The Lean Startup: Problem-Solution Fit

As mentioned in our last post, the Lean Startup approach invests your resources into a product that customers want. As entrepreneur Ash Maurya puts it in his book Running Lean, “Before investing months or years of effort towards building a product, the first step is determining if this product is something worth doing.” Or in other words, make sure you achieve Problem-Solution Fit first.

Since startups risk investing in unprofitable products, the aim is to validate the problem by testing your model’s components.

Following your business idea, the components that makeup and fit your model are uncertain. As a result, it’s way too risky to assume that you know your business model without validating it first.

Traditionally with new ventures, startups will create a business plan that identifies future objectives and strategies for achieving them. The problem with business plans is that they presume your model to be certain and are execution-oriented. Therefore, you’ll likely find yourself investing in an idea even before knowing its Problem-Solution Fit.

Besides failing to recognize the uncertainties startups face, business plans were originally designed for large corporations. Luckily, for those of you who aren’t fluent in business speak, there’s a tool called the Business Model Canvas (BMC).

Since its release in 2010, the BMC has helped countless startups around the world identify their customer’s needs and wants. The BMC is a visual chart with sections that correlate with different components of your business model, such as your value proposition, infrastructure, customers, and finances.

So how does it work?

Simple. Write down your assumptions or hypotheses on a number of multicolored sticky notes and paste them in each of the nine sections. Or if you prefer to keep things digital, download your very own template and just type everything in. Regardless of your preferred format, the BMC makes validating or invalidating your assumptions and hypotheses easy. Plus, on top of its visual and dynamic appeal, the BMC uses common language so that your marketing, finance, and engineering teams can communicate effortlessly.

As discussed earlier, in the early and uncertain stage of a startup, understanding the problem is absolutely crucial. Of the nine sections on the BMC, the most critical is initially your customer segment and value proposition. Therefore, if you can identify the people with the problem you are looking to solve, as well as the solution to their problem, then you have identified the Problem-Solution Fit. Even more important, you would have likely debunked a number of business model assumptions, and saved yourself a lot of time, money, and heartache.

To begin plotting and testing your research and assumptions, check out Strategyzer’s Business Model Canvas today!

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Foster, P., & Giacomassi, R. (2015). Test Your Business Idea (1st ed.). Galeton, PA: The Business Therapist.

Ries, E. (2011). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York: Crown Business.