Before we look at each of the terms individually let’s run through the main terms as they are very close with each other and it makes sense to mention them together:
Problem and needs
You have to understand which problem you will be trying to solve or if you already have a product then you have to understand which problem your product is solving. The problem can vary depending on the customer you are selling it to. The same product for different customers may be seen as a different problem solver. When you will find and will be able to describe your ideal customer then it will be much easier to define the problem itself. This might be very tricky and hard at the very beginning to do when you don’t know much about your market and customers and their needs.
The good practice is if you haven’t got a specific product in your mind yet, start with problem definition then finding people who have this problem as the main pain and only then try to figure out what kind of product might solve this specific problem to that specific customer segment the best way ever!
What is a problem? – a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome.
- Late Middle English: from Old French probleme,
- via Latin from Greek problēma,
- from proballein ‘put forth’,
- from pro ‘before’ + ballein ‘to throw’
Albert Einstein – his quote shows the importance of being able to define the right problem is very important and that it might take some time as it’s not simple.
When you give a problem to a few different people it might look something like this:
You see the problem depending on your previous experience, knowledge and point of view.
If you will use only your existing experience then there might be a high risk that you will come up with an existing solution (sometimes it’s good) but if you want to innovate then you need to step back and use some methods to learn more.
The 5 ‘W’s – Who, What, Where, When and Why – is a great tool that helps get pertinent information out for discussion.
Who – Who does the problem affect? Specific groups, organizations, customers, etc.
What – What are the boundaries of the problem, e.g. organizational, workflow, geographic, customer, segments, etc. – What is the issue? – What is the impact of the issue? – What impact is the issue causing? – What will happen when it is fixed? – What would happen if we didn’t solve the problem?
When – When does the issue occur? – When does it need to be fixed?
Where – Where is the issue occurring? Only in certain locations, processes, products, etc.
Why – Why is it important that we fix the problem? – What impact does it have on the business or customer? – What impact does it have on all stakeholders, e.g. employees, suppliers, customers, shareholders, etc. Each of the answers will help to zero in on the specific issue(s) and frame the Issue Statement. Your problem statement should be solvable. That is, it should take a reasonable amount of time to formulate, try and deploy a potential solution.
Video:
Steve Blank 3min video about Understanding the Problem:
5 WHYs technique (Sakichi Toyoda)
Very often we do try to solve the most understandable problem even though we should be fixing the root cause, not the consequences.
It turns out that 5 WHYs method is very useful in many different situations. Just asking “WHY” 5 times might lead us to the root cause of the problem. Solving root cause might be simpler, it definitely is a more sustainable way to go as consequences may differ in different situations and by other external forces and it doesn’t actually solve it just reduces the effects.
There might be a situation when the root cause is far impossible to solve right now then it’s ok to step one or a few levels up the WHY chain and fixing one of the consequences.
This is a good example of how asking 5 times WHY it’s possible to solve very complex problem relatively simply and quickly.
Hypothesis and testing
As mentioned before we have to find a way to find out the truth as almost everything we think of now is just an assumption/hypothesis. So we must figure out what is that we don’t know now and want to find out or we sort of know but need an approval. Then figure out what is the fastest and cheapest way to find that out. The “Data-driven decision making” approach is not the easiest and fastest but definitely the most comprehensive way to go. Because when you have an approval of your hypothesis it’s not just your point of view – it’s a fact.
Product definition
Only after you have found out to whom in which situation and what is the most important thing/pain, only then you should start defining the product which would solve the problem the best way ever.
MVP (Minimum viable product)
How to figure out what it is for my project? It’s the very minimum product which does provide the core functionality to be able to provide value for potential customers. Probably it won’t be as nice looking and automated at first. MVP’s main goal is to be able to learn as much as possible for the minimum effort possible.
Customer interviews
This part of the market and customer research is A MUST. Until it’s a fact (which you might consider a fact if X amount of people have told you that it is true) otherwise it’s just a hypothesis (assumption). We can think as much as we like in our heads what, why and how is happening and trying to search on internet and interpreter in many good and not so good ways. Anyway, all of it still will be assumption until we get out and find the truth.
Customer value proposition and Business Model Canvas
A customer value proposition is a business or marketing statement that describes what do you do and why a customer should buy a product or use a service. This is a statement that has to be updated several times during market, customer research, product development process. That is the core goal for Business Model Canvas.
Business Model Canvas is a one-page overview that lays out both what you do (or want to do), and how you go about doing it. It helps you to put together the main elements of your business plan, it is simple to explain to any person, and you can change the elements in your canvas any time with ease.
https://diytoolkit.org/media/Business-Model-Canvas-Size-A4_2.pdf