It seems to many people that any problem a customer is willing to pay for, is worth solving. But that may not be the best way to create a sustainable business. Typically we will start with our own ideas, but this is probably not focused nor compelling enough.
Start with a customer problem, not an supplier idea. Ideas are “free floating” — and most will never turn into a business unless they solve a fundamental problem. Instead, start with a problem that is either unworkable, unavoidable, urgent or underserved — or some combination of the four. I found the ideas of Harvard Professor Michael Skok useful.
So here’s a quick list of the 4 characteristics of problems that will enable you to create a sustainable business model.
The critical thing to remember is that if you’re not solving a valuable problem, you’re unlikely to build any great value.
Is the problem Unworkable? Does your solution fix a broken business process where there are real, measurable consequences to inaction for the customer? Will someone get fired if the issue is not addressed? Then there is real motivation to get the problem solved and ensure the solution is sustainable.
Is fixing the problem Unavoidable? Is it driven by a mandate with implications associated with governance or regulatory control? For example, is it driven by a fundamental requirement for accounting or compliance?
Unworkable or unavoidable problems can spell biggest opportunities. When a problem is unworkable, find the person who could get fired if it isn’t fixed — that person will be highly motivated to buy your solution. Unavoidable problems — such as accounting, regulation or even aging — will similarly give you a built-in set of potential customers.
Is the problem Urgent? Is it one of the top few priorities for a company? In selling to enterprises, you’ll find it hard to command the attention and resources to get a deal done if you fall below this line. Non-urgent problems won’t be a priority for potential customers. “You have to have something that’s in their top three priorities” to get a potential customer’s attention, Skok said. Most large enterprises also budget a year in advance, so your solution can’t mean a net increase in cost for the company — so it needs to save money for another area in the business.
Is the problem Underserved? Is there a conspicuous absence of valid solutions to the problem you’re looking to solve? Focus on the whitespace in a market or segment- as long as this meets one or two of the essential elements above… if there’s just white space without urgency, unworkableness, and unavoidability, it will take much longer to motivate peple to pick up your idea .
Don’t just aim for “faster, better, cheaper. That typically represents just an incremental change, and it will only be a matter of time before another company does it faster, better or cheaper than can do it. Instead, aim for breakthrough changes.
If you’re going to pick a fight, pick a big fight. It’s often just as much effort to go after a small fight as a big one.
Disruptive innovation shouldn’t have disruptive adoption. If it’s too hard to adopt an innovation, it may never happen, so make the adoption processes as easy and iterative as possible to motivate people to change their habits.
Pursue something you believe in. The best value propositions are developed by people who are uniquely suited to tackle the problem.