Avoid Solutions in Search of a Problem!

In the fast-paced world of business, companies often invest heavily in developing new products based solely on their technical capabilities or vision, without considering whether they solve a real problem. This approach can lead to a situation where the company has invested a significant amount of resources and effort into developing a solution that ultimately has no market demand or user value. This scenario can be a significant problem, not only for the company's reputation and revenue but also for venture capitalists who invest in such ventures.

In this article, we'll explore how to avoid this trap and develop products that meet real needs and solve real problems. We'll delve into the importance of identifying the real problem before developing solutions and highlight the value of conducting thorough research, engaging with potential customers, and validating assumptions. We'll also share practical tips for identifying problems, validating assumptions, and developing solutions that align with the market's needs.

By following these steps, companies can avoid developing products that don't have real-world applications and increase their chances of success in the market. This approach can help companies build credibility with investors, strengthen their reputation, and increase revenue while providing value to their users. Let's dive in!

Build customer relationships early on

In the world of business, it's common for companies to keep their ideas a secret until they are ready to launch their products. However, this approach can be a big mistake. Building relationships with potential customers early on is essential to validate your ideas and ensure that your product aligns with market demand. You don't even need to have any code developed to do this - a well-styled PowerPoint can do wonders, allowing you to step customers through your thinking process.

To build effective customer relationships, start by interviewing potential customers to gain an understanding of their problems and needs. This step is crucial in ensuring that your product solves a real problem that potential customers are facing. Once you have identified the problem, you can use your PowerPoint presentation to demonstrate your proposed solution and get feedback from your potential customers. By doing this, you'll be able to validate your assumptions, refine your product, and create a valuable customer base before you even launch your product.

By building strong relationships with potential customers early on, you can ensure that your product meets market needs and demand. This approach can also help you to build credibility with investors and increase your chances of success in the market. So don't be afraid to open up and engage with potential customers - it could be the key to your company's success.

Early customer involvement is a shortcut to future revenue

Involving your customers in developing/validating your product ideas will also lead the initial group of customers who try it out which referred to as "Alpha" or "Beta" customers. These individuals are typically early adopters who are eager to try out new products and provide feedback to the development team. This additional feedback can be incredibly valuable in helping the team refine the product and address any issues or concerns that customers may have.

Furthermore, these early customer relationships can often translate into long-term business relationships. By cultivating a positive relationship with these initial customers, companies can build a loyal customer base that will continue to use and recommend their products or services to others.

Having a pool of Alpha and Beta customers can also help companies quickly validate that their product development hit the mark for their customers. By getting feedback from these early adopters, companies can test the implementation and adjust their product development strategy accordingly. This can save time and resources in the long run, as companies can avoid investing in features or products that customers don't want or need.

In summary, building strong relationships with Alpha and Beta customers is a critical component of successful product development. By leveraging the feedback and insights of these early adopters, companies can build better products, establish a loyal customer base, and ultimately drive business growth.

Field of Dreams is not a Strategy

Build it and they will come (the mantra from the movie “Field of Dreams”) is not a strategy for startup companies.?As a matter of fact it may cost you your company and end up having wasted money, resources, and personal “capital”.

I know, Steve Jobs is on record having said “It's not the customer's job to know what they want", but is an incorrect portrayal of how one should approach the involvement of customers.?It is correct that customer don’t design your product, but they do know what makes their life easier and what problems they have.?So the secret is in how you ask the questions. Match this with your domain expertise and you have a winning product strategy.

The State of Maryland got it right

Amazing is that a governmental agency had figured it out.?The Maryland Department of Business and Economic Development's (DBED) Technology Development Corporation (TEDCO) required companies to have talked to at least 100 potential customers as a condition for receiving funding through its Maryland Innovation Initiative (MII) program.

The MII program, which was launched in 2012, provides funding and support to Maryland-based companies focused on bringing innovative technologies to market. The program requires companies to demonstrate that they have conducted customer discovery and validated their business model before receiving funding.

One of the key components of this validation process is speaking with potential customers to understand their needs and pain points. By requiring companies to talk to at least 100 potential customers, TEDCO aims to ensure that companies have made sufficient customer discovery to validate their business model and demonstrate a clear path to the market.

This requirement reflects the importance of customer feedback in the development of new technologies and the need for startups to validate their business ideas before investing significant time and resources into product development. By requiring companies to conduct customer discovery as a condition for funding, TEDCO is helping to ensure that Maryland-based startups are better positioned for success in the long run.

Where to go from here?

It is often cited that around 80% of startup companies fail, although the exact number may vary depending on the industry, geography, and other factors. This statistic is based on research conducted by various organizations. Approximately 20% of new businesses fail in their first year, 50% fail by their fifth year, and 70% fail by their tenth year.

There are many reasons why startups fail, including a lack of market demand, poor business model, insufficient funding, competition, and management issues. Insufficient funding can also be rooted in lack of market demand and poor business model both indicators that the early engagement with customers was missing.?A good way to mitigate these problems is seeking advice and mentorship from experienced entrepreneurs and industry experts who can help startups navigate the challenges of launching and growing a new business.

And as a final word, while this article reads with a strong focus on B2B business ventures, it also translates well to B2C, but coming up with concrete answers of market validation is most likely more expensive.?Ask me about the company that helps with consumer validation in a 1-step process.