An important step you need to take in the ideation phase of your startup is to develop a clear problem definition and hypothesis. What this means is that you need to be able to write down exactly what the problem is that your idea would solve and what is the hypothesis – a proposed explanation based on limited evidence as a starting point for more investigation – that will guide you forward in developing your startup company.
This module will give you practical guidance and a template to follow in order to do this task.
Step 1 – Formulate your initial explanation – or hypothesis – of the unmet needs or problems of a specific market (large group of people) you want to target.
Step 2 – Conduct customer discovery research in order to refine your hypothesis with in-depth insights about the problem area.
Step 3 – Validate your findings with additional research, such as surveys and interviews of target customers.
Step 4 – Prioritize the unmet need (or needs) you believe should be addressed first and evaluate how you can form or evolve a team to develop differentiated solutions to solve the problem(s).
Step 5 – Develop a “persona” (compilation of common characteristics of the target customer) to guide solution development.
This 5-step approach may sound difficult, but it’s not when you take it one step at a time. To help you, the following is a template you can use to write down your problem statement with hypothesis:
When [a target customer is doing something],
we believe that [the target customer with primary characteristics, such as age, title, interest, ability/lack of ability or other defining characteristics]
who want [a specific function or to meet a psychological need]
are dissatisfied by [whatever exists today]
because of [the shortcomings of what exists today]
and/or because of [constraints facing customers].
The following are real examples of a problem hypothesis:
“When purchasing a new records management system, we believe that the head of IT for a big city police department is dissatisfied with offerings from incumbent vendors such as Microsoft or Motorola because such offerings: 1) have a confusing user interfaces requiring lots of end user training and leading to input errors; 2) suffer from long lags in responding to user input, frustrating end users; 3) are not configurable by department IT staff, requiring expensive customization by software vendors; and 4) lack APIs that make it easy to link to third-party applications, requiring time-consuming and expensive system integration work by software vendors.” (For Mark43)
“When buying a used car, we believe that consumers who are unable to gauge a car’s mechanical quality and who lack an acquaintance who can assess quality on their behalf are dissatisfied with private purchase transactions (e.g., via Craigslist), because they: 1) are worried about purchasing a lemon; 2) dislike hassles with scheduling a test drive; 3) have concerns about their personal safety when meeting the seller, who is a stranger; and 4) hate haggling over price.” (For Shift Technologies)
The main takeaway of this module is that you need to define the problem that you plan to solve with your idea for a startup. You need to do research and continually refine your hypothesis. It will then lead you to having a clearer picture of the “persona” of your target customer (who you want to sell to) and the problems you want to solve for them.