully accessed or otherwise) of their faces. You may or may not have had the coding expertise to build the prototype yourself, or a dorm suite full of other gifted student coders who had the time and inclination to help you more or less for free. You may or may not have been willing to cut as many corners and burn as many bridges as it took to pull it all off.

As you take inventory of your own capacities, here are some sub-questions to guide you:

  • What skills and experience do I have that may give me an edge in developing a solution? Maybe you can write most of the code yourself, or maybe you’re a gifted networker, or maybe you’ve worked for the last ten years in the industry for which you’re now developing a tech solution. Think beyond the obvious things, like degrees and certificates, and look at your soft skills, too.
  • What communities do I already belong to? Whether you’re a people person or not, you belong to dozens of distinct communities: professional, social, academic, linguistic, online, offline, inline (if you’re into rollerblading), local or regional or national, mainstream or underground, actual or virtual. Just like Facebook, many successful businesses have begun by leveraging access to (and familiarity with) a specific group of people and their problems.
  • How much time and money can I invest in this? If you have a day job, as most entrepreneurs do, you may have to limit yourself (at least at first) to problems you can address in your spare time and on a tight budget. Certain products and markets have higher costs of entry than others, in terms of both time and capital.
  • Who do I know? We don’t subscribe to the theory that “It’s not what you know, it’s who you know,” but “who you know” is still a question worth considering. Your business will need partners, investors, advisors, employees, and customers. Most new businesses draw on friends, family, acquaintances, and other existing connections for at least some of these roles.
  • What do I care about? This is where the second half of our first question comes into play: what solutions will enable you to stay true to your identity? If that seems wishy-washy, it’s not. Values are a part of your identity–maybe the most important part. Passion is another. Like everyone, you are more likely to find success in a venture that aligns with your values and passions. That doesn’t mean that the idea that feels the most “like you” is the one you’ll go with. But it’s an important consideration.

2. Which solutions have the highest value to the market and the greatest feasibility?

The first question should leave you with a fairly manageable list of problems you are uniquely equipped to solve. But rather than trying to design all of these solutions into a single product, you need to narrow your list even further by looking for value and feasibility. Obviously, this is easier said than done.

Especially when we start talking about value, we are starting to breach our false divide between what you can provide and what your customers need. As we have said, those two considerations must be in constant dialogue with each other. But even before you dive headlong into market research, you should be able to get a preliminary sense of which solutions on your list will have value on the market. For example, if you have determined that you are uniquely equipped to develop a scorekeeping app for frisby golfers, you might be justifiably skeptical about the business prospects of that solution for that community, even if you’re a passionate frolfer yourself. But if the same core competencies have you well positioned to develop a similar app for conventional golf, a sport with a wider following and more disposable income in play, it may be obvious where the most value lies.

The same goes for feasibility. A full-blown feasibility study may not be possible so early in your research phase, but you should be able to prioritize some solutions or sideline others just by asking the question. If you’ve been designing enterprise asset management (EAM) programs for the last decade, you very well may have the skills, experience, and connections to build a new EAM platform to compete with the incumbents in your region. But how feasible is this goal as a first step? Even if your experience really does make your solutions more effective than the competition, do you have the resources to compete with well-established, full-service products right out of the gate? How much risk will investors be willing to take on, even for ideas they recognize as good ones? If you’re evaluating that idea alongside a more modest one, like an asset performance DaaS (Data as a Service) function that can be offered to the incumbents or their customers, it may be obvious which is more feasible just by asking the question.

These are just examples, and not every decision will be so clear. The balance between value and feasibility–and it is certainly a balance–may make two or more options seem equally viable. In the end, you may need to find a way to get a few of these ideas in front of potential customers cheaply and early. There’s no real substitute for testing prototypes, even super-inexpensive ones, on the target customers who are experiencing the problem you want to solve.

3. Who are the people who experience these problems?

Future articles on this topic will do a deeper dive into personas and the insights to be gained from identifying your target customer with a high degree of specificity. But as you can see from the first two questions above, the who is never really separable from the what. You can’t ask “What problems am I equipped to solve?” without also asking “Solve for whom?” And you can’t ask “Which problems have the highest value?” without asking “Value for whom?” For that reason, this may not be a third question so much as an overarching concern that gives context and urgency to the other two.

But even so, it is worth asking on its own, before you can perform formal market research as such. If you are trying to solve problems in a domain or community you know well, as most new entrepreneurs are, you should be able to paint at least a preliminary picture of your target customers by reflecting on your own experience and talking with other members of the community. Who needs what you’re selling? What do they want from their work, play, or family life? How can you–you specifically–help them get what they want?

Ultimately, the goal of problem validation is to expand your understanding of the various facets of real, felt problems so that you can narrow your focus and tailor solutions to your unique skill set. Instead of attacking the problem as you first understand it, step back and take a wider view of the problem in terms of your core capacities: your own distinct skills and resources, the limits of value and feasibility, and a clear sense of who you’re building for.

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