How do you identify and validate business problems? (2024)

Before tackling any problem, it's essential to immerse yourself in its context and scope. This entails engaging with stakeholders, collecting diverse data, and analyzing existing systems and external factors. By defining boundaries, assumptions, criteria, and constraints, you not only narrow your focus but also pave the way for effective problem decomposition and solution evaluation, ultimately ensuring that your problem-solving efforts are well-informed and aligned with your goals.

Business problems come from (in order) people, processes, and technology. Considering that people create the latter two, we are, in fact, the cornerstone of our problems. This means that to understand the business problem and its context, we must understand people. It's like in that phrase: "Do not play the cards; play the player."After you acknowledge stakeholders, their attitude toward the change, and their level of influence, you may proceed with gathering information about the change. Without the key step, the initiative might bump into lots of issues down the road.

Defining a problem shouldn’t be really difficult. Why is that?A problem is a gap between the current state and the goal ( Company, Department, individual, etc). Therefore, you need to look at the company’s goals/targets and understand how your department will help achieve that goal. With that information, you need now to compare your current results vs the results required to achieve that goal.The difference is your problem. Solving the problem is important because if you do it, the company is closer to its goals or remains capable of ( regulation requirements for instance).You can't act on the problem itself. It is a result of something, like a process. But the definition makes clear that it is the only thing that needs change.

Root Cause Analysis (or RCA) is my favorite technique. It's hilarious how many experts dive into developing the solutions without or with only a surface-level understanding of the problem or an opportunity. I always teach my peers not to be satisfied by simple answers and to push further. Yes, sometimes it might be a little annoying to stakeholders. There were cases when I had fights with them, escalating the "he asks too many questions instead of doing things" question to my superiors. In a few cases, they were correct, truth be told, and I learned my lesson. But in 99% of situations, it was correct to ask for more information, and we got along, as clients saw that my questions helped them understand their ideas even better.

Upon first learning about the issue, what we usually encounter is a list of observable symptoms. Conducting a Root Cause Analysis (RCA) not only discovers what really generates symptoms, but also might unveil that there are multiple problems or no problem exists at all (in certain cases, the only "issue" could be a lack of awareness that the symptoms reported are actually within the boundaries of what is expected).While implementing RCA itself might require a certain level of effort, it can prevent organizations from wasting resources on addressing non-existent problems. It also prevents incorrect requirements to be forwarded to the decision making process.

To identify and validate business problems in a concise manner:1. **Listen**: Pay attention to feedback from customers, employees, and stakeholders.2. **Analyze Data**: Look at performance metrics to spot issues.3. **Define the Problem**: Clearly articulate what the problem is.4. **Validate**: Confirm the problem's significance with stakeholders and through data.

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There is a good template I have been using for years to define the business idea in one sentence:%product name%is a%essential description, like "search engine" or "social media platform"for%target audience%which is going to%brief description of key issues and goals to fix them%by%brief description of key solution elements which should fix issues%For example, "TikTok is a social media platform for people from 10 to 40 which is going to provide content creators with the place to share and promote their ideas in the form of full-screen entertaining videos". Something like this)

Careful here. A problem statement is how we describe the current state vs the goal. This can't always be SMART. Eventually, you'll find it's impossible for N reasons.The problem statement must indicate, in clear terms, why it is a problem: it is because the goal is X and we are delivering Y.And it is important because if we deliver X, we are helping the company get closer to its vision. If we can't deliver, this will be the impact xyz.The problem is something you don't have control. because it is a difference between a goal and a current state. To have control, you should own the goal, and this is usually not the case. If you don't control the goal, you can't say the problem is achievable, so be careful.

Validating the problem is the trickiest but the most important thing to do before starting any initiative. Many businesses fail, thinking that if they create a good product, people will buy it just because it is something good for them. For example, I still hear that someone is trying to reimagine Tinder or similar platforms. Some of them indeed make a difference, bringing something unique or finding a niche, but most are just rubbish - people do not need another clone.

With clear steps, you can confidently identify and validate business problems, providing a solid foundation for effective solutions. But remember that each business problem is unique, and the approach you choose might need to be tailored accordingly. Adapting and being open to feedback throughout the process will lead to more accurate problem identification and validation.

The Internet is full of articles and websites listing different business ideas. Some are a waste of time, others - look quite tasty. But for some reason, they are not yet implemented.The problem here is that anyone can come up with something, but to bring it to life is a whole different story. You need knowledge, resources, and, most importantly, reliable partners to help you.