Turn Your Idea into a Product Users Want: Identify the Right Problem

Most founders want to start building right away. Nearly a decade ago, entrepreneur Eric Reiss introduced the lean startup concept. The process can save you money and time by translating your idea into a prototype before developing a full product. Despite its widespread adoption and impact, lean methodology hasn’t dramatically reduced the startup failure rate. According to CB Insights, nearly 70 percent of all startups fail. And research in 2019 shows that “no market need” remains the No. 1 cause of failure. How can you build a product that customers want and will pay for? Take time to define the right problem. We sat down with Julia Austin, Dinesh Moorjani, and Allison Mnookin to talk about their early-stage product insights and approach to customer-problem fit. They share their experiences with early product development and four steps that can help you get started.

Julia Austin, an expert in product development, early-stage advisor, and angel investor advises, “be sure you’re clear about what the problem is and who you’re solving for.” How can you become certain of the problem and potential user? Devote more time and attention to customer-problem fit.

Investigate: Does an Unmet Need Exist?

All startups need to prove that the problem they identified is worth solving by proving that 1) an unmet need exists 2) the market is big enough to go after. Most founders downplay this step in product development, according to Austin who has advised dozens of early-stage startups including Drift, Lovepop, and Wistia and taught hundreds of emerging entrepreneurs at HBS. 

Define the Unmet Need or Problem

Most founders frame problems around the solution they already want to build. Taking time to clearly define the problem—before thinking about solutions—may seem rudimentary. But problem definition can help dislodge any unconscious bias you have towards your solution. It can broaden your understanding of the product and increase your chances of building a product people want.

Identify that a Strong, Unmet Need Exists

Shikhar Ghosh accrued decades of experience building companies from the ground up and advising hundreds of founders. “Identifying a core human need underlying the problem,” he observes, “can be very powerful and improve the product.” Talking with Ghosh about customer-problem fit, serial entrepreneur and investor Dinesh Moorjani agrees. As founder and former CEO of Hatch Labs, Moorjani incubated and built over ten early-stage companies from the ground up, including the iconic Tinder. 

I think it starts with something very core. . . There has to be some nagging problem.

Dinesh Moorjani

Does the Problem  Encompass  Any Core Emotional Needs?

Often, that problem has an emotional component. Hatch Labs released Blush, a wine-discovery app in 2011. By matching wines with user taste preferences, it allowed users to choose wine before entering a store. When defining the problem, Moorjani recalls that the team identified an emotional component. Shoppers felt overwhelmed by endless choices at a wine store.

One of many product ideas that grew from Hatch Labs, Blush was relatively short-lived. In contrast, Tinder, which launched at roughly the same time, has achieved a multi-billion dollar valuation and revolutionized how single people connect worldwide.

In the early stages of exploring customer-problem fit for an app like Tinder, Moorjani’s team identified strong emotional components. Most people have a desire for companionship and fear rejection. Defining the problem and being aware of the emotional needs surrounding the problem sets the stage for the next step: identifying your customers and understanding their pain points.

Identify Your Target Customer Segment

After developing a clear idea of the problem, you need to identify your first target audience. Many founders start by building product solutions around their own needs and experience. Austin cautions, “as you do your discovery process, be alert and willing to recognize that the ideal user is different from the image you imagined.”

Start with Demographics

You should begin by capturing demographic data about your customers: age, gender, geographic location, and income. But demographics have limitations. For instance, the demographic “professional women, ages 18-35, living in the Northeast” may be too broad in the context of your problem. Customer personas go a step further by capturing key characteristics of your target customers that provide insights into “who they are as human beings.”

Create Personas to Get Specific

As you begin to define your target customer and embark on discovery research, you can create personas, which identify salient common characteristics customers. Personas give you insights that will help you determine the right person to target first and help your team to understand a particular user’s needs and pain points. They also allow you to understand any constraints a customer may face.

Use a Template to Create Personas

Austin recommends using a simple template to record information about personas. Templates allow you to capture and present the information in a streamlined and consistent manner. Creating a persona quote, she emphasizes—stating what you imagine they might say about the problem from their perspective—can help your team feel connected to the persona. Hubspot offers a robust “Make My Persona” tool that enables you to enter data to build a persona. See our resources below for links to other templates.

Any additional information that you provide about a persona  will likely lead to a better solution down the road because you really understand who you’re building it for.

Julia Austin

Sample Persona

Sample Persona. Source: Julia Austin, HBS Startup Bootcamp.

Understand Existing Solutions

As you develop personas, find out how they currently deal with the problem—do they use workaround hacks? Do they currently use any other solutions? Why are these solutions dissatisfying? Austin suggests asking, “What do you believe is the unmet need of that target persona” and pinpointing what makes them unhappy.

After you create a few personas, you can begin to conduct customer interviews to begin to validate that your personas are accurate. Austin cautions that often, “interviewers ask the wrong questions or gather detailed responses that lack relevance. Both can send you in the wrong direction.” For practical tips on how to conduct better interviews check out Uncovering Users’ Needs—Interviewing Techniques to Get More Meaningful Data.

Determine the Size of the Problem and Customer Segment

If you want to develop a profitable business, you need to spend some time doing a market analysis. If you identify that the market is very small, it might not be worth solving the problem—even though the problem might be a real pain point for a particular group of users.

 Competitive Benchmarking

Conducting competitive benchmarking can help you understand the landscape around the problem and identify other players in the market. 

You should never be thwarted by other players in the market. Just because they’re there doesn’t mean they’re doing it right. Or they could’ve been around for a long time and  are ready to be displaced.

Julia Austin

Plus, Austin explains, competitors’ existence can serve as a reinforcing data point that the particular problem is worth solving.

Develop Problem Hypotheses to Validate

Defining the problem, identifying your target customer, and assessing the market, provide the data for your problem hypothesis. This succinct statement provides a foundational roadmap and articulates the variables you need to validate as you develop your product. Your problem hypothesis outlines your thoughts about the problem. “What do you believe is the unmet need of that target persona? What are they unhappy with? Why are they unhappy with it?”

At this stage of discovery and customer-problem fit, your problem statement should focus on the problem you perceive and your customers’ needs. It should not include your proposed solution.

Instead, it should reflect detailed evidence you have observed about the problem. You’ll create problem-solution hypotheses once you determine that you’ve defined the right problem.

“Writing a problem hypothesis is not a one-step process” Austin underscores, “It’s just the beginning of a non-linear, ongoing discovery process.” Austin shares a basic downloadable template she developed for HBS Startup Bootcamp that forces you to articulate your belief about the unmet need or problem.

 

Seek Unbiased Feedback on Your Problem Hypothesis

In addition to teaching at HBS and co-leading HBS Startup Bootcamp, Allison Mnookin is the former CEO of Quick Base, Inc. In her two decades of experience as a technology executive for cloud and business software companies, she learned the importance of receiving unbiased feedback on your problem hypothesis. Mnookin advocates asking a trusted colleague who is not directly involved in your venture to review your problem statement and answer the following questions.

Iterative Process

Austin and Mnookin observe that many founders skip the step of seeking feedback because they want to move forward quickly. But to determine if you’re on the right track, you need to continue to develop and test your hypothesis.

Don’t assume there’s an, “A, B, C, we’re done” process. It can take multiple iterations before you really end up at the right solution.

Julia Austin

Drawing from his experience in that position and as an investor today, Moorjani notes, “Product insight is laying out what you believe is a hypothesis that’s going to be true—but you might be proven false.” Or you may identify something completely different and unexpected that could take you into a new direction.

It can be frustrating when you have to continue  to revisit and hypothesize. And change your statements and talk to a whole new group of people.  But the more work you spend upfront, when you get to that solution build, you’re going to feel like you’re working on the right thing.

Julia Austin

Interested in learning more techniques for validating your problem and diving deeper into customer unmet needs? We continue to add to our Product section. Get practical advice and a frmaework for how to conduct better customer interviews in Uncovering Users’ Needs—Interviewing Techniques to Get More Meaningful Data. 

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