If you want to create a small business or a world-changing startup as an entrepreneur, a critical “mind” shift you might need to understand is that creating a business or startup is not about ideas but about solving problems that will impact either large markets (people) or disrupt large industries (companies). You need to look for “good” problems that consumers would be willing to pay for the solution. If you’re not working on good problems, or just spinning random ideas, you are really wasting your time. Finding good problems is exactly what serial entrepreneurs do.
Serial entrepreneurs are not looking for ideas. They look for concrete problems, hopefully in large markets, that cause potential customers significant pain; problems with solutions for which customers would be willing to pay. Serial entrepreneurs know they have an interesting problem when it meets these four key criteria:
– Solving the problem has the potential for significant financial impact.
– The marketplace is large or growing significantly.
– A solution for the problem is actually possible.
– The problem and its solution create a business model that satisfies both customers and entrepreneurs.
Serial entrepreneurs follow Thomas Edison’s advice regarding innovating a new solution to a problem: “I don’t want to invent something that no one will buy.” They understand that innovative technology or a new service is just a means to an end. This leads to the two ways serial entrepreneurs think.
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One: In preparing to understand the problem, serial entrepreneurs do not rely solely on themselves to define the problem and its unknowns. Part of their preparation includes identifying the people they need from the various “expert” domains that will help them completely understand the problem. Then, with the help of their “virtual team,” serial entrepreneurs define what they don’t know and what they need to know. Some serial entrepreneurs use the technique of asking the “why” question five times, “peeling the onion” to understand root causes of a specific problem. Once they have defined the initial unknowns, they start the work of gathering and synthesizing information to eliminate the remaining unknowns. This process of elimination allows them to move more closely to a “known” that could be the solution.
Two: Serial entrepreneurs gather data from a number of perspectives and then assimilate this information across multiple market or industry domains to understand the problem completely. They think holistically to “connect the dots,” the specific pieces of information associated with understanding the problem. But, in order to connect them, they first must “find the dots.” The task at hand is all about discovery. In their form of discovering, the real challenge is to view the problem from multiple perspectives, or domains. They think from the technical, customer, market, and competitive perspectives, blending information from each into an overall, holistic understanding of the problem and the various contexts in which it resides. Problems are viewed as more than technical or engineering challenges. A problem is an interconnected “hub” where all the information that surrounds it helps to identify potential solutions.
Let’s review the four possible ways in which you might find a good problem.
Using Strategy to Identify Problems: Sometimes serial entrepreneurs, like inventors, start investigating a problem area because the performance capabilities of a particular technology have reached a plateau, while performance demands keep increasing. To move to the next performance level requires shifting to a different technology. Initially when the first wireless routers and cards were being developed, the costs were too high to interconnect devices to each other using this wireless technology. That’s when Bluetooth was created.
Reframe Existing Problems: Serial entrepreneurs have an uncanny ability to reframe existing problems. By immersing themselves in a problem, they see it through a different lens that allows them to capture aspects that had been previously overlooked. For example, sales are down. Why? Salespeople did not meet their quotas. Why? We ran out of inventory. Why? We only have one distributor in that region. That is the problem. You could use the same scenarios to understand the rise of organic dog food and craft beer.
Work Backwards And Connect the Dots: Serial entrepreneurs may work backward from a long-term objective to discover how tackling a series of short-term problems might allow them to ultimately produce, many years later, that long-term vision. Steve Jobs had a way of “connecting the dots” looking forward (to see the eventual cloud) from the rise of early smartphones to then logically step Apple “backwards” to develop the iPod, iTunes, the iPhone, the iPad to Apple’s cloud services today.
Use Other Domains for Insight: Serial entrepreneurs find the right problem by gathering insight from across multiple domains. It’s a real skill to look across industry, market and trend domains to see where they will intersect. Ring, an initial video doorbell replacement product eventually was cross-connected with security, mobile applications, smartphones and a cloud service. Essentially nothing new from an innovation point of view (wireless, camera, mobile application, proximity sensor) but now inter-connected to a platform with the aspect of security and notification that gave customers peace of mind. They are not disrupting the doorbell industry. Ring is seriously disrupting the home security industry.
As serial entrepreneurs refine their understanding of the problem from each perspective, they redefine their objectives and enhance their support network. Then, when they have gathered sufficient information across all relevant dimensions, serial entrepreneurs start to make connections across these disparate types of information that others just do not see. Their special capability to logically and methodically synthesize information allows them to reach the desired “aha!” moment needed to solve the problem. That is when they begin the refine a potential solution.
The serial entrepreneur’s journey is not emotional. It’s about studying large markets, industries and the trends that potentially sweep across each other to create problems where the right solution will either grow or disrupt an industry. If you want to build a good company, look for a good problem.