Solutions looking for a problem

Entrepreneurs like to solve problems and improve things, which often leads to "solutions looking for a problem". It is important to remember the difference between Consumer problems and Enterprise problems. Entrepreneurs fall into the "solution looking for a problem" trap when they try to solve problems from a technical perspective and don't completely understand the business aspects. 

I have found that readers enjoy the "questions for entrepreneurs" section of my stories so I will put them right up front, and follow with the story.

Questions for entrepreneurs

• How did your potential customers survive all these years without your product?
• Have you or your team worked in this space and experienced this problem?
• Who is your competition and how will they react to your new approach?
• Will competitors lower their price or copy your idea to knock you out?
• Who is your customer and how much are they willing to pay to solve this problem?
• Have you showed a prototype to potential customers?

I have talked to hundreds of entrepreneurs over the years about new ideas and starting a company.  I have found that when they have worked in the industry and have lived the problem they are trying to solve, they have a much better shot at success. They understand the problem, who is effected by the problem, what the alternatives are, who the competitors are, what their weaknesses are, who the buyer is, who the approver is, the cost impact of the problem, and the reasonable price for the solution. In effect they have done their market research by working in the marketplace and experiencing the pain.

Entrepreneurs who have a deep understanding of technology can dream up interesting ways to apply the technology to new problem areas. They make perfect sense, but often miss the mark in the marketplace because they only understood the technical problem, not all the other aspects. They do market research, but without consciously knowing it, they end up asking questions that only support their original assumption.

The other obvious mistake entrepreneurs make is not anticipating how the competition will react to their entry into the market. How long do you think it will take for them to copy your idea, or even improve upon it? Less than you think.

I talked with a start-up a few weeks ago who had an interesting technical approach to theft detection in retail stores. He utilized the existing video feed from  surveillance cameras and used software algorithms to compare the video to the cash register feed in real time. He could compare the number and size of items passing through the video to the items being recorded on the cash register stream. The software could detect abnormal movements and gestures in the video and compare them to the cash register stream to detect problems. Years ago I worked in a research lab that did advanced video recognition so I was interested in the approach. This company had solid technology, more than I will get into here, but I could see the potential issues pretty quickly.

This company had a great technical approach to the problem of theft in retail stores, but they had no clue about the business aspects of the problem. He was about to fall into the trap of a solution looking for a problem. If he had worked in a retail store chain he would have known about all the other approaches to theft detection, how effective they are, how much they cost, and how happy the stores are with the existing approaches. He would have known how store clerks already "game the system" and could "game" his new system too.

When I asked him if he had talked to any security managers at retail stores, he said no, he wanted to wait until the product was completely done and could show off all the features that solve the problem. I will spare you the rest of the story, it goes downhill from here. If he had shown an early prototype to potential customers he could have gotten early feedback that would have improved the product immensely.

Consumer problems are a little easier to understand because we are all consumers and have probably experienced the problem. New technical approaches often work better for Consumer products than enterprise products. But, consumer marketing is a huge challenge for technology companies. Examples of successful new technologies for consumers include; eBay, Skype, Napster, AltaVista, NetFlix, iPod, etc.

Consumers are quicker to try new technologies and adopt them. Consumer make impulse purchases. Consumers like to be the first to try new things. Enterprises are more conservative and move slower, but tend to buy large quantities that get rolled out to lots of employees.

So, when I see a start-up focusing on a new technical approach in the Consumer space I ask a different set of questions than when a company is trying to penetrate an Enterprise market. Entrepreneurs should remember this distinction or they could end up in the "solution looking for a problem" trap.

Have you had experiences you would like to share? Leave a Comment and lets start the discussion.

Comments

[Richard Cunningham]

Twenty years ago I promoted a solution looking for a problem. It looked very much like MS-Office. It had WYSIWIG word processing, spreadsheet, graphics editor, personal database and e-mail, all within it's own windowing system. So technically, it was way ahead of it's time. Applix, the developer of the product, had channel relationships with IBM, DEC, HP and Sun. Prospective customers loved the demos.
What could go wrong?
The product cost too much to own. That is, it required workstation hardware, connected with (then) expensive networks, supported by a team of high salaried systems administrators.
The Applix management team had successful experience developing an office automation product, but underestimated the *total* cost of ownership.