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Defining a problem is the one most important step that could be taken in the way of solving it. For businesses that are developing new products and services, or even for starting entrepreneurs, this is an essential process by which a business opportunity is identified, and a solution can be applied 1,2.
To determine the appropriate business problem, consideration should be given to the surrounding environment and its sub-environments (economic, social, health, cultural, technical, etc.). Each of these environments contains a set of major problems. Each of these major problems has many ramifications- specific problems. A specific sub-problem can be considered to tackled as our intended "business problem" to work on its business model.
Business Problem Example
There are many economic problems in the community, including the scarcity of sources of income for graduates and new families. This is our main example problem. Looking at the details, we find that this scarcity has several reasons behind it, the most important of which are (1) the lack of skills of new graduates than what is required in the market, (2) the high cost of living, and others. In this example, you can take the sub-problem (lack of graduate skills) as a "business problem" and develop an app for teaching business and soft skills for grads as a solution.
A good approach to identifying the problem well is “Challenge Statement” that was coined by M.Basadur who suggested that identifying a problem in a challenge statement helps us think differently about the problem at hand. The method to achieve that is to ask “How might we?”3
Challenge Statement Example
Statistics show that a certain community are health-conscious as they often try to find the most organic vegetables and fruits without chemicals additives to buy. However, finding these organic greens is no easy task as current supply mainly focuses on packaged imported goods with limited local quality control.
If we identify the problem here, it would be something like: Current green-products in the market are not appeasing for health-conscious community who face difficulty in finding what they need. Applying the Challenge Statement concept, we can say: How can we make green-products more easily available to customers who want them? Thus, a well identified problem statement becomes: Limited accessibility for organic vegetables and fruits locally.
You can see that by defining the problem different than its mere appearance, we may end up with a number of possible solutions to tackle this problem. Take for example:
- Opening a new grocery store dedicated offering organic fruits and vegetables.
- Building a mobile app to link local farmers to customers directly where customers can buy directly from farmers and collect their products a set point.
- Encouraging targeted community to grow their own greens using an easy planting kit that can be grown at home. The list can go on.
This means that a single problem statement that illustrates one real problem can have more than one approach to solve, and therefore more than one potential business idea. Each of the ideas mentioned in the previous example can represent the core of a startup given that it was studied and evaluated in a correct technical and financial manner, which reinforces the importance of identifying the correct problem before determining the solution or "the business idea".
How do I get to right business idea for a startup?
As mentioned earlier, a single problem can have more than one method of solution, which means that there can be several approaches to solve a problem. But which of these ideas are the best to utilize as a business idea?
The principle of selection usually depends on evaluating the idea at several levels to reach the most financially and technically-sound idea that suits the market. The process of identifying such idea includes thinking on the following levels:
- Correct problem diagnosis: Not all problems are suitable or eligible to be "business problems" that require an innovative solution provided by a startup or a business. It is important to identify an appropriate problem that affects enough people to tackle.
- Be creative: It is important when developing solutions to a problem that we think creatively first, without considering boundaries and limitations that might hinder the solution. The wilder the imagination at this stage, the better.
- Know your limits: After opening the door to the imagination and brainstorming creative ideas, it is important to return to reality and existing constraints. Here, it is essential to benefit from creative ideas as much as possible- try to benefit from parts of ideas that may go with existing constraints, and scrap the remaining parts that are very difficult or impossible to achieve.
- Market study: It is essential to study the market to find out if there is an opening for marketing and selling the intended product or service. See Market Evaluation for more details.
- Write down your thoughts: Develop your business model and business plan .
