Read full chapters here:
Chapter 2:
Problem Finding
“The mere formulation of a problem is often far more essential than its
solution, which may be merely a matter of mathematical or experimental
skill. To raise new questions, new possibilities, to regard old problems
from a new angle requires creative imagination and marks real advances
in science.”
- Albert Einstein
solution, which may be merely a matter of mathematical or experimental
skill. To raise new questions, new possibilities, to regard old problems
from a new angle requires creative imagination and marks real advances
in science.”
- Albert Einstein
Find and solve a problem. Fulfill an unmet need. This is the equivalent of telling an art student to paint something culturally relevant and then walking away without further direction. Without the knowledge of color theory, composition, drawing techniques, cultural values, et cetera that person would be at a loss trying to figure out how to achieve success in the art world. But this happens in the world of entrepreneurship. Potential entrepreneurs are given these brief tips for success and then left to fend for themselves. What I want to do with the second chapter of this book is to give you something actionable right now. I want you to have something that, if you walked away from the book after this chapter, would be worth the price of admission. This chapter is a systematic approach to finding problems to solve. It is a process that you can use to find unmet needs in the marketplace. It is the answer to “how” we find problems and unmet needs that seems to trip up so many would-be entrepreneurs. You can use this technique from square one without any specific focus or idea of where you are headed. I do not claim to be the originator of this process. I owe this entire chapter to the late Richard M. White and his process titled “market gap analysis.”(4) Having to pull this information from a chapter in his obscure book from 1977 titled The Entrepreneur’s Manual is a sign of just how fragmented the idea market is. Without further ado, let’s take a look at the process, the idea behind it and how we can use it.
To preface White’s method of market gap analysis, we should be aware of what it is that he sought to accomplish and why it works. A great quote from Gilbert K. Chesterton comes to mind that illustrates the problem White was trying to diminish. Chesterton said, “the perplexity of life arises from there being too many interesting things in it for us to be interested properly in any of them.” When we are given the insight that in order to innovate we must find and solve problems, we are left with a vast sea of possibilities. There are too many interesting avenues we could take which leaves us at a loss about where to start. Essentially we need to focus in. White presents a concrete method for identifying problems or “market gaps” as he calls them. The process works because it allows us to start with no previous conception of where you are headed and systematically forces you to focus in and hone your thought stream. In the process you break down a sea of potential markets into a smaller, more manageable subset of ideas. When we are able to break it down in this manner, our mind is able to wrap itself around the task at hand. We are now able to have relevant, specific thought streams that address innovation and allow us to identify potential problems. By the last step we have concrete avenues and issues to research. Let’s now look at the process and see how White accomplishes all of these things.
Step 1: Choose an Industry
While White didn’t specifically state this as his first step, this is a helpful precursor to his process. This is the first and only time in this book that I will advise that you pick any industry, even at random if you so choose. It can be however broad or narrow as you choose. Call it travel or leisure or entertainment, it doesn’t matter. This process inherently has you focus in by the end, so feel free to choose any industry that interests you at the outset. The process is also relatively quick, so if you have lackluster results with one industry, it doesn’t take much to start all over. By the way, this isn’t just a read and remember chapter. Get out your pen and actually try this. Without doing so, you will never appreciate the value.
Step 2: Lay Out Objectives
For the second step, White says that we need to lay out our objectives for the potential idea or venture. What he means by this is that we need to define what type of opportunity we are willing to pursue and what types we are not. Throughout the process White has us continually coming back and comparing potential ideas with our objectives. Any potential avenues or problems that we uncover that do not match with the objectives of the venture can then be eliminated so we can focus on problems that will meet the criteria we want in an idea. Some examples of criteria might be;
1. Must have a potential market of at least 1 million units
2. Must be a physical product, not a service
3. Total market potential must be $500 million plus
4. Must be able to attain at least 10% of that industry
5. Must be an electrical device
He also adds that you must address personal objectives and the type of industry when you lay this out. For instance;
5. Want to pursue a long term growth industry
6. Founders are visible in the public eye
7 Ability to attract top talent from other firms with the idea.
By incorporating your personal goals along with the objectives of the product, you get a clearer picture of the type of venture you want to start. By doing this you eliminate a lot of avenues that would never provide you with the opportunity you were searching for. It is the first level of focusing your efforts. Also, White mentions that numerous objectives might seem too restrictive to produce anything viable. You will quickly see that this is not the case. Ten to twelve objectives is considered low demands by White. Hashing out all your objectives is key to finding the right match for your venture. At this point, you want to write down your objectives for a venture. Putting the goals and necessities of your venture on paper now will eliminate a lot of the clutter for the future. Do this now on your own.
Step 3: Segment Your Industry Into Major Components
For the purpose of examples, I am going to use the “Entertainment” industry as my industry of focus. The third step involves breaking down your industry of focus into its major components. This means you want to break it down into the types of entertainment you could possibly explore and also the potential consumers. Most of these examples are taken directly from White.
1. Senior Citizen, Adult, Children, Family
2. Male, Female, Both
3. Active, Passive or Combination
4. Indoor, Outdoor
5. Spring, Fall, Winter, Summer
6. Lower Class, Middle Class, Upper Class
7. Black, White, Hispanic, Combination or All
You can come up with any method for segmenting a market. These are just a few examples. As we proceed we are going to choose one of these major segments. Say, for instance, we choose Adult Entertainment (not in the pornography sense). This is another level of focusing in. By choosing this we are ignoring senior citizen entertainment, children’s entertainment, family entertainment, et cetera. White has us follow only one leg of one of the major category breakdowns. You can always come back to this step and choose a different leg, but in order to focus, you only choose one at a time. Do this now with your pen and paper.
Step 4: Segment Again Into Major Categories
The next step is to take the avenue we selected in step 3, adult entertainment, and segment it further into its major categories. Some good examples of how to segment might be the times adults have available for entertainment or the types of entertainment. Let’s look at some of those breakdowns.
1. Weekday, Weekend, Vacation, Holiday, Retirement
2. Movies, Music, Art, Reading
Since I do not want to just blindly copy White’s book, I am going to take a slightly different direction than he did with our example. However, I thought it was interesting that when he segmented the categories by time available to pursue them, it made it extremely easy to identify problems. For instance, if he chose weekday as his category, in the next step he would break it down into all the major time categories available in a day. Pre-breakfast, Breakfast, After Breakfast/ Before Lunch, Coffee breaks, et cetera. Segmentation is about getting specific. For some reason, “time” segmentation makes it easy to identify with in your mind.
Step 5: Segment Again Into Major Categories
For my example I chose movies. So now we are at Adult-Entertainment-Movies. Again we break this down into its major categories.
1. DVDs, VHS, Internet Downloads
2. Pay per View, Movie Rentals, TV Movies, Theater Visits
3. Independent Movies, Major Motion Pictures
White says “You’ll note that so far, all that we have done is focus, magnify, refocus, remagnify, refocus again, remagnify again until the large growth industry is divided into handleable portions. An industry like the [entertainment] industry is so large that you cannot begin to see it until you segment it down to its sub-sections. We are now just beginning to see the trees in the forest. The more complex an industry, the more you have to divide, redivide and reredivide.”
Step 6: Elimination Based On Objectives
In this step you now take the breakdown of step 5 and eliminate any categories that do not mesh with the objectives you stated at the outset of this process. You may be able to keep them all intact or you may eliminate 75% of the subsets. Results will vary widely depending on the individual and their goals. Take a moment to briefly compare whether you think any of your segmented categories can be eliminated at this point based on your objectives.
Step 7: Identify Problems With The Subset You Select
For this step I am going to choose “theater visits” as my category to continue with. So now we are at Adult-Entertainment-Movies-Theater Visits. It should now be much easier to concentrate on identifying problems. If you hadn’t been given some substance and a process to follow, trying to identify a “problem” out in the vast seas of possibilities might have lead you down a completely irrelevant path. You may have never even started thinking, you might have just given up and went to mow the lawn or watch television. But with a specific stream of thought, you are now at a place that is much more specific. You are now faced with identifying problems when adults seek entertainment by making a trip to the movie theater. This is something we can all identify with and a specific situation on which we can focus our minds. Now let’s explore some of the problems with this activity. I will limit my list to fifteen because I think you will get the point.
1. Going to the movies is expensive at $9.50 a ticket, $3.00 a gallon for gas, $5.00 for drink and $4.00 for candy, I can’t afford to go see the movies I want to
2. Theaters are noisy, I have to hope that my fellow moviegoers do not include the teenage population, babies, cell phones, et cetera
3. Seats are uncomfortable
4. The floor is somehow always sticky
5. The person in front of me is blocking 1/8th of the screen and I have to crane my neck
6. The best seats are always taken. I end up in the front row or way in the back
7. I can’t find more than one seat open and I have two people with me
8. Having to leave for the restroom or snacks, I miss part of the movie
9. My show is sold out and the next movie isn’t for another hour and a half
10. The noise level is too loud
11. The theater is always cold
12. I feel cramped by the leg room
13. Only the theater built in 1978 is showing the movie I want to see so the picture quality is outdated
14. The closest movie theater is a 20 minute drive
15. Dinner finished early and I have an hour to kill before the movie starts
You could continue on and identify a plethora of other problems that exist with theater visits. When you actually perform a market gap analysis, please do exhaust the list with your ideas as it will give you the most opportunity to take advantage of this type of analysis.
Step 8: Eliminate Problems That Do Not Mesh
Step eight is the second round of elimination of those things that do not mesh well with the objectives we set out at the beginning of the exercise. Let’s say for instance that I have no real interest in solving the problem that “theaters are too cold.” I would eliminate this from my list and focus on those areas where I feel I have the skills to solve the problems at hand. Continue to eliminate problems until you are satisfied that the problems left have the capability to match the objectives of the venture.
Step 9: Matrix Analysis (White’s Title)
A “matrix analysis” sounds more complicated than it actually is. In this step you want to list out all of the problems you are moving forward with along the left hand side of a piece of paper. Then across the top of the paper from left to right you are going to make a column for each of the objectives you laid out at the outset of the process. After you have done that, go through each problem and place a check mark under each objective column that you feel the solution to that problem would mesh with. Once you have thought through this process and have a final tally, you want to move forward in this analysis with those problems you feel best match the your objectives and capabilities.
Step 10: Listing Ideas for Solutions
At this point we have accomplished the goal of this chapter. Instead of aimlessly trying to locate problems, we have shown you a process to systematically identify where they might lie. The key part of the understanding of this chapter was to develop a way to add substance to the common mantra of “find a problem to solve.” We have done that. This advice isn’t as vague or obscure now that we have a substantive process with which to find those problems. From here we are going to proceed in two ways. First, I will tell you how White finishes his process and how he talks about solving problems. Secondly, we can diverge from White’s process and talk about how this book and its chapters can aide you in solving the problems you have located. First for White.
Moving Forward with step 10, White recommends that you start listing out all of the possible solutions to each of the problems you have identified. This is pretty much a think tank/ brainstorming session. You can now start to theorize and explore ways in which to solve the problems you have uncovered. White suggests that you list as many possible solution avenues as you can come up with. Taking different angles and theorizing different solutions will allow you to get the whole picture.
Step 11: Select the Best Opportunities and Test them
This step is mostly self explanatory. After you have exhausted your list of problems with all the possible solutions you can come up with, it is time to start testing the validity of some of those solution avenues. This is where the leg work of innovation begins to come in and branches out beyond the scope of this book. In this stage you want to start testing whether your ideas could actually solve the problem. This step is mostly about research and exploration. It is also about testing some of the assumptions you have made up until this point. For instance, you might discover that a solution you thought would have a 1 million unit market in fact is only a 200,000 unit market and, by your standards, not worth pursuing. Many books and texts will show you methods to test market viability and research methods to test the validity of your ideas. That is beyond the scope of what we are doing here, but I trust you will have no problem locating numerous sources that have some concrete methods for your analysis.
At this point White ends his process. He has given you the means necessary to identify problems and cuts you loose to research, test and compare solutions that you might employ. What White has given us is the great start. I keep reiterating that most books on entrepreneurship and new venture creation start by saying “OK, you have an idea…now here is how to build a business.” White gets us closer to that point. Now we actually do have an idea or at least a problem to wrestle with. We have direction and can start working with more concrete processes. After identifying the problems you want to solve, the rest is leg work. It is about perseverance and a determination to find a solution. It is about research, testing, prototypes, et cetera. Once you have a direction, the rest is up to you. If you don’t like the direction you have, White has given you a process to uncover a million more directions to start with. For me, having that starting point is the most reassuring part. I know that once I have a direction I am passionate about, I will do the leg work, the research and continue to push for solutions. The hard part was getting that first inkling of where to go, seeing where the problems lie. More importantly we have relevant problems to solve, not just-plucked-out-of-a-hat problems that we might have found given little initial direction. Now that we have that start, we can move forward with the concrete areas of work and getting closer to launching a venture.
As I mentioned before, we also need to look at how we can use the chapters of this book as well as White’s “now solve it” ending to his process. I think what is unique about this book is that many of the chapters are essentially solution techniques that produce novel results. I think when White said to “think of all the possible solutions,” what he was basically telling you to do was use brainstorming to finish out the process. While brainstorming is a good method, this ending to such a great process is somewhat lackluster. We all know how to brainstorm. I think employing some of the chapters of the book as solution methods can be much more innovative. What I mean by this is that when you look at the problems you have identified, you can start to run down all of the innovative ways in which people create ventures to see what might be applicable to the problems you have identified. The chapters of the book are some of the areas and solution methods that the entrepreneurial community have identified as methods that produce novel results and consistently innovative solutions. Utilizing their power can make the efforts of “market gap analysis” that much more meaningful. Instead of just brainstorming, you can employ tactics that, often, inherently create novel solutions to problems. So my advice to you is that if you choose to use White’s market gap analysis, take his ending one step further by employing some of the updated methods for solving problems innovatively. This greatly increases the chances that you will be able to find novel business ideas and avenues of success to further pursue.
I want to start wrapping up this chapter with some final insights that Richard White laid out for his market gap analysis. The first thing that I wanted to mention is a process White talks about for choosing your industry of focus. White mentions that in order to sustain and grow a firm, we need to pick industries that have the potential for growth. Identifying a growth industry at the outset of the market gap analysis will help ensure that any solutions you start to come up with will not be lost efforts in a mature market space. White said that in order to find the industries that people are calling “growth” industries, you had to look no further than some of the investment people and firms out there making decisions. Banks, mutual funds, venture capitalists and other sources of funding for ventures are a good way to see where smart people are putting their money. These groups will generally have defined the growth industries they believe will propel their investments for the future. If you want to identify growth markets, start targeting your market gap analysis around those industries that these people are investing in. Ask around. Many magazines, web sites and blogs will give you a pretty clear picture of where growth industries may lie for the future.
Another caveat to market gap analysis that White talks about is being able to classify the opportunities and solutions that you come up with. Not all of the areas of opportunity are going to be right to pursue. Part of this is common sense and part of it is investigatory work. White put his opportunities into three main categories; long term growth market, short term growth or mirages. Short term growth markets were those markets where opportunity existed but the chance to take advantage of it would be fleeting and short lived. He also identified mirages where at first glimpse it might seem as though there is a chance for growth, but in actuality the solution may not be viable. An instance of this would be that there is a problem, we have a solution, people would like it but they wouldn’t be willing to pay for the solution. Mirages are typically problems that exist but consumers are not willing to pursue solutions because they are so minor or maybe the solution is too complex to warrant a purchase. Therefore, White recommends sticking to only opportunities that you believe your research shows are going to be long term growth industries. These are industries characterized by long term needs and willingness of consumers to pay. Long term growth industries are measured in years or decades whereas short term growth industries might be measured in months. Know the difference between these areas of opportunity and be conscious as you move forward that the best venture ideas are founded in long term growth industries.
The final point is this, do not simply read this chapter. This chapter is meant to show you the process. Only by actually doing the process yourself on paper and putting in the time will you get anything out of this. The more you practice something, the better you can become at it. This chapter is no different. Start practicing now and start putting in the effort it takes to uncover truly great sources of business ideas. Just understanding the chapter is not enough. The ideas aren’t going to fall in your lap, start doing a proactive search for them. The more searching you do, the better your odds of success will become.
It took me seven years to find this obscure, out of print method that Richard White put to paper in 1977. Although this process is not mind-blowing and is intuitive once someone shows it to you, I think that it hits on a point that is often lost in innovation teachings. Innovation is about breaking things down, taking one small step at a time. Only later can you piece together the total picture. The nice thing about White’s method is that it can give you a kick-start if you are spinning your wheels trying to locate a venture to start. It is reassuring to know that you can start to define a direction and start right now versus wandering aimlessly wondering when intuitive thought might hit. White’s method gives us a way to break down “finding problems” into manageable pieces and a definable direction. Utilize this as often as possible and I am sure that you will start seeing the world and it problems in a new light. In combination with the solution chapters of this book, you will be well on your way to creating great business ideas.
(4) White, Richard M. The Entrepreneur’s Manual. Radnor, PA: Chilton Book Company, 1977, pp.
52 – 59.
To preface White’s method of market gap analysis, we should be aware of what it is that he sought to accomplish and why it works. A great quote from Gilbert K. Chesterton comes to mind that illustrates the problem White was trying to diminish. Chesterton said, “the perplexity of life arises from there being too many interesting things in it for us to be interested properly in any of them.” When we are given the insight that in order to innovate we must find and solve problems, we are left with a vast sea of possibilities. There are too many interesting avenues we could take which leaves us at a loss about where to start. Essentially we need to focus in. White presents a concrete method for identifying problems or “market gaps” as he calls them. The process works because it allows us to start with no previous conception of where you are headed and systematically forces you to focus in and hone your thought stream. In the process you break down a sea of potential markets into a smaller, more manageable subset of ideas. When we are able to break it down in this manner, our mind is able to wrap itself around the task at hand. We are now able to have relevant, specific thought streams that address innovation and allow us to identify potential problems. By the last step we have concrete avenues and issues to research. Let’s now look at the process and see how White accomplishes all of these things.
Step 1: Choose an Industry
While White didn’t specifically state this as his first step, this is a helpful precursor to his process. This is the first and only time in this book that I will advise that you pick any industry, even at random if you so choose. It can be however broad or narrow as you choose. Call it travel or leisure or entertainment, it doesn’t matter. This process inherently has you focus in by the end, so feel free to choose any industry that interests you at the outset. The process is also relatively quick, so if you have lackluster results with one industry, it doesn’t take much to start all over. By the way, this isn’t just a read and remember chapter. Get out your pen and actually try this. Without doing so, you will never appreciate the value.
Step 2: Lay Out Objectives
For the second step, White says that we need to lay out our objectives for the potential idea or venture. What he means by this is that we need to define what type of opportunity we are willing to pursue and what types we are not. Throughout the process White has us continually coming back and comparing potential ideas with our objectives. Any potential avenues or problems that we uncover that do not match with the objectives of the venture can then be eliminated so we can focus on problems that will meet the criteria we want in an idea. Some examples of criteria might be;
1. Must have a potential market of at least 1 million units
2. Must be a physical product, not a service
3. Total market potential must be $500 million plus
4. Must be able to attain at least 10% of that industry
5. Must be an electrical device
He also adds that you must address personal objectives and the type of industry when you lay this out. For instance;
5. Want to pursue a long term growth industry
6. Founders are visible in the public eye
7 Ability to attract top talent from other firms with the idea.
By incorporating your personal goals along with the objectives of the product, you get a clearer picture of the type of venture you want to start. By doing this you eliminate a lot of avenues that would never provide you with the opportunity you were searching for. It is the first level of focusing your efforts. Also, White mentions that numerous objectives might seem too restrictive to produce anything viable. You will quickly see that this is not the case. Ten to twelve objectives is considered low demands by White. Hashing out all your objectives is key to finding the right match for your venture. At this point, you want to write down your objectives for a venture. Putting the goals and necessities of your venture on paper now will eliminate a lot of the clutter for the future. Do this now on your own.
Step 3: Segment Your Industry Into Major Components
For the purpose of examples, I am going to use the “Entertainment” industry as my industry of focus. The third step involves breaking down your industry of focus into its major components. This means you want to break it down into the types of entertainment you could possibly explore and also the potential consumers. Most of these examples are taken directly from White.
1. Senior Citizen, Adult, Children, Family
2. Male, Female, Both
3. Active, Passive or Combination
4. Indoor, Outdoor
5. Spring, Fall, Winter, Summer
6. Lower Class, Middle Class, Upper Class
7. Black, White, Hispanic, Combination or All
You can come up with any method for segmenting a market. These are just a few examples. As we proceed we are going to choose one of these major segments. Say, for instance, we choose Adult Entertainment (not in the pornography sense). This is another level of focusing in. By choosing this we are ignoring senior citizen entertainment, children’s entertainment, family entertainment, et cetera. White has us follow only one leg of one of the major category breakdowns. You can always come back to this step and choose a different leg, but in order to focus, you only choose one at a time. Do this now with your pen and paper.
Step 4: Segment Again Into Major Categories
The next step is to take the avenue we selected in step 3, adult entertainment, and segment it further into its major categories. Some good examples of how to segment might be the times adults have available for entertainment or the types of entertainment. Let’s look at some of those breakdowns.
1. Weekday, Weekend, Vacation, Holiday, Retirement
2. Movies, Music, Art, Reading
Since I do not want to just blindly copy White’s book, I am going to take a slightly different direction than he did with our example. However, I thought it was interesting that when he segmented the categories by time available to pursue them, it made it extremely easy to identify problems. For instance, if he chose weekday as his category, in the next step he would break it down into all the major time categories available in a day. Pre-breakfast, Breakfast, After Breakfast/ Before Lunch, Coffee breaks, et cetera. Segmentation is about getting specific. For some reason, “time” segmentation makes it easy to identify with in your mind.
Step 5: Segment Again Into Major Categories
For my example I chose movies. So now we are at Adult-Entertainment-Movies. Again we break this down into its major categories.
1. DVDs, VHS, Internet Downloads
2. Pay per View, Movie Rentals, TV Movies, Theater Visits
3. Independent Movies, Major Motion Pictures
White says “You’ll note that so far, all that we have done is focus, magnify, refocus, remagnify, refocus again, remagnify again until the large growth industry is divided into handleable portions. An industry like the [entertainment] industry is so large that you cannot begin to see it until you segment it down to its sub-sections. We are now just beginning to see the trees in the forest. The more complex an industry, the more you have to divide, redivide and reredivide.”
Step 6: Elimination Based On Objectives
In this step you now take the breakdown of step 5 and eliminate any categories that do not mesh with the objectives you stated at the outset of this process. You may be able to keep them all intact or you may eliminate 75% of the subsets. Results will vary widely depending on the individual and their goals. Take a moment to briefly compare whether you think any of your segmented categories can be eliminated at this point based on your objectives.
Step 7: Identify Problems With The Subset You Select
For this step I am going to choose “theater visits” as my category to continue with. So now we are at Adult-Entertainment-Movies-Theater Visits. It should now be much easier to concentrate on identifying problems. If you hadn’t been given some substance and a process to follow, trying to identify a “problem” out in the vast seas of possibilities might have lead you down a completely irrelevant path. You may have never even started thinking, you might have just given up and went to mow the lawn or watch television. But with a specific stream of thought, you are now at a place that is much more specific. You are now faced with identifying problems when adults seek entertainment by making a trip to the movie theater. This is something we can all identify with and a specific situation on which we can focus our minds. Now let’s explore some of the problems with this activity. I will limit my list to fifteen because I think you will get the point.
1. Going to the movies is expensive at $9.50 a ticket, $3.00 a gallon for gas, $5.00 for drink and $4.00 for candy, I can’t afford to go see the movies I want to
2. Theaters are noisy, I have to hope that my fellow moviegoers do not include the teenage population, babies, cell phones, et cetera
3. Seats are uncomfortable
4. The floor is somehow always sticky
5. The person in front of me is blocking 1/8th of the screen and I have to crane my neck
6. The best seats are always taken. I end up in the front row or way in the back
7. I can’t find more than one seat open and I have two people with me
8. Having to leave for the restroom or snacks, I miss part of the movie
9. My show is sold out and the next movie isn’t for another hour and a half
10. The noise level is too loud
11. The theater is always cold
12. I feel cramped by the leg room
13. Only the theater built in 1978 is showing the movie I want to see so the picture quality is outdated
14. The closest movie theater is a 20 minute drive
15. Dinner finished early and I have an hour to kill before the movie starts
You could continue on and identify a plethora of other problems that exist with theater visits. When you actually perform a market gap analysis, please do exhaust the list with your ideas as it will give you the most opportunity to take advantage of this type of analysis.
Step 8: Eliminate Problems That Do Not Mesh
Step eight is the second round of elimination of those things that do not mesh well with the objectives we set out at the beginning of the exercise. Let’s say for instance that I have no real interest in solving the problem that “theaters are too cold.” I would eliminate this from my list and focus on those areas where I feel I have the skills to solve the problems at hand. Continue to eliminate problems until you are satisfied that the problems left have the capability to match the objectives of the venture.
Step 9: Matrix Analysis (White’s Title)
A “matrix analysis” sounds more complicated than it actually is. In this step you want to list out all of the problems you are moving forward with along the left hand side of a piece of paper. Then across the top of the paper from left to right you are going to make a column for each of the objectives you laid out at the outset of the process. After you have done that, go through each problem and place a check mark under each objective column that you feel the solution to that problem would mesh with. Once you have thought through this process and have a final tally, you want to move forward in this analysis with those problems you feel best match the your objectives and capabilities.
Step 10: Listing Ideas for Solutions
At this point we have accomplished the goal of this chapter. Instead of aimlessly trying to locate problems, we have shown you a process to systematically identify where they might lie. The key part of the understanding of this chapter was to develop a way to add substance to the common mantra of “find a problem to solve.” We have done that. This advice isn’t as vague or obscure now that we have a substantive process with which to find those problems. From here we are going to proceed in two ways. First, I will tell you how White finishes his process and how he talks about solving problems. Secondly, we can diverge from White’s process and talk about how this book and its chapters can aide you in solving the problems you have located. First for White.
Moving Forward with step 10, White recommends that you start listing out all of the possible solutions to each of the problems you have identified. This is pretty much a think tank/ brainstorming session. You can now start to theorize and explore ways in which to solve the problems you have uncovered. White suggests that you list as many possible solution avenues as you can come up with. Taking different angles and theorizing different solutions will allow you to get the whole picture.
Step 11: Select the Best Opportunities and Test them
This step is mostly self explanatory. After you have exhausted your list of problems with all the possible solutions you can come up with, it is time to start testing the validity of some of those solution avenues. This is where the leg work of innovation begins to come in and branches out beyond the scope of this book. In this stage you want to start testing whether your ideas could actually solve the problem. This step is mostly about research and exploration. It is also about testing some of the assumptions you have made up until this point. For instance, you might discover that a solution you thought would have a 1 million unit market in fact is only a 200,000 unit market and, by your standards, not worth pursuing. Many books and texts will show you methods to test market viability and research methods to test the validity of your ideas. That is beyond the scope of what we are doing here, but I trust you will have no problem locating numerous sources that have some concrete methods for your analysis.
At this point White ends his process. He has given you the means necessary to identify problems and cuts you loose to research, test and compare solutions that you might employ. What White has given us is the great start. I keep reiterating that most books on entrepreneurship and new venture creation start by saying “OK, you have an idea…now here is how to build a business.” White gets us closer to that point. Now we actually do have an idea or at least a problem to wrestle with. We have direction and can start working with more concrete processes. After identifying the problems you want to solve, the rest is leg work. It is about perseverance and a determination to find a solution. It is about research, testing, prototypes, et cetera. Once you have a direction, the rest is up to you. If you don’t like the direction you have, White has given you a process to uncover a million more directions to start with. For me, having that starting point is the most reassuring part. I know that once I have a direction I am passionate about, I will do the leg work, the research and continue to push for solutions. The hard part was getting that first inkling of where to go, seeing where the problems lie. More importantly we have relevant problems to solve, not just-plucked-out-of-a-hat problems that we might have found given little initial direction. Now that we have that start, we can move forward with the concrete areas of work and getting closer to launching a venture.
As I mentioned before, we also need to look at how we can use the chapters of this book as well as White’s “now solve it” ending to his process. I think what is unique about this book is that many of the chapters are essentially solution techniques that produce novel results. I think when White said to “think of all the possible solutions,” what he was basically telling you to do was use brainstorming to finish out the process. While brainstorming is a good method, this ending to such a great process is somewhat lackluster. We all know how to brainstorm. I think employing some of the chapters of the book as solution methods can be much more innovative. What I mean by this is that when you look at the problems you have identified, you can start to run down all of the innovative ways in which people create ventures to see what might be applicable to the problems you have identified. The chapters of the book are some of the areas and solution methods that the entrepreneurial community have identified as methods that produce novel results and consistently innovative solutions. Utilizing their power can make the efforts of “market gap analysis” that much more meaningful. Instead of just brainstorming, you can employ tactics that, often, inherently create novel solutions to problems. So my advice to you is that if you choose to use White’s market gap analysis, take his ending one step further by employing some of the updated methods for solving problems innovatively. This greatly increases the chances that you will be able to find novel business ideas and avenues of success to further pursue.
I want to start wrapping up this chapter with some final insights that Richard White laid out for his market gap analysis. The first thing that I wanted to mention is a process White talks about for choosing your industry of focus. White mentions that in order to sustain and grow a firm, we need to pick industries that have the potential for growth. Identifying a growth industry at the outset of the market gap analysis will help ensure that any solutions you start to come up with will not be lost efforts in a mature market space. White said that in order to find the industries that people are calling “growth” industries, you had to look no further than some of the investment people and firms out there making decisions. Banks, mutual funds, venture capitalists and other sources of funding for ventures are a good way to see where smart people are putting their money. These groups will generally have defined the growth industries they believe will propel their investments for the future. If you want to identify growth markets, start targeting your market gap analysis around those industries that these people are investing in. Ask around. Many magazines, web sites and blogs will give you a pretty clear picture of where growth industries may lie for the future.
Another caveat to market gap analysis that White talks about is being able to classify the opportunities and solutions that you come up with. Not all of the areas of opportunity are going to be right to pursue. Part of this is common sense and part of it is investigatory work. White put his opportunities into three main categories; long term growth market, short term growth or mirages. Short term growth markets were those markets where opportunity existed but the chance to take advantage of it would be fleeting and short lived. He also identified mirages where at first glimpse it might seem as though there is a chance for growth, but in actuality the solution may not be viable. An instance of this would be that there is a problem, we have a solution, people would like it but they wouldn’t be willing to pay for the solution. Mirages are typically problems that exist but consumers are not willing to pursue solutions because they are so minor or maybe the solution is too complex to warrant a purchase. Therefore, White recommends sticking to only opportunities that you believe your research shows are going to be long term growth industries. These are industries characterized by long term needs and willingness of consumers to pay. Long term growth industries are measured in years or decades whereas short term growth industries might be measured in months. Know the difference between these areas of opportunity and be conscious as you move forward that the best venture ideas are founded in long term growth industries.
The final point is this, do not simply read this chapter. This chapter is meant to show you the process. Only by actually doing the process yourself on paper and putting in the time will you get anything out of this. The more you practice something, the better you can become at it. This chapter is no different. Start practicing now and start putting in the effort it takes to uncover truly great sources of business ideas. Just understanding the chapter is not enough. The ideas aren’t going to fall in your lap, start doing a proactive search for them. The more searching you do, the better your odds of success will become.
It took me seven years to find this obscure, out of print method that Richard White put to paper in 1977. Although this process is not mind-blowing and is intuitive once someone shows it to you, I think that it hits on a point that is often lost in innovation teachings. Innovation is about breaking things down, taking one small step at a time. Only later can you piece together the total picture. The nice thing about White’s method is that it can give you a kick-start if you are spinning your wheels trying to locate a venture to start. It is reassuring to know that you can start to define a direction and start right now versus wandering aimlessly wondering when intuitive thought might hit. White’s method gives us a way to break down “finding problems” into manageable pieces and a definable direction. Utilize this as often as possible and I am sure that you will start seeing the world and it problems in a new light. In combination with the solution chapters of this book, you will be well on your way to creating great business ideas.
(4) White, Richard M. The Entrepreneur’s Manual. Radnor, PA: Chilton Book Company, 1977, pp.
52 – 59.
