Aug 15

How To Find And Validate A Market Problem

My last post was basically the highest level guidance possible about market discovery, including a litmus test for assessing your process. But I didn’t go into the actual steps for doing it. I’m not going to do that in this post either. Instead, I’ve got a few good sources and suggestions for guidance on how to do it.

Lots of people have put out lots of guides on how to find and validate market problems. Or, as they often put it, how to “find a product idea.”

Most of these guides are about finding new market problems to solve as a startup. But the techniques are equally valuable if you need to find new features for an existing product, or come up with new products to augment your product portfolio.

  • Amy Hoy’s approach to finding and validating a market problem is quite different from Paul Graham’s. For one thing, she’s more focused on “lifestyle businesses” versus becoming a billion dollar enterprise. Her technique is called a Sales Safari, and the big difference is that you aren’t solving *your own* problem. You can get the gist of the Sales Safari in this video. (You can attend her online course 30×500 – which I have not done – to learn more.) The fundamental idea of 30×500 is to find a problem that 500 people will pay you $30 a month to solve. This provides a good income if you are a sole proprietor.
  • Then there’s just going out and talking to customers or potential customers and exploring what their biggest problems are. This is best illustrated by Justin Wilcox’s “How I Interview Customers” video.You have to start with some idea of what you might want to work on – a hypothesis about a problem. But instead of starting to build something, you start talking to people who might have that problem. You can validate they have the problem, that it’s urgent, and that they’ll pay for a solution. His videos help you get started doing that.

I hope you find some of these links valuable and interesting for helping you find and validate market problems that you can solve with your startup, or your corporation.

Jul 15

How Badass Are You At Finding And Validating Market Problems?

How to avoid having a “solution in search of a problem”

You have to become badass at finding and validating market problems to have a successful product business. This post will help you assess where you are now, and where you need to focus to get (even more) badass.

There are three main top-level activities for product managers:

  1. Find and validate market problems
  2. Create solutions to the problems
  3. Take the solutions to market.

And by now you know which of these I think is the most important. (Hint: #1.) Because if your product isn’t a solution to an urgent and pervasive market problem, no one will buy it.

There are many techniques for finding and validating market problems. They involve extensive interaction with customers and prospects to elicit problems, pains, needs, and desires using open-ended questions. (That is, you can’t just ask “What are your big problems?”) This is followed by analysis of what you’ve heard to surface and identify problems. Then those must be validated to determine which are valuable to solve, and which align with your organization’s abilities and business goals. I’ll get deeper into those techniques in a future post.

How Am I Doing?

In this post we’ll focus on framing the process and assessing how you’re doing. (Inspired by Kathy Sierra’s Badass ideas, if you’re keeping score.) Here are some questions you can ask yourself – answer honestly – to gauge your process for finding and validating market problems.


  • Do you engage with a large part of your customer (and potential customer) base regularly to find unmet needs, desires, and opportunities?
  • Do you use techniques like open-end questions and direct observation of customers, rather than simply asking them what they want?
  • Do you have a process for aggregating the multitude of conversations to detect the “weak signals” that indicate problems you can solve?
  • Do you meet with customers separately from sales activities?
  • Do your prioritization criteria explicitly take into account whether a feature helps solve a validated market problem?


  • Can you clearly state the market problem that you are solving and how your solution addresses it?
  • Do customers understand and agree that they have the problem?
  • Have you validated the value of solving the problem, the size of the market for the solution, and that your solution can be profitable?
  • Can you state how your solution is superior to or more desirable than that of your competitors, including doing nothing?

Obstacles and Challenges

Like any worthwhile activity, the process of finding and validating market problems is difficult. And it’s time consuming. You need to spend time “outside the building” talking to and interacting with the market. There are a number of other challenges you may face:

  • You may have difficulty getting “permission” to get outside the building to observe prospects and customers. Or you might only be “allowed” to visit customers when helping sales.
  • You don’t have time to visit or talk to customers because you are being pulled in too many directions.
  • You have a technology that people (inside the company) are convinced is a product, but which does not solve a market problem.
  • The amount of learning you get from any individual customer or market interaction is usually small. It requires many such interactions to start to surface the weak signals that indicate significant market problems.
  • There will be a lot of back and forth between your ideas for solutions, problems to be solved, the market you want to attack, and the technology you can bring to bear.
  • It is hard to find customers to interview; you are not sure where to start. This is especially true for startups that don’t yet have a customer base.
  • Some customers only want to talk to you about how existing features can be improved or new features they want. This is legitimate feedback, but often does not reflect a deeper underlying new market problem that will enable you to grow sales or expand your market.


Every other step in the product lifecycle depends on having important and valuable market problems to solve. Most everything else you might do as a product manager is meaningless if you’re building a solution without a problem:

  • Roadmaps
  • Requirements
  • Strategic alignment
  • Win/loss
  • Competitors
  • Sales
  • Go-to-market
  • Etc.


“People pay you for a solution to a problem.”

Therefore, to have a successful product, you need a process for continually finding new problems – both big and small – to solve for your customers and prospects.

Apr 15

The Astonishing Financial Benefits of Improving PM Effectiveness

Image of man holding hand-lettered cardboard sign saying "Give Me One Million Dollars"

Give Me One Million Dollars (by Klaus M, CC licensed)

What if you could increase your company’s revenues by $1 million simply by changing what you do? Not by adding any new employees, or buying a business software package. Just by doing things a little differently. What would $1 million more on your top line mean for your bottom line?

That’s the kind of return you can get by improving your product management operation – per product manager!

A Massive ROI

The business value of a product manager is about $10 million in revenue, based on standard industry ratios. A 10% improvement in product management effectiveness is therefore worth about $1 million more revenue. (10% of $10 million.) And if you gain that improvement simply by changing behavior, by doing things differently, that new revenue is going to flow all the way to the bottom line.

That sounds pretty good, doesn’t it? So, how do you do it? How do you increase product management effectiveness by 10%? Do you just increase the hours a PM works? Or can you get them to put in 10% more effort? Unlikely.

Instead, a 10% improvement is going to come from doing things differently. (And everywhere I say “PM” in this discussion, I also mean “the PM organization” or “the PM function within your company.”)

How To Be A More Effective Product Manager

What are the levers we have to increase PM effectiveness? At a very high level:

  1. We can do a better job of discovering important market problems.
  2. We can do a better job of creating solutions to those problems.
  3. We can do a better job of taking those solutions to market.

For example, let’s say I want to do a better job of discovering important market problems. This is often the highest leverage I have. No one will buy my solution, no matter how good it is, if it doesn’t solve an important problem! Therefore, step 1 is to focus more of my time on market discovery. If I’m not spending much time finding problems, I’ll have to reprioritize my work to spend more time on that activity.

This means I won’t be able to do some other things – they’ll fall off my plate. I might not be able to babysit customer enhancement requests. I might not have as much time to write detailed user stories for developers. Spending time discovering market problems to solve is almost always a higher payoff activity than spending time decomposing requirements.

More Effective Means More Successful, Higher Quality Products, Faster

This is because when I understand the market problem well, I can do a better job of prioritizing the work of the product team. Whether it’s choosing between different features, or choosing between different products to invest in. Prioritization is a complex subject in itself, but having good market intelligence is the most critical part.

If you have more market intelligence you can write better features. You can tie the feature more explicitly to specific market needs. The feature will be worth more (versus “this seems like a good idea”). And the developers will be more motivated – they’re solving a real validated market problem! So you get a higher quality solution.

Finally, better problem discovery gets us to market faster! We don’t get more efficient or code faster. We simply make better decisions and create less waste. A feature that doesn’t really solve a problem, or that’s incomplete, or is implemented in a less valuable way is waste. And waste is always a drag on revenue and profits. By being a more effective product manager you’re eliminating waste from the product development process.

When Japan innovated their manufacturing systems in the ’70’s, their great efficiencies were not the result of working faster. (Although they also developed techniques for working faster, analogous to unit testing and code templates.) They focused on eliminating the waste of doing work that was bad or incorrect or unnecessary. Not only did their efficiency skyrocket, but so did their quality. Now we in product management have the same opportunity.

Three things you can do today to start being a more effective product manager:

  1. Calculate how much time you’re spending today finding market problems. This means talking to customers, prospects, the customers of competitors, and lost prospects – outside the context of sales – to understand their most important problems.
  2. Plan how you’ll start spending more time on market discovery.
  3. Practice your market discovery skills such as asking open-ended questions, putting yourself in your customers’ shoes, and “asking Why? five times.”

By the way, Justin Wilcox has a great resource on how to do a market discovery interview. If you start doing a few of these every month, you’ll learn a lot about how to offer more value to your market, and thereby start creating more revenue for your company!

Mar 15

The Most Important Problem

What is the most important problem that our customers, or the people we want to sell to, are having – that we can solve?

This is the fundamental question we PMs have to keep asking ourselves (and our customers/market).

Ideally what we’d do is prioritize solving that problem. And then, if we have capacity left over, we ask, “what’s the second most important problem that our customers, or the people we want to sell to, are having – that we can solve?”

And then we prioritize solving that second problem. We keep doing this until we run out of resources.

Then we do it all again.

There are of course lots more details – how much of that #1 problem do we solve? Do we get it to MVP state? To V1.0 state? To highly polished state? The answer to this question depends on a few things:

  • How we will use this solution to sell
  • How we will use this solution to differentiate
  • How hard it is to get from MVP to the next level, or the one after that
  • Whether the MVP is actually “marketable”
  • If a competitor has set a bar on how much functionality is needed

It’s hard to live with this approach on a day-to-day basis, but it’s really what we should be doing.

And the roadmap is then just a list of the problems we’ll be solving over time – [tweetthis hidden_hashtags=”#prodmgmt”]”The roadmap is then just a list of the problems we’ll be solving over time”[/tweetthis] – (subject to change, of course, as the problems customers face change.)

Sep 14

Revenue Up-And-To-The-Right – That’s The Goal

The Business of Software blog just posted my latest essay! Here are some excerpts, and you can read the rest there:

Most of you have the ambition to get big. How do you do that? The only way to get big as a product company is for people to buy your product. Preferably a lot of people, for significant amounts of money at a time. Duh!

But why would people buy your product? We know there are products that people don’t buy. We don’t want those – because you can’t get big, or even grow at all. If you look at the revenue line for a product that no one buys – it’s nasty! We don’t like that line!


 Why Do We Get Revenue?

Compare it to our desired revenue line – up and to the right – and accelerating as it goes up. If our product sells like that, it means it’s solving an important problem for some people – important enough that people will pay for the solution.

You can have a beautiful product, beautifully engineered and architected, and totally rocking in usability – but if it doesn’t solve a big market problem – flat line.

But a product can have some warts, not quite work as the user expects all the time, have some typos, use a 1998 style UI – but if it solves a big problem better than anything else – up and to the right.

Read the rest, including thoughts about the real definition of product management (it’s not just about finding problems)  at the Business of Software blog.

Jul 14

Love the Problem, Not the Product

Post-Its for organizing your life

Post-Its for organizing your life

I’ve got a couple of great essays in the hopper (I know I promised a followup on why Excel is not great for product managers), that will be baked soon, I hope.

But in the meantime, I wanted to let you know about an essay I wrote recently for Mike Smart’s PM 2.0 blog.

What’s the most important thing you should worry about as a product manager? I think you’ll be surprised by my answer – and my examples of markets who have figured that stuff out.

Product managers often place the cart before the horse. We love to think about the product, the features, how “cool” the UI is, and how we can make the product better.

But when it comes right down to it, your product is the third most important thing you should be worrying about.

Yes, you read that correctly. There are two much more important things than your product you should focus on if you want your company to be successful.

Read the rest of the essay here: Love The Problem, Not The Product.

Let me know what you think of this (not so) radical position in the comments!