25
Aug 15

Finding and Validating Market Problems – Key Themes

For the past few posts I’ve been beating the drum on “finding and validating market problems” – the most important thing that product managers do if they want to make a lot of money.

I gave you an explanation of why it’s so important, a self-assessment, and I linked to a bunch of techniques you can use.

If you read those articles a set of themes starts to jump out:

You’re Testing A Hypothesis Or Generating Ideas

You need either a hypothesis to test about a market, or an area or domain to investigate. For example, you might have a specific idea for a product. Or you want to try to discover what problems might be unsolved in a particular domain.

In my current job the domain is project management. I believe there are a lot of problems in project management still unsolved. Therefore, I talk to project managers and other people who work on projects to find unsolved problems. My initial research is to figure out where to focus in my next set of research. I’ll start with the hypothesis that “lots of problems in project management don’t have technical solutions yet.” If and when I discover some of those problems, my followup hypothesis will be “problem X of project management is a good candidate for a new technical solution.

You have to talk to a lot of people

To discover these problems, you will have a lot of conversations with people who are familiar with the domain, or working in the domain. There are two key points:

You’re looking for a “weak signal”

Often people won’t have a concrete sense of the problems they have. It might just be a frustration, or something they feel could be better. So you have to talk to a lot of people about their experiences in the domain.

People don’t necessarily know “their biggest problem”

You can’t simply ask your informants “what is your biggest problem?” The questioning has to be more oblique, otherwise you tend to “freeze” people. Ask them about their experience doing the job. Ask about what keeps them up at night. Or about recent challenges. Or when they have an “I suck” feeling in their job. Or, alternatively, what generates an “I rule!” feeling in their jobs, and how often that happens. They you can explore if there are ways to make more I Rule moments and fewer I Suck moments.

Get people talking with open-ended questions about their own experiences

From a technique standpoint, use open-ended questions (that don’t have Yes or No answers). And you can have a mix of provocative and “discovery” questions. Effective provocative questions get the person to think a little differently, to consider other options, to shift their point of view. For example, you might ask someone what features of Facebook should be applied to their domain. The whole tone of a discovery meeting can change in response to a question like that, when your informant says, “I’ve never considered that before,” or “I’ve never thought about that,” or “I didn’t realize that was possible,” or “No one has ever asked me that before.”

(Suffice it to say that the topic of using open questions and provocative questions to discover useful information in an interview needs its own series of blog posts!)

Once a signal starts bubbling up through the noise, you can go to the next phase

How do you know you’ve done enough interviews? You want to hear a lot of people coming up with the same problem. Ideally, people will say they’ve tried to solve this problem, but have been unsuccessful or not fully successful. Even better, they’ve budgeted some money to find a solution to this problem, but haven’t been successful in finding or buying a solution.

By the way, even if you think you already know the problem, and have an idea for a solution, don’t tell people about it at this stage. You’re really trying to find unsolved or badly solved problems, or validate that the problem you’re thinking about is actually important. You’re not pitching.

Use affinity mapping and similar techniques to discover the weak signal

If a problem doesn’t arise obviously from the interviews, you have to do some amplification. Go back through all your interviews (either via transcripts or detailed meeting notes), and pick out the “snippets” that seem to be interesting. You probably won’t find all of them the first time through, and many of the things that might be interesting won’t turn into anything useful in the end, after analysis, but do your best. This also works well collaboratively, because different people will come away with different snippets from the same conversation or notes.

Take all these snippets, from all your conversations, and analyze them. A good way is to use “affinity mapping.” Put the snippets onto post-it notes, or onto a virtual post-it note system, and try to find snippets that go together. Your goal is to tease out a weak signal from everything you’ve heard, and then use affinity mapping to amplify the signal.

For example, in an earlier life I interviewed a lot of product managers about a product idea I had. The product idea didn’t turn out to solve a big enough problem, so I abandoned it. But in the course of these interviews I heard something surprising multiple times – “I go to LinkedIn to find out how to do product management.” This shocked and surprised me – LinkedIn is a place to find out how to do product management? I never would have guessed that, and in fact, the first time I heard it I kind of ignored it. But then, when I heard it again, I realized it might reveal a problem I hadn’t discovered before, or at least a solution that a number of people were trying and which I might be able to either leverage or improve upon.

Will they pay for a solution?

Finding a problem is merely step one. The next step is to make sure there is a market for a solution. We’ll talk about that more in the future.


07
Aug 15

How To Find And Validate A Market Problem

My last post was basically the highest level guidance possible about market discovery, including a litmus test for assessing your process. But I didn’t go into the actual steps for doing it. I’m not going to do that in this post either. Instead, I’ve got a few good sources and suggestions for guidance on how to do it.

Lots of people have put out lots of guides on how to find and validate market problems. Or, as they often put it, how to “find a product idea.”

Most of these guides are about finding new market problems to solve as a startup. But the techniques are equally valuable if you need to find new features for an existing product, or come up with new products to augment your product portfolio.

  • Amy Hoy’s approach to finding and validating a market problem is quite different from Paul Graham’s. For one thing, she’s more focused on “lifestyle businesses” versus becoming a billion dollar enterprise. Her technique is called a Sales Safari, and the big difference is that you aren’t solving *your own* problem. You can get the gist of the Sales Safari in this video. (You can attend her online course 30×500 – which I have not done – to learn more.) The fundamental idea of 30×500 is to find a problem that 500 people will pay you $30 a month to solve. This provides a good income if you are a sole proprietor.
  • Then there’s just going out and talking to customers or potential customers and exploring what their biggest problems are. This is best illustrated by Justin Wilcox’s “How I Interview Customers” video.You have to start with some idea of what you might want to work on – a hypothesis about a problem. But instead of starting to build something, you start talking to people who might have that problem. You can validate they have the problem, that it’s urgent, and that they’ll pay for a solution. His videos help you get started doing that.

I hope you find some of these links valuable and interesting for helping you find and validate market problems that you can solve with your startup, or your corporation.


31
Jul 15

How Badass Are You At Finding And Validating Market Problems?

How to avoid having a “solution in search of a problem”

You have to become badass at finding and validating market problems to have a successful product business. This post will help you assess where you are now, and where you need to focus to get (even more) badass.

There are three main top-level activities for product managers:

  1. Find and validate market problems
  2. Create solutions to the problems
  3. Take the solutions to market.

And by now you know which of these I think is the most important. (Hint: #1.) Because if your product isn’t a solution to an urgent and pervasive market problem, no one will buy it.

There are many techniques for finding and validating market problems. They involve extensive interaction with customers and prospects to elicit problems, pains, needs, and desires using open-ended questions. (That is, you can’t just ask “What are your big problems?”) This is followed by analysis of what you’ve heard to surface and identify problems. Then those must be validated to determine which are valuable to solve, and which align with your organization’s abilities and business goals. I’ll get deeper into those techniques in a future post.

How Am I Doing?

In this post we’ll focus on framing the process and assessing how you’re doing. (Inspired by Kathy Sierra’s Badass ideas, if you’re keeping score.) Here are some questions you can ask yourself – answer honestly – to gauge your process for finding and validating market problems.

Process

  • Do you engage with a large part of your customer (and potential customer) base regularly to find unmet needs, desires, and opportunities?
  • Do you use techniques like open-end questions and direct observation of customers, rather than simply asking them what they want?
  • Do you have a process for aggregating the multitude of conversations to detect the “weak signals” that indicate problems you can solve?
  • Do you meet with customers separately from sales activities?
  • Do your prioritization criteria explicitly take into account whether a feature helps solve a validated market problem?

Outcome

  • Can you clearly state the market problem that you are solving and how your solution addresses it?
  • Do customers understand and agree that they have the problem?
  • Have you validated the value of solving the problem, the size of the market for the solution, and that your solution can be profitable?
  • Can you state how your solution is superior to or more desirable than that of your competitors, including doing nothing?

Obstacles and Challenges

Like any worthwhile activity, the process of finding and validating market problems is difficult. And it’s time consuming. You need to spend time “outside the building” talking to and interacting with the market. There are a number of other challenges you may face:

  • You may have difficulty getting “permission” to get outside the building to observe prospects and customers. Or you might only be “allowed” to visit customers when helping sales.
  • You don’t have time to visit or talk to customers because you are being pulled in too many directions.
  • You have a technology that people (inside the company) are convinced is a product, but which does not solve a market problem.
  • The amount of learning you get from any individual customer or market interaction is usually small. It requires many such interactions to start to surface the weak signals that indicate significant market problems.
  • There will be a lot of back and forth between your ideas for solutions, problems to be solved, the market you want to attack, and the technology you can bring to bear.
  • It is hard to find customers to interview; you are not sure where to start. This is especially true for startups that don’t yet have a customer base.
  • Some customers only want to talk to you about how existing features can be improved or new features they want. This is legitimate feedback, but often does not reflect a deeper underlying new market problem that will enable you to grow sales or expand your market.

Summary

Every other step in the product lifecycle depends on having important and valuable market problems to solve. Most everything else you might do as a product manager is meaningless if you’re building a solution without a problem:

  • Roadmaps
  • Requirements
  • Strategic alignment
  • Win/loss
  • Competitors
  • Sales
  • Go-to-market
  • Etc.

Remember:

“People pay you for a solution to a problem.”

Therefore, to have a successful product, you need a process for continually finding new problems – both big and small – to solve for your customers and prospects.