The Problem With Problems

A well known, but often overlooked avenue of exploring potential businesses, is to look for problems to solve. Society, mankind and organizations have all sorts of problems they are more than willing to pay someone to solve.

But here is the thing; Despite the staggering number of problems in this world, most entrepreneurs are still chasing ideas.

I wanted to explore why and made a surprising realization.

The experiment.

A couple of years ago I did a little experiment. I posted the following question on a popular business website called HackerNews:

“Ask HN: What problem in your industry is a potential startup?”

The result speaks for itself. As you can read there is a lot of good examples in that thread and the discussions which unfolded afterwards were even better.

Since that specific experiment worked out great, I thought I would try my luck in other communities, but quickly realized, that asking wasn’t just, magically going to be as good. The results were fluctuating but ultimately disappointing.

I tried other approaches too, but they gave me even less. Yet from the HackerNews thread, I was on to something.

HackerNews though, isn’t like any other place. It’s a community of people from a wide variety of backgrounds and working inside, a disparate number of industries. Ranging from designers and developers to musicians, economists, students, MBAs, doctors, traders, scientist and lawyers, they all have one thing in common; They all care deeply about building businesses using technology. That’s why it worked so great with HN and not the other places.

So why is it that media, blogs and communities are filled with business ideas, but not with business problems? The world certainly don’t have lack them and it’s not like we don’t like to talk about other problems. To understand why, we need to understand what problems actually are.

Problems, problems, problems.

There are three main types of problems. Social, human and organizational. For the purpose of this essay the latter that is of special interest to me. The two former are rarely solved by businesses and are often wicked problems that only get's resolved as a byproduct of solving organizations problems.

Organizational problems are problems that exist inside any organization. To understand them you often need to have worked inside of or with them. They are problems like “Why does it take so long to process an order”, “Why is our cash flow bad”, ”Why is it so hard to ship a package”, “How do we keep track of all this inventory”, “How do we find the right candidate”, “How is our competitors outcompeting us on price” and so on.

All problems that organizations deal with all the time.

Hidden problems.

Social, human and organizations problems have what I call hidden problems i.e. problems underlying the obvious solution.

For a social problem like poverty, the obvious solution is to provide enough wealth for everyone so they aren’t poor anymore. The reason why we can’t just do that is because you can’t just create wealth.

The obvious solution to the human problem like “How do I find love?” is to find someone to fall in love with. The problem of course is how do you do that.

For organizational problems the same principles apply as with the two others, but with one important difference; The organizational problems are harder to expose, however they are easier to analyze and solve once found. This is what makes them potentially valuable businesses. They exist within a structure of an organization or a market and allow you to explore their nature much easier. They aren’t available to everyone, but that is why, they are in high demand.

As an example — In order to bill a client, design agencies normally need to track the time they spend on a project. The designers fill out their time-sheets and the agency invoice the client. There are a lot of solutions to that problem like time-tracking software. But inside this hides another more illusive problem; Invoices often gets sent out too late because time sheets aren’t being filled out on time. Time sheets aren’t being filled out, because everyone hates doing time sheets.

It gets worse— Tracking your time make sense when you are billing by the hour, but many agencies today bill per project. So why are they still tracking the time? Because management likes to be able to track the hours people spend on these projects so they can better predict what the price of the next project should be.

Here is the issue with that though — There isn’t any evidence showing this is even possible. And so a lot of time is wasted waiting for the designers to fill out their time-sheets; on a project thats not paid by the hour; in order to better estimate future projects; which there is no evidence is doable. Just because thats how it’s always been.

I know all this because I was working in these agencies for more than a decade and even ran my own for 7 years. Because I was inside the organization I got exposed to the problems, had access to the data and could analyze it. So problems in organizations are especially interesting because they often have more tangible underlying problems that can be turned into businesses once you unveil what the obvious solution is masking a layer or several deeper.

The problem with problems.

These hidden problems are the true gold standard of entrepreneurism and it’s amazing how little discussion there actually is about how to find them. It’s hardly a surprise though since they; as we can see, can be hard to find and I think there are a couple of reasons why.

1) Hidden problems aren’t obvious even to those who experience them every day.

Most people have enough human problems. They are often hired to do a specific job and don’t necessarily think about these problems as something that could be solved. Many just see them as part of the actual process. So to even understand they are problems, require a certain kind of attention, most people simply don’t have. (I have later learned that this is called functional fixedness and is a cognitive bias. Which explain why people sometimes say “Why didn’t anyone think of this before?” — most people simply don’t think like that.)

2) Hidden problems often only reveal themselves over time.

Not all problems are even instantly recognizable. Instead they only reveal themselves over time or through years of experience. This also means that many of these problems require a certain age and experience to even notice let alone understand.Perhaps this is one of the reasons why the average age of a founder is 38 and with 16 years of working experience behind him.

3) There is a disconnect between what kind of problems the young and the old generation experience.

It is often said that “Youth is wasted on the young”. Based on my little spare time study, in this context, it seems truer than ever. The youth have all the energy and time to spend, no obligations and no financial worries. But they have very little life experience and exposure to these hidden problems. So what they end up solving are the kind of problems primarily young people have. This certainly makes for some very amazing products, but I can’t help feeling a little disillusioned. The amount of time and energy that goes into fun, but ultimately useless ideas, rather than fixing some of these hidden problems is mind-numbing.

On the other hand, the older generations are exposed (aware or unaware) to a lot of these hidden problems. They have experience on how to solve them because they understand them. Yet by that time, most of them have to provide for a family, pay of their mortgage, tuition fees, healthcare, yearly vacations and the 3 cars. They also often lack the imagination for how to solve things in a new technological paradigm.

So I now realized that there is a potential goldmine of problems we simply don’t know of, because the people who are exposed to them aren’t connected with the people who have the opportunity and creativity and energy to solve them.Which begs the question:

Are the old and young generations wildly underutilizing each other as resources?

Think about it. When you reach 35 in Silicon Valley you are considered an old timer. I have heard about young people, discussing whether they should hire someone because he was over 30. Their concerns? — given his high age could he fit into the culture. There is no doubt that being young in a startup has it’s advantages, but it certainly also come with a lot of disadvantages.

There is a lot of wasted energy, which could have been put to better use if only there was better way to unite experience and young creativity to solve these problems. Which brings me to my final observation.

Perhaps the real power of diversity in business isn’t hidden in gender, race or education, but in age. I think thats an idea worth spreading.

This essay was originally posted on my personal blog Black&White