A well known but often overlooked avenue of exploring potential businesses is to look for problems to solve. Society, mankind and organizations have all sorts of problems they are more than willing to pay someone to solve. Here is the interesting thing though: Despite the staggering number of problems in this world, most entrepreneurs are still chasing ideas. I wanted to explore why and came to a surprising conclusion.
A couple of months ago, I did a little experiment. I posted the following question on a website called HackerNews: “Ask HN: What problem in your industry is a potential startup?”
The result speaks for itself. As you can see, there are a lot of good examples in that thread and the discussions which unfolded afterwards were even better. Since that specific experiment worked out great, I thought I would try my luck in other communities, but quickly realized, that asking wasn’t just magically going to be as good.
I tried other approaches too, but they gave me even less. Yet from the HackerNews thread, I knew I was on to something. HackerNews isn’t like any other place. It’s a community of people from a wide variety of backgrounds and working inside a disparate number of industries. Ranging from designers and developers to musicians, economists, students, MBAs, doctors, traders, scientist and lawyers, they all have one thing in common; They all care deeply about building businesses using technology. That’s why it worked so well with HN and not in the other places.
Where are the problems?
So why is it that media, blogs and communities are filled with business ideas but not with business problems? The world certainly doesn’t lack them and it’s not like we don’t like to talk about other problems. To understand why, we need to understand what problems actually are.
Why is it that media, blogs and communities are filled with business ideas but not with business problems?
As I see it, there are three major types of problems: Social, human and organizational. It is the latter of these that is of special interest to me, as the two others are rarely solved by businesses.
Organizational problems are problems that exist inside any organization. To understand them, you need to have worked with them. It’s issues like “Why does it take so long to process an order”, “Why is our cash flow bad”, ”Why is it so hard to ship a package”, “How do we keep track of all this inventory”, “How do we find the right candidate”, “How are our competitors outcompeting us on price” and so on. All problems that organizations deal with all the time.
Social, human and organizational problems also have what I call hidden problems; problems underlying the obvious solution.
For a social problem like poverty, the obvious solution is to provide enough wealth for everyone so the poor people aren’t poor anymore. The reason why we can’t just do that is because you can’t just create wealth.
The obvious solution to the human problem like “How do I find love?” is to find someone to fall in love with. The problem of course is how do you do that.
For organizational problems the same principles apply as with the two others, but with one important difference: The organizational problems are harder to expose, however they are easier to analyze once found. This is what makes them potentially valuable businesses. They exist within a structure which allows you to explore their nature much easier. They aren’t available to everyone, but that is why they are in high demand.
An example: In order to bill the client, design agencies normally need to track the time they spend on a project. The designers fill out their timesheets and the agency invoices the client. There are a lot of solutions to that problem like time-tracking software. But inside, another more illusive problem is hidden: Invoices often get sent out too late because time sheets aren’t being filled out on time. Time sheets aren’t being filled out because everyone hates doing time sheets.
It gets worse: Tracking your time make sense when you are billing by the hour but many agencies today bill per project. So why are they still tracking time? Because management likes to be able to track the hours people spend on these projects so they can better predict what the price of the next project should be.
Here is the issue with that though: There isn’t any evidence showing this is even possible. And so a lot of time is wasted waiting for the designers to fill out their timesheets; on a project that’s not paid by the hour in order to better estimate future projects: which there is no evidence is doable. Just because that’s how it’s always been.
I know all this because I was working in those kind of agencies for more than a decade and even ran my own for seven years. Because I was inside the organization, I got exposed to the problems, had access to the data and could analyze it. In other words: problems in organizations are especially interesting because they often have more tangible underlying problems that can be turned into businesses once you unveil where the obvious solution hides. And it is often a layer or several deeper.
The problem with problems
These hidden problems are the true gold standard of entrepreneurism and it’s amazing how little discussion there actually is about how to find them. It’s hardly a surprise though since they -can be hard to find and I think there are a couple of reasons why:
1) Hidden problems aren’t obvious even to those who experience them every day.
Most people have enough human problems. They are often hired to do a specific job and don’t necessarily think about these problems as something that could be solved. Many just see them as part of the actual process. So to even understand that they are problems, requires a certain kind of attention which most people simply don’t have.I have later learned that this is called functional fixedness and is a cognitive bias. Which explain why people sometimes say “Why didn’t anyone think of this before?” — most people simply don’t think like that.
2) Hidden problems often only reveal themselves over time.
Not all problems are even instantly recognizable. Instead they only reveal themselves through years of experience. This also means that many of these problems require a certain age and experience to even notice let alone understand. Perhaps this is one of the reasons why the average age of a founder is 38 with 16 years of working experience behind him or her.
3) There is a disconnect between what kind of problems the young and the old generation experience.
It is often said that “Youth is wasted on the young”. Based on my little spare time study in this context it seems truer than ever. The youth have all the energy and time to spend, no obligations and often, not always of course, no financial worries. But they have very little life experience and exposure to these hidden problems. So what they end up solving are the kind of problems primarily young people have.
This certainly makes for some very amazing products, but I can’t help feeling a little disillusioned. The amount of time and energy that goes into fun but ultimately useless ideas rather than fixing some of the hidden problems is mind-numbing.
There is a disconnect between what kind of problems the young and the old generation experience.
On the other hand, the older generations are exposed (whether they know it or not) to a lot of these hidden problems. They have experience in how to solve them because they understand them. Yet by that time, most of them have to provide for a family, pay off their mortgage, tuition fees, healthcare, yearly vacations and their cars. They also often lack the imagination on how to solve things in a new technological paradigm.
So I realized that there is a potential goldmine of problems we simply don’t know of because the people who are exposed to them aren’t connected with the people who have the opportunity and creativity and energy to solve them. Which begs the question:
Are the old and young generations wildly underutilizing each other as resources?
Think about it. When you reach 35 in Silicon Valley you are considered an old timer. I have heard about young people, discussing whether they should hire someone because he was over 30.
Perhaps the real power of diversity in business isn’t hidden in gender, race or education, but in age. I think that’s an idea worth spreading.
Their concerns? Given his high age could he fit into the culture. There is no doubt that being young in a startup has it’s advantages, but it certainly also comes with a lot of disadvantages. There’s a lot of wasted energy which could have been put to better use if only there were better ways to unite old experience and young creativity to solving the problems.
Which brings me to my final observation: Perhaps the real power of diversity in business isn’t hidden in gender, race or education, but in age. I think that’s an idea worth spreading.
Alle illustrationer: Thomas Petersen.
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