Now that you understood the big picture of the industry, and you chose a point to enter the market, you need to understand the need or problem that your clients have and that you will try to solve. Building your business around your customer and their needs can be difficult to master, but it’s one of the most reliable way to build a business and to scale it. Always start with a problem that you identify in a customer group. To really understand how to solve it, first you need to learn how to find the root cause of a problem?
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In my past 10 years as an entrepreneur, one of the most important lesson that I learned is: Always start with the problem or need of you customer! You are trying to innovate and create Value Added for your customers, therefore they are the ones that know better.
How to understand your customer?
- How the problem that you want to solve affect their lives?
- When the problem appears?
- Why the problem appears?
- What solution did your customers find to solve it?
- What pain points do they have?
- What sacrifices do they make in order to move forward?
If you don’t have yet customers, try to start a conversation with the customer of your future competitors, and try to find the answers to the questions asked above.
Try to resist the wish of starting from the idea. If you are planning to build a sustainable business, you need to put the customer’s needs in the center of all of your efforts.
What are the customer needs that your business wants to solve?
A need is the prime motivator that determines a customer to purchase a product or service. You should develop a deep understanding of the problem that you are trying to solve and of the customers you are trying to serve.
For better understanding the psychology behind human motivations, the way we are reacting to different needs, and how these needs are changing over time, we need to go back in 1943, when Abraham Maslow, an American psychologist, first proposed the “Hierarchy of need”, known these days as “Maslow Pyramid”.
Maslow Pyramid:
Maslow proposed that people have three different categories of needs:
Basic needs
1. Physiological needs – food, water, rest, a place to sleep, a house.
2. Safety needs – security, safety.
Psychological needs
3. Belonging and love – intimate relationships, friendship.
4. Esteem – prestige, feeling of accomplishment, recognition.
Self-fulfillment needs
5. Self-actualization – creative activities, achieving your potential, “leaving something behind”.
Usually, the most common form of representing this needs, are in a pyramid shape, with the most basic needs at the bottom of the pyramid. The idea behind this representation is that people need to satisfy the needs at the bottom of the pyramid first, before tiring to satisfy the ones at the top of the pyramid. First, we need to satisfy our basic needs as food and water > then we will prioritize safety and security. After that, > relationships and belongings, and in the end we will have > Self-actualization needs.
In order to be preoccupied with the needs in the upper part of the pyramid, people first have to completely satisfy their needs from the bottom of the pyramid.
1. Physiological needs
Are at the base of the pyramid. These are the biological needs, usually linked directly with our survival. Maslow present this needs as being the ones that a person need to satisfy first, before being motivated to chase the needs from the above levels of the pyramid.
It is understandable why people will be preoccupied first satisfying their basic needs, like food, water, shelter, sexual needs or sleep, before thinking about status and accomplishments, for example.
2. Safety needs
Will become a priority once physiological needs are met. On this level we have needs like: job security, economies, insurance, the feeling that you are not in danger of natural disasters or wars.
These needs are very common for children. Most of their daily needs are at this level of the pyramid, dominantly being the security needs.
3. Love and Social needs
Being loved, appreciated, having friends, or being part of a group, are the need that all humans have, at least in our modern society. You can see the effects of these categories of needs by looking at club sports, supporters of a team, religious groups, online communities. Is it true as well for smaller groups like families, friend or intimate partners.
4. Esteem needs
This are the respect and appreciation that a person receives form a close member of their social groups. Maslow presented two types of needs in this subcategory. The low-level, that are needs reflected on others, like the need to be respected or appreciated by your colleagues, the members of your family or friends. The higher level, in which we are talking about self-respect and self-appreciation. In this cases, the needs are satisfied by ourselves, if we are filing confident, competent, independence or freedom.
5. Self-actualization needs
Means that we are utilizing and developing our potential, perusing goals, finding the right partner. In order for people to try to satisfy their self-actualization needs, it is not enough to satisfy the ones on the lower level of the pyramid, but they need to master them.
Self-actualization can be described as a value-based system. To reach this level, we need to satisfy our needs, starting from the base up, one by one. Just after we will satisfy all our needs, we will focus our energies and our attention to fulfil our true potential and create new things.
Why do you need to understand this classification in order to learn how to find the root cause of a problem?
First, it is important to understand where to classify the need of your customer on the Maslow’s Pyramid. You will need this information to better understand what messages to use in your communications, what contextual picture to use, and what tone you need to use.
Second, we need to understand what are the external factors that can influence the position of your customer and their needs. The basic needs are usually constant, they are less affected by fluctuations in market conditions. On the other hand, the needs at the top of the pyramid are more affected by recessions and fluctuations in the market.
For example, the need for bread will be somewhat linear over time. On the other hand, the need for caviar will vary, depending on how the general markets are performing.
How to create a problem statement?
To create a proper Problem Statement, you should pay attention to the following things:
- It should not imply a cause.
- It should not imply a solution.
- Be specific.
- Quantify the problem.
- State the effect.
An ideal problem statement should have the following features:
- It describes the difference between the actual situation and the desired one.
- It does not offer a proposed solution.
- It does not attempt to diagnose the problem, nor assign blame.
- It is objective, and data based.
- It keeps the company goals in mind, at all times.
- It is measurable, not qualitative.
Problem Statement template – essential for understanding how to find the root cause of a problem!
You can create a proper problem statement, following the template below:
… who?; … were?; … when?; … What?; … why?; … How many?; … how frequent?; … how much?
In order for the process to be complete, once you have the final statement of the problem, you can set a goal.
To do it right, a goal must be defined using the SMART (specific, measurable, attainable, relevant and time-bound).
How do you know if your goal is defined in a smart way? Answer to the following questions:
- Specific – what will you achieve?
- Measurable – What metric will you used to measure your success?
- Attainable – Do you have the right skills and recourses to achieve this?
- Relevant – Is this goal relevant for your team/organization?
- Time-bound – What is the deadline for achieving this goal?
Understanding the problem – 10 questions that will help you better understand the problem/need and the market context.
After you found out the how to classify the need that you are trying to solve on the Maslow’s Pyramid, you need to define the problem. To do that, you can start by find the answer to the following question:
- Is this problem recurrent?
- When this problem occur?
- How many people have these problem?
- The need/problem persists all year around, or it is something seasonal?
- Where do we find this need in Maslow’s Pyramid?
- Is it a need/problem that is more present every day, or is something that is in decline and fewer people have this problem?
- What solution to this problem did people find until this point?
- How much do they pay at the moment to solve it?
- Who else is working to find a solution to this problem?
- Why do you think you can make it better, cheaper, or faster?
Study Case – for understanding how to find the root cause of a problem.
I will use as an example the Strategy Kingdom platform.
“Entrepreneurs (who) that want to build a sustainable business (what), especially when they are at the beginning of their career (when), they discover that building a business is a very complex process(why), that requires a lot of knowledge and tools, in order to cover all the area that need to be address day by day (how often).”
Define Goal
Help 1000 entrepreneurs/year (specific and time-bound) worldwide, building a sustainable business (specific), by providing them a step-by-step strategic framework (relevant), accessible online, free (attainable) .
How to find the root cause of the problem using Fishbone Analysis?
A fishbone diagram is a structured way of analyzing and finding the root cause of a problem. Is it a visual representation of the cause and effect of a situation. is one of the most used tools for finding the root cause of a problem?
The head of the fish represents the problem, or the effect. The bones, represents the big categories from where the potential root cause may occur. The smaller, horizontal bones, represents possible contributing causes.
To dive deep, you need to use the 5whys Technique presented in: Where to start as an entrepreneur? You need to ask “Why?” at every potential cause. This way, you will go to the root of the problem.
This is a team effort, and in order to have the best results, you should treat it as a brainstorming session. You can use the following guidelines for better results:
- Prepare a white board.
- Draw a fish, like the one in the picture above.
- Agree on the problem statement (using the steps above). You will write down the problem statement on the head of the “fish”.
- Brainstorm the main category of causes that can contribute to the general problem. Ask each team member to contribute with at least one cause.
- Dive deep in each category and find the causes that are generating the problem.
- Ask “why?” at least 3 times for each cause to really understand it.
- Make a top three causes, that can lead to the general problem.
- Debate and try to weight each cause, until you agree on the one that has the biggest impact in the desire outcome.
Conclusion
Following the above process, you will dive deep until you really have a good grasp on the problem that you are trying to resolve. Doing so will allow you to see new perspectives, and to understand the real root cause of a problem. This way, you will avoid concentrate your resources on trying to solve the effects of a problem, and not addressing the real root cause of the problem.
If you feel that you understood how to find the root cause of a problem, you should start implementing this. Make this exercise with your specific case and try to apply what I’ve shared here for your situation.
As always, if something is not clear, contact us, and I will try my best to help you find the answers to your questions.
Additional resources and Bibliography
A Theory of Human Motivation – by Abraham H. Maslow
Motivation: Biological, Psychological, and Environmental – Lambert Deckers.
Wikipedia – Maslow’s hierarchy of needs
