A Framework for Understanding Market Problems
You almost certainly have read or heard the famous Einstein quote:
“If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.”
— Albert Einstein
I often cite an analogous quote, though I’m not sure of the source:
“The quality of your solution depends on your understanding of the problem”
We spend a lot of time talking about and thinking about problems — we talk about problem spaces, problem statement, market problems, customer problems, user problems etc. etc. — but quite honestly, I’ve seen very few tools or frameworks to help decompose and evaluate problems in a way that is meaningful for Product teams.
Size, Frequency and Willingness to Pay
When thinking about problems, a common (simple) analysis is often:
- How big or pervasive is the problem?
- What are the alternatives?
- Would people pay you if you solved it?
The answers to the these questions should come from research with prospects or likely buyers of a product. This is perhaps the absolute minimum one should understand about a problem when evaluating it, but it’s far from rigorous and we should certainly be able to do much better.
The 4Us Framework
I recently came across what I see as a great framework to evaluate problems. It’s called the 4Us framework from Underscore VC. You can find it in the video and presentation on this page. The speaker in the video — Michael Skok — does a great job at explaining the concepts and provides good examples.
Building a Compelling Value Proposition | Underscore VC
Contributed by Michael Skok (In my first article on Forbes, I suggested how entrepreneurs might get started. Once…
Here’s the framework. The 4Us when assessing problems are:
- Unworkable (how painful)
- Unavoidable (how necessary)
- Urgent (how time sensitive)
- Underserved (how many alternatives)
Let’s walk through each of these.
A problem is unworkable if it relates to a broken process or a result having severe consequences if something goes wrong. And by severe, it’s likely that there is a potential loss of revenue, loss of customers, loss of reputation or some other significant loss that the unworkable problem causes.
For example, I once managed a product that automated enterprise data testing to ensure it was complete and accurate.
One of our early customers was a financial services company. They were regulated and had strict requirements on the data they published. The data had to be accurate, because in some cases, if there were errors, people could get fired and the company would risk other penalties.
They used our software to automate their validation processes and our product could do the job in a fraction of the time of their current processes. So, no one got fired and the job got done faster.
A problem is unavoidable if there is something compelling people to address the problem or act.
For example, GDPR (General Data Protection Regulation) legislation in Europe impacted companies around the world, and in order to do business and under threat of significant fines if they didn’t comply, companies followed the regulation. This was unavoidable for any companies looking to do business in Europe or move data from Europe to other geographies.
Another example of an unavoidable problem is the new iOS 14.5 privacy features that put privacy control directly into the hands of users allowing them to control what data (if any) apps can collect and share about them.
App makers, particularly those that depend on collecting user data must adjust their apps, and possibly their business models, to account for this change.
An urgent problem is one that is…well…urgent…that must be addressed quickly or is deemed a high priority by the company.
Cybercrime is a real threat to business. Companies invest significant time, money and effort to protect their assets. If an intrusion is detected, companies need to react quickly to identify the nature of the intrusion and block it to minimize harm. There is real urgency when those problems arise and so companies view products to help address these situations as very important to evaluate and purchase.
When looking at a problem, is it underserved with solutions? i.e. are there many competitors and alternatives in existence or are there a scant few?
If you’re looking to create a product or solution, you don’t want to enter an already crowded market, unless you have a novel and differentiated way of addressing the problem.
One example of a company that addressed an underserved problem is Toronto based Loopio. Loopio provides RFP response software that helps companies efficiently and effectively provide answers to RFPs (Requests for Proposals), which are common amongst large enterprises.
The founders of Loopio personally felt the pain of manual processes most companies followed with filling out RFPs and decided to create a solution. When they started back in 2014, there weren’t many products addressing the problem, so the market was clearly underserved.
Putting the 4Us Framework to the Test
Let’s use Loopio to evaluate the problem they were solving using the 4Us framework.
RFPs are typically complex questionnaires, often consisting of hundreds of questions that require many people in a company to fill out.
Prior to Loopio, the process most companies followed was to create a spreadsheet of the questions, email the spreadsheet around through the company — or at least the parts of the spreadsheet relevant to various people who could answer those questions — and then once the answers were collected, fill in the RFP as best as possible, share with others for review etc. before finally submitting it. This process could involve dozens of people and take many days or even weeks.
Does that sound like a workable solution? No, not at all. So unworkable? Yes
For vendors looking to sell into enterprises or government agencies that use RFPs — and many of the largest ones do — RFPs are simply part of the business process they have to follow.
If a company or agency sends out an RFP to vendors, they have two choices: decline to participate (and lose any chance of getting the business) or fill out the RFP as best as they can
So, for those vendors, is it unavoidable? Yes.
When an RFP is sent out by a company, there is a clear and usually relatively short timeframe — on the order of a few weeks — in which the RFP must be completed and submitted for review. During this time, the vendors have to disrupt internal teams to get them to do their part and fill out the appropriate sections.
Is it urgent: Yes.
We’ve already discussed whether the RFP problem was underserved when Loopio started out. The reality was that there were a few companies that were trying to address the problem, but their products were not very efficient at solving it.
Loopio took a different approach (focusing on being information-centric) to the problem and solved it in a much more effective way than existing companies.
This is an important point to consider. Just because there are existing solutions, if they’re not solving the problem well, or if you can see a different and better approach to solving the problem, you may be able to enter a market with existing competitors by changing the game.
So overall, Loopio’s founders identified a problem that had good characteristics in all 4 categories, and solved it in a way that led them to growth and success.
Does a Problem Need to Have ALL 4 Us?
In an ideal world, a problem HAS a strong score in all 4 categories. But in reality, not all problems will. What’s important is how you think about the problem before deciding that it’s not a problem worth addressing.
A problem may be unavoidable and underserved, but not unworkable or urgent.
For example, many companies have hiring processes that are inefficient, that rely on emails to share resumes, interview schedules etc. They often also have additional manual processes for collecting and assimilating feedback on interview candidates. There are clearly more efficient ways to manage interviews and hiring.
But, for those same companies, the process is manageable and there is no urgency in changing it, possibly because there isn’t a clear connection to a loss in revenue or other business metric.
Does that mean there is no opportunity there? Absolutely not. There may be aspects of this problem, or a subset of the wider market where this problem is also both unworkable and urgent.
This leads to what I believe is a 5th U that could be applied to the framework:
The 5th U — Universal
Your initial thoughts and framing of the problem MAY NOT encompass everything you need to evaluate the problem. Problems are associated with specific types of companies and/or specific types of people in those companies.(i.e. segments).
A problem that is not urgent or unworkable to one group, may be exactly that to another. Think about a company that must hire aggressively to support expected or planned growth. For a company like that, not having an efficient hiring process that brings in high quality candidates in a timely manner IS an urgent business problem.
The goal of universal, is to help IDENTIFY (often by narrowing down) the audience to see if there is a subset — a segment — of the larger market that has high ratings in each of the other 4 Us. If so, then that also helps identify where to start in your pursuit of customers.
It’s an iterative process, but having an EXPLICIT component in the framework that focuses on the WHO, will help you better identify the problems and their the pain (unworkable), necessity (unavoidable), urgency (time sensitivity) and lack of alternatives (underserved).
External Validation is Critical
Like many activities in the Product space, it’s important to view internal discussions of external topics (market problems, customer requirements, etc.) as hypotheses that require external research and validation.
Once you’ve done an internal assessment of market or customer problems, interview your target audience — the people who you think the problem is Universal, Unworkable or Urgent etc. for — and hear from them how they see the problem.
Use those insights to inform your view of the market problem, who it impacts, who would value solutions etc. and then decide if it’s worth pursuing further in whatever way is appropriate for you.
The value of this framework is that it provides a more definitive way of thinking about problems. This leads to a more constructive and less opinionated discussion amongst team members.
I shared this framework with a client recently and they held an internal “problem pitch” session. The feedback on the session was that the framework was very helpful in having a discussion with a common language to talk about problems. In some cases, the initial assessments on some of the U’s was quite subjective, but that was a good opportunity to discuss HOW to get additional information to make a better assessment.
No framework is perfect, but when discussing a nebulous topic (like value or problems etc.), a good framework can really help bring focus, consistency and clarity on the topic. A common problem (no pun intended) when working in product is the lack a clear and common vocabulary and set of constructs to decompose a topic and discuss it to bring common context amongst a team or organization.
A good framework, like the the 4Us — with or without the addition of the 5th U — does that.
Give it a try in your company, and let me know how it goes. I’d love to hear the results.
A little feedback please
If you’ve read this far, thank you. I’d like some feedback on the article to make it better. Just a few questions. Should take 30 seconds at the most, but it will be really valuable to me. Thanks in advance.
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