Startup Design: Problem-Solution Fit

"You can’t build a successful company without first building a successful product, and you can’t build a successful product without first achieving problem-solution fit.” Marc Andreessen

FarmConnect (not real name) was a Nigerian agritech startup founded in 2017 by an agricultural expert and her team. They aimed to tackle the significant problem of inefficiencies in the Nigerian agricultural supply chain, particularly the lack of access to markets for smallholder farmers.

They got the problem right and developed a problem statement. They correctly identified the pressing issue of smallholder farmers struggling to sell their produce at fair prices due to inadequate market access, middlemen exploitation, and limited logistics infrastructure.

However, they started having issues when as they developed solutions to the problem. Instead of considering the people, they focused on the technology they wanted to build. They developed a digital platform to connect smallholder farmers directly with buyers, eliminating middlemen and increasing profit margins for farmers. Here are some of the mistakes they made while developing the solution:

- Focusing too much on the tech aspect, neglecting the complex social and cultural dynamics of the agricultural sector.

- Assuming that farmers would readily adopt the platform without sufficient education and training.

- Failing to establish robust logistics and delivery systems to ensure efficient produce transportation.

- Not adequately addressing the issue of limited internet connectivity and digital literacy among rural farmers.

There were assumptions with their solutions that they never took time to validate. They just wanted to build something and get it out there. Possibly raise funding and feel more like successful founders.

Despite initial enthusiasm, farmer adoption rates were low due to the platform's complexity and lack of trust. Also, Buyers were hesitant to use the platform due to concerns about produce quality and consistency. The biggest part of the solution that wasn’t factored in was the logistics and delivery challenges, which led to delayed or spoiled produce, damaging the platform's reputation. As a result, they struggled to scale and sustain operations, eventually shutting down in 2021.

What did they do wrong? They correctly identified the problem but failed to develop a solution that effectively addressed the complex needs and constraints of smallholder farmers and buyers. The startup's overemphasis on technology and neglect of social and cultural factors, logistics, and education/training led to its demise.

Founders need to understand that when solving a problem, they must look at the diverse part of the impact of the problem. Every problem comes with multiple smaller problems that have to be addressed for the startup to effectively solve the major problem its out to solve.

Understanding the problem is crucial, but equally important is developing a solution that considers the intricacies of the context, user needs, and local dynamics. A well-designed solution must address the specific pain points and constraints of the target audience to achieve success.

Ask The Right Question

Someone once told me, “Assumption kills faster than aids.” That you attained market-problem fit doesn’t necessarily mean that your solution will be what the customers need. Assuming a solution is needed without validating it with your potential customers can lead to creating a product that the market doesn’t need.

When you don’t ask questions, you fall into the trap of thinking that you know better than your customers. When founders assume they know what their customers need rather than ask and validate it, they become closed to feedback thereby missing the golden opportunities to improve and adapt.

Founders who do not ask questions, assume a lot and are inflexible. Even when there is a resist to the solution, they continually pour more money into marketing to push it down the throat of the customers. Assumptions lead to misallocation of resources in the wrong place, marketing strategies, and technologies.

You have a 360-degree review and overview of the problem so you can solve the right problem.

To achieve Problem Solution Fit, where are some questions you need to ask:

1. What Job Do They Want Done? Customers hire your product to achieve something. You need to know what exactly they want to achieve using your solution. If you don’t know what they want to achieve, you may develop a product that doesn’t help them at all.

2. What Is Their Need? You need to know what their need is. A customer needs is a statement that describes how a customer measures success and value when getting a job done. You have to know what the customer values. Customer needs are broken into three: social, functional, and emotional needs. Your solution should address all three of these needs

3. At What Levels Does the Problem Impact Them? In studying the problem, you need to know the various impacts the problem has on your customers most especially the limitations and restrictions the problem places on them. You should know what they want to achieve or do that the problem limits or restricts them from achieving and doing

4. What Other Factors Relate to the Problem? This will enable you to understand the system or infrastructure you will need to create or that needs to be on the ground to deliver your solution. This will determine the partnerships you need to develop, the channels you need to use and the technology (resources) to leverage to deliver your solution. For instance, Tesla has to consider creating charging stations in developing its electric cars or finding a partner who already has that infrastructure.

5. What are the root causes and effects of the problems? From the root causes and effects of the problem, you can develop the features that will go into your products.

Value Effect Matrix

While working on a business model and products for different companies and for ourselves, we noticed that founders make mistakes by not knowing in advance whether what they are working on is exactly what their customers want and are ready to pay for it.

To enable founders to validate their problem-solution fit, we came up with the Value Effect Matrix. It’s a concept that says that resources flow from a place of low importance and value to a place of high importance and value. All founders need to do is develop a solution for the problems of their customers, they should get to know which problem is important and high value to their customers.

I realized that when something is important for people, they will want it by all means. But that doesn’t mean they will want to buy it or pay premium for it. In order for them to pay for it, it has to be high value. We all want to have something that is both important and high value to us.

When you do this right and understand what is important and high value to your customers, you can craft it into your marketing message and easily convince, inspire, and influence your customers to do business with you.

The Value Effect matrix helps you to know the specific problem you need to focus your time, resources, and effort to solve for your customers in order to get the maximum return. You must not leave it to chance.

1. Low Importance-Low Value: Don’t build a solution for a problem in this quadrant. It will fail because there is no market for it. People in this quadrant are the laggards.

2. Low Importance-High Value: They people will be willing to pay for your solutions in this quadrant but it's not that important to them. Expect customers at this level to make purchases once. They will need a lot of convincing to buy from you. You can’t build a profitable and scalable startup on this. Through marketing, you can convince these people to buy. They are the early majority.

3. High Importance-Low Value: They want your solution but it's not their priority and they won’t put in their funds to buy it. You may market to these people and all they will tell you is that they will get back to you. Most startups focus on people in this quadrant. However, people in this quadrant will need to know that they will get exactly what they want from your solutions. They are the late majority

4. High Importance -High Value: People in this quadrant are the first you need to focus on. They are your early adopters.

When you do your analysis right, you will find the ideal people to solve problems for and market to. These are the people who will help you build your startup.

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