Problem Definition

Market problem definition: The starting point for product strategy.

You'll need to:

1. Define your market

Market = your customers + your competitors customers + non-customers

Market ≠ your customers only or target audience only

2. Describe your market to stakeholders

Help your stakeholders understand the high-level characteristics of this market/segment.  Use narrative and quantitative (if available) descriptors. 

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SaaS B2B example: Wellness Retail

Market description: Retailers of organic/natural/clean goods for beauty/skincare and nutrition/supplements.

• Global CAGR 7.9% (2021-2028)

• Global retail wellness market size: $1.8B

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3. Define market problems

Market Problems ≠ customer desires or competitor offerings

Market Problems are

• Challenges and unmet needs of your market (see above)

• Observable and measurable

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SaaS B2B example: Wellness Retail

Wellness Retail market problems:

• Competition

• Brick-and-mortar and online experience disconnect

• Retail wellness application new user acquisition, conversion, retention

• Brand loyalty and consumer stickiness

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4. Summarize

Combine what you know about your market and their problem(s) into a high-level summary statement.

Keep it short and simple. Use bullet points and/or visuals if appropriate for your stakeholders. 

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SaaS B2B example: Wellness Retail

The global wellness retail market, which includes brick-and-mortal and online retail for organic, natural, and clean skincare, beauty, and nutritional goods, is valued at 1.8 billion USD and expected to grow over the next several years (7.9% CAGR). With the expanded commercialization of personal wellness goods and digitization of services wellness retailers face many challenges in growing a loyal consumer base.

Understanding "who is the user and what is their problem?" is an essential precursor for any product development team working toward a solution. It is critical to involve the entirety of the development team in this process so that everyone feels ownership over the user's problem.

To do this, you'll need to:

1. Define your user

This is most effectively done through the use of user personas. 

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Example: 

Mr. Allen, is a full-time employed outside of the home and is a caregiver to one elderly parent who lives at home with Mr. Allen and his family. Everyday, Mr. Allen provides meals and transportation to his parent, and ensures that his parent's daily health care needs are met. _________________________________

2. Define your user's problem

What prevents your user from accomplishing their intended goal?

What's the context for this problem? Why does the problem happen?

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Example: 

Mr. Allen needs to coordinate his parent's activities and appointments with those of his own family, but is overwhelmed by the volume of reminders and scheduled events. It's difficult for Mr. Allen to know whether there are conflicts when one person is scheduling an event or appointment and make sure that everyone is aware in real time. 

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3. Define the impact of the problem

What's the cost or consequence when the problem occurs?

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Example: 

Mr. Allen regularly double-books himself between his schedule, his family's schedule and his parent's schedule which creates transportation problems for his family. This also creates stress in needing reschedule or miss certain events. 

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4. Structure a statement

Problem statement, user story (toe-may-toe/toe-mah-toe). Whatever the methodology, summarize who, what, why, when, where so the team can start thinking about possible ways to address the problem. 

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Problem statement example:

Family caregivers are challenged by juggling multiple schedules and coordinating activities, appointments, and transportation. This can be overwhelming and place added stress on an individual, impacting their ability to support their family. 

User story example:

As a family caregiver, I want to be able to see all of my family member's up-to-date schedules in one place so I can accommodate as many activities, appointments, and other commitments as possible with minimal conflicts. 

On the surface, the problem itself may be obvious and easy to articulate. However, to help stakeholders decide if it's a problem that's worth solving, it's important to define the following:

1. What matters to your business?

This ought to be clear and can be derived from any of the following:

• Mission

• Values

• Objectives and Key Results (OKRs)

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Example:

Organizational performance metric:

Increase new user conversion rate by 10%

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2. Why does the problem matter?

Help the stakeholders understand why they should care about the problem. It helps if you can do this in the context of impact to mission, values, or performance metrics.

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Example:

New user engagement for our flagship product has been steadily declining for the past 18 months [problem] which impacts our ability to meet our user conversion goal for the year [performance metric].

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3.  What's the root cause of the problem?

This is critical to prepare for action.

A full-blown RCA (root cause analysis) or RIE (rapid improvement event) ala Lean Manufacturing may not be necessary, but the principles can be important in helping get to an underlying cause of the business problem that may be tangibly solved.

The simplest path to a root cause is by doing an exercise called "The 5 Whys."

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Example:

Problem: New user engagement steadily declining

1. 1. Why? Because abandonment during registration has increased

   2. Why? Because we've had bugs in the registration

   3. Why? Because the software is brittle/code is old

   4. Why? Because we haven't made any substantive improvements in 2 years

   5. Why? Because we don't have a fully-dedicated development team

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4. What's the proposed path forward?

Persuade your stakeholders to take action.

• What's the benefit of action?

• What's the consequence of inaction?

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Example:

If we do nothing, we may continue to see a downward trend of new user engagement and conversion rates, which may ultimately impact market share and revenue growth in time [consequence]. However, if we consider balancing resources between existing products and new development we can show our commitment to our users in delivering the best experience possible, and reverse user engagement trends [benefit, tied to what matters to the business].

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5. Summarize

Combine what you've uncovered in a high-level summary statement.

Keep it short and simple. Use bullet points and/or visuals if appropriate for your stakeholders. 

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Example Business Problem Statement

Over the past 18 months, new user engagement for our flagship product has been steadily declining, which has impacted our ability to successfully meet our annual performance metrics. User engagement has declined in part due to many technical issues with the registration process as a result of minimal improvements to the software over several years. Without a team dedicated to supporting this product, we may continue to see a negative impact to our users and ultimately our own organization's success. However, if we consider balancing technical resources between existing products and new development we can show our commitment to our users in delivering the best experience possible, and reverse user engagement trends.