Problem Validation: How to Know if the World Really Needs Your Cool Idea
Building a product that the world wants is the cornerstone of building a great company, which means problem validation is a key step in defining the solution you are developing.
Great products start with a deep understanding of a high-value market problem, the impact of that problem, and a knowledge of who will be the most willing to pay for a solution.
Many entrepreneurs think they understand the high-value market problem they are trying to solve, but when digging deeper, they discover that there’s a lot more to learn. In fact, when CB Insights asked more than 200 CEOs of startups that failed “why?”, the top reason was “no market need.”
That’s the value of this integrated startup model. Using it, you can figure out if the world wants your solution before you waste more money or time.
Product Validation Precedes Product Prototype
This approach begins with problem validation, not with a product prototype. It’s about stepping back and evaluating things from a potential user or buyer’s perspective, not from what an entrepreneur believes.
Here are the steps:
- Define the problem and solution.
- Identify the user, buyer, and supplier of the solution.
- Build a survey that asks the right questions of the right audience to validate (or invalidate) the solution.
With this process, entrepreneurs are likely to:
- Fail faster! Which is better because you can go to work on a better idea.
- Stop wasting resources on something the market does not want.
- Prove the world needs your cool idea.
Define the Problem and Solution
Hypothesize about what you think you know about the market problem and how you think you can solve it. In one to two sentences, describe the market problem in a way a lay person would understand. Then do the same with the solution. Be as concise as possible; avoid buzzwords and industry jargon.
Break the problem into two parts:
- What pain (cost, risk, lost opportunity) are you alleviating or what opportunity are you seizing? Are you solving a significant and high priority problem for your target market? Is it an annoyance, or do people wake up in the morning thinking about it? Is it in the top three problems that must be solved?
- What specific ways does this problem present itself?
Craft a solution statement that responds to the problem statement:
- What solution do you offer your customer? Write and re-write your definition until a stranger understands in 30 seconds or less.
- How do the benefits (increased revenue, reduced cost, reduced risk) sum up to provide this solution?
Here’s an example using Google, a company that solved a problem and solution that we all understand:
Problem: “Internet content is being created at a rate significantly higher than humans can process and locate. Internet users need a much more effective way to search for content, images, locations.”
Solution: Google will index and analyze web sites, linking data, metadata, and patterns to create a search engine that will quickly get users the most relevant information they need.
Our secret sauce is a page-rank algorithm technology that hypothesizes that all things being fairly equal, the user will consider the most popular content as the most relevant.
Identify User, Buyer, Supplier
Clearly articulated definitions of problem and solution form the basis of survey questions that can validate (or invalidate) your hypothesis and assumptions. Once you have basis for survey, you need to figure out where to send it.
Identify all the active stakeholders who could use or benefit from the product. These are the people you will want to survey. Think of anyone whose success or failure could depend (at least to some degree) on solving the problem that you’ve identified.
Let’s use a sleeping pill as an example as we walk through these definitions:
Users: Who will use the product? Users engage directly with the product.
Sleeping pill users include the patient, doctor, and pharmacist.
Buyers: Who will purchase the product? Buyers pay for some aspect of the product.
Sleeping pill buyers include the patient, the pharmacy, the insurance companies.
Suppliers: Who will supply the product to the users and buyers or provide the raw material for the product? Suppliers contribute data and materials to the creation of the product. Suppliers also sell and/or physically deliver the product to buys and users.
Sleeping pill suppliers include the doctor, the pharmacist, the drug manufacturing company, and the company supplying the raw materials to the drug manufacturing company.
Your product may not be as complex as a sleeping pill, but be sure to examine it from all sides.
It’s fine to start at a high level, with a company or a department, then work your way down to an actual human being—a person with a name, a title, and responsibilities. But work your way down to a human, you must. (The Pre-concept Market Validation Checklist can help.)
- Who has the most to gain with your solution? Who has the most at stake? Build the persona, then identify people who match.
- Based on the persona, which real individuals are most important to the success or failure of turning your product into a business? Which of them is most critical to getting the problem solved? Which is the hardest to contact, to gather data and information from? Which can you NOT grow the business without?
Entrepreneurs sometimes don’t think of product impact this way. It’s a new idea, this categorizing the value of a product by laying out a value chain of stakeholders and assessing which of them is the most critical to the product being purchased and the startup earning revenue.
When we do this exercise in our Customer Learning Lab, entrepreneurs develop educated assumptions upon which to base their validation surveys. Their focus becomes all about what the market really needs and who will pay for a solution. That broader focus narrows up to connecting specifically to the most influential stakeholders and proving (or disproving) that the problem they are solving is high value (or not).
Try it for yourself by downloading and completing the Problem Validation tool.
Next Step: The Survey
“If you don’t know where you’re going, you’ll end up somewhere else.” Yogi Berra
After completing the groundwork of Product Validation—defining the problem/solution and identifying the users, buyers and suppliers– learn how to put your work into action. Our Propeller instructions help build targeted market surveys to prove or disprove your assumptions. Test your hypotheses directly with the users, buyers, and suppliers who are most critical to your company’s success.
Interesting. The “problem” needing solved may only be obvious or worse assumed by founder while it’s not necessarily a pinch point to the niche.