"BEFORE YOU BUILD THE RIGHT SOLUTION, YOU HAVE TO UNDERSTAND THE PROBLEM FIRST." - ASH MAURYA
The more you know about the people with the problem, the better you will be able to judge the value of that market.
In gathering the information necessary to make an objective and informed assessment of the commercial potential of an idea, it can be helpful to consider and answer a series of deceptively simple questions:
While these questions may appear simple, even simplistic, they do help focus attention on key factors which underpin an idea’s potential commercial success, such as, market identification, market demand, customer identification and quantification, and finally, sales.
Having been confronted with a problem, some ideas come from resolving that problem, but other ideas may be stimulated by any number of other factors. Even if your idea was conceived to address one particular problem, the solution you have devised may address several other problems.
In 1942, a team was set the challenge of developing a clear plastic material which could be used to make gun sights. The resultant material didn’t work particularly well as a gun sight material, but resolved problems as diverse as:
The solution was cyanoacrylate, more commonly known as superglue.
"THE TEST OF AN IDEA IS IF CUSTOMERS WANT IT AND ARE THEY WILLING TO PAY FOR IT." - PETER F. DRUCKER
This problem might be obvious, like being on a journey and coming across a river with no bridge, it could be quite a slight problem, like not being able to find the kind of socks you like in the clothes store, but considering an idea in terms of the problem it solves, starts you along the road of assessing the commercial opportunity for your idea.
It may appear frivolous to consider a choice of socks as a problem, but if you are able to identify the market where that problem exists, and if there is money being spent to resolve that problem, then there is potential for commercial exploitation of that idea.
Create a list of the problems which your idea solves. This list may only contain one problem, but if there are more, please ensure that each problem is clearly identified and distinct.
Core problems: 1. Bicycles left in public places are prone to theft. 2. Theft of bicycles are on the rise in certain areas. 3. New materials and designs have led to a rise in more expensive bicycles on the road. 4. There is a limited number of secure facilities for storing bicycles 5. It is currently not possible or difficult to track bicycles. 6. There are no solutions available for specifically tracking bicycles.
The more people you can show are affected by the problem, the bigger the potential demand for a solution and greater the business case for your idea.
It is important though to be specific. It is not enough to say that "anyone" could be affected by the problem. The same problem may affect different people in different ways and so it is important to distinguish the different groups.
It is possible to say that the problems associated with the theft of bicycles affect anyone who owns a bicycle. However, this can be broken down into more specific groups of customers, such as:
Who is affected by the problem for which your idea is the solution? Using the worksheet provided identify the groups of customers who experience the problem(s) which you have identified.
Describing known groups of people, or people with certain interests, characteristics, or who pursue certain activities can help to define this list. (References to people in this context can also mean companies or other organisations which experience the problems which your idea solves).
For each problem listed and for each group of customers identified (in Exercise 1 and 2), attempt to quantify the number of people who have that problem. Initial research may be undertaken on the internet, however a list of useful resources has also been provided below that may help you in undertaking this research.
Extrapolating the answer from known data - If you are having difficulty in assessing the number of people who have the problem, it can sometimes help to consider the groups, types and numbers of people who do not have the problem.
The resulting numbers of people may be approximate, but the justification and arguments for identifying the people as belonging to this group should be strong and clear. A strong argument that a smaller group of people will be interested in your idea may have greater potential than a weak argument that a large group will be interested.
If the problem is significant, there is a greater likelihood of it being addressed, and resources being dedicated to addressing it. On the other hand, if the problem is little more than an annoyance, it may be relegated to the side-lines, and simply avoided or ignored.
In order to be comfortable that a potential market will actually hold a demand for your services, there should be a significant ‘pain’ element in the problem you solve, which would give you confidence of the commercial potential available in solving that problem.
For each group of people you have now identified who have the problem you solve (Exercise 2), make an assessment of how bad the problem is for them, ranging from a problem which must be addressed immediately to a problem which the person is willing to live with. Remember this is an assessment of the demand for a solution to the problem generally, not the demand for your idea specifically.
It will help you to have a clear appreciation of the proposition, but it will also help you to turn your idea into commercial reality. Whether you are speaking to partners, colleagues, suppliers, advisers, funders or customers, simply describing your idea (the solution) is not enough. You will need to catch their attention, spark their interest and be able to convince them of the value of your proposition.
You have to show that there is a real problem, that it is big enough and that customers are willing to pay money to have it solved.
To grab someone's attention, include an impactful, "shocking" statement about the problem. This should be made up of real facts and statistics you have come across in your research.
Referencing an external source will help you in validating the problem. Do make sure though that whoever you are referencing is a credible source.
Providing numbers helps put the problem in perspective and makes it "more real" to others.
Based on the exercises undertaken above as part of Module 2, you should have the information and knowledge to develop a statement about the commercial opportunity (the problem your idea solves).
The commercial opportunity: "One million people suffer food borne illnesses in the UK each year, costing £20,000 in hospital treatments (burning problem). Food borne illnesses results in 500 deaths in the UK alone each year (shock value), and according to the Food Standards Agency (third party validation) costs the Government £1.5 billion (quantifying the problem)."