No Problem in Your Business Model is a Problem

A manager at Toyota is delivering a quarterly update to an executive. He’s enthusiastic because all the metrics are trending up and to the right. They shipped on time — sales and customer satisfaction numbers are up too. The executive patiently listens until the manager is done and then asks: “So, where are the problems?”

The manager explains that it was a great quarter and that there are no problems to report. The executive shakes his head and says: “No problem is (a) problem.”

This is the famous Toyota “no problems is problem” story that is often retold by lean consultants to highlight one of the key tenets of running lean: finding problems worth solving.

Problems Lead to Working Business Models

The search for the right problems worth solving is particularly critical at the earliest stages of any product innovation cycle. I often call this the “honeymoon stage” because this is when everything seems possible. But without the right focus on the right problems, nothing (but waste) is actually accomplished.

Starting with the right problems is so critical for the search for a working business model, which was my primary reason for modifying the original Alex Osterwalder Business Model Canvas to include a Problem box in The Lean Canvas.

The original business model canvas centers around a value proposition, with everything else on the canvas supporting its delivery.

You can’t define a compelling value proposition without first understanding your customers and their problems.

Note: I wanted to preserve the original canvas as much as possible, which is why for every box I added, I had to remove another. To see how and why I picked what to replace, read this longer post: Why Lean Canvas versus Business Model Canvas.

In my work with entrepreneurs, while I make everyone start by filling out a full Lean Canvas, I initially only focus my attention on this quadrant of the canvas:

This is universal risk #1. If you get this quadrant wrong, everything else on the canvas falls apart — your solution, channels, pricing, etc., will all be wrong.

In my diagnostic sessions with innovators, I want to understand how much of this quadrant is validated empirically versus still just a leap of faith. If the latter, the next order of business is first running a 5 Whys root cause analysis and then prioritizing gathering empirical evidence through customer observations and/or interviews.

The Search for Problems Worth Solving Never Ends

The search for problems isn’t limited to just the early stages. As the Toyota story highlights, continuous improvement is always ongoing, and it always starts with exposing the right problems worth solving.

Once the business model is underway, we tend to rely on data to identify the right metrics to focus on improving. The problem with metrics is that while they can tell us where we are failing, they can’t always tell us why. We need to rely on other qualitative techniques, like usability tests and customer interviews, to understand the underlying root causes. Once you uncover those, therein lie the problems worth solving.

Several companies I consult with have adapted the Lean Canvas specifically for this purpose. They use the canvas not only to describe their overall business model, which tends to stabilize over time but also as a release planning tool. They create a new Lean Canvas per release cycle and use it to theme each major release around key customer problems that have surfaced repeatedly over time. This exercise helps them drive organizational focus down to the right feature set (solution), metrics, and customer segments, aligning sales, marketing, design, and development efforts.

Should Everything Be Described As A Problem?

A common question I get asked is how to fill the problem box for desire-oriented products like movies, video games, or fashion. First, it is possible to reduce the motivation of desire into a set of basic problems using Maslov’s hierarchy of needs:

The reason we might play a video game, for instance, could be to escape, de-stress, or achieve mastery. The reason we buy new clothes might be for love and belonging or self-esteem needs. But explicitly positioning these kinds of products around such basic problems would be plain weird. It’s much more effective to take an aspirational route and trigger the emotions (versus problems) that align with these needs.

Another issue I frequently see is that the problems people put down tend to be so high-level that they are obvious and not actionable. Yes, salespeople want to sell more. People want a cure for cancer. You have to get more specific than that.

The answer to both these challenges is framing problems around progress or desired customer outcomes.

Bob Moesta put it well when he said that fundamentally everyone is in search of progress (outcomes), and it helps to think of problems in terms of the obstacles that keep them from achieving this progress. This is true whether you are describing a problem-led or desire-led product.

The picture below illustrates this point using a customer journey forces diagram:

Customers desire a future state where they are better off than their current reality. Once you can identify the success dimensions of this desired future state and study the obstacles keeping them from achieving that state — therein lie the problems worth solving.

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