Coming up with new business ideas is hard. Coming up with good ideas that will actually grow your business rather than waste your time and money is even harder.
I’ve been working with businesses of all sizes for 15 years now, and unearthing that next idea that will drive business growth is a universal challenge.
The last thing you want to do is chase after trends or waste time and money on ideas that customers and clients don’t want.
You actually have access to the best people to talk to about new products and services – your current customers and clients!
So what do you do? Where is that next breakthrough idea hiding? I find that time and again, the idea you need is waiting for you to discover it in the same place: solving adjacent problems.
What do we mean by adjacent problems?
Adjacent problems are challenges that your customers face in doing tasks directly before or after what they use your product to do already.
Here’s an example.
The team at ShippingEasy started off by providing a web application that makes it easier for solopreneurs and ecommerce business owners to ship products to their customers. As ShippingEasy grew, they began offering those same solopreneurs and ecommerce business owners an inventory solution, and then email marketing solution. Those solutions solved adjacent problems that any solopreneur or ecommerce business owner would have: How do we keep in touch with people who have bought products from us? How do we keep our inventory tracking in line with our sales data? By branching out and solving adjacent problems for its customers, ShippingEasy provided even more value for their existing customers, and made their suite of offerings even more attractive to potential new customers.
In this case, the adjacent problems were how businesses that shipped with ShippingEasy could more easily do email marketing and quickly keep track of inventory, both of which happen right before and after shipping a product.
Some entrepreneurs are naturally good at this and are very instinctual. But even if you are this entrepreneur, at some point you have to scale this skillset to your team.
Our favorite method for discovering and solving adjacent problems is generative research.
Generative research is the process of observing your existing customers in action and asking them to clarify WHY they do things the way they do them. While most companies start their hunt for new business ideas with a brainstorming meeting at their own office, the better bet is to get out of the vacuum of your office building and watch your customers at work.
Generative research can give you ideas in two main ways:
You see how you can improve the service that customers currently pay you for
You get to see adjacent tasks (what they do immediately before or after they use your product or service) and understand how you could create a new product or service to help with those adjacent tasks, which for you is an adjacent market.
By watching what customers do immediately before or after they use a service or product they are already buying from you gives you insight into issues they have in tasks or challenges that are directly adjacent to what you already do for them.
It’s powerful because you likely have a certain level of expertise, and because your customers already trust you in a related task.
Once you know their issues, you’ll start to see how you can market your current products as the solutions to those problems and how you can expand your offerings to solve their other problems.
This kind of deep inquiry gives you an understanding into the methods they use to accomplish their goals in a way that allows you to find inefficiencies, unmet needs, or latent needs. Focusing on observation and discovering why something is done a certain way today will give you much more insight than directly asking your customer what else they need.
Often, customers are so entrenched in their day-to-day that they cannot see what a breakthrough change would look like, and wouldn’t know how to ask for it. They will ask for a better version of what they already have instead of a new, breakthrough solution.
As Henry Ford is reputed to have said, “If I had asked people what they wanted, they would have said faster horses.” You don’t want to bet the future of your business on a bunch of data where customers are telling you to build them a faster horse.
So How do You do this with Your Own Customers?
- Schedule Observations:
Contact five or more of your customers and schedule a time when you can visit them and observe their workflow. (This can be done remotely as well but we recommend doing the first few in-person.)
- Branch Out:
Your job is to watch them use your product or service, as well as the adjacent tasks, or tasks that come immediately before or after what they use your product or service for.
- Observe & Ask:
Understand the most important work flows and what steps give them trouble (by the way they may not complain about, so steps that give them trouble may seem normal to them, so if you notice it don’t call it out to them and debate about it just jot it down.) Some ways to figure out less than ideal steps or workflows is to notice: Which tasks are manual? Which are expensive? Which take a long time? What parts of those tasks would they like to make easier or change?
- Look for Patterns:
Once you’ve finished the observations, it’s time to review your notes. Review the observations that you made: What are the things that came up again and again that were difficult, frustrated, or tedious? What are the important workflows people used to accomplish business goals that you observed that were difficult or could be much easier, faster, or cheaper?
- Brainstorm solutions:
Based on your assets and strengths, brainstorm how you and your company could solve those problems using the strengths and assets that already exist at your company. What are some ways you can solve their problems? Pay special attention to how these solutions can solve their problems on both an emotional level (getting people to like them, trust them, etc.) as well as on a functional level (getting things done faster, cheaper, or better). This brainstorm stage, where you start from the customer’s problems rather than the minds of your own team, is where new ideas for opening adjacent markets come from. Develop a set of criteria to narrow on the opportunity they want to investigate further.
- Validate the opportunity with quantitative research:
Once you narrow in on one or just a few problems you want to solve, design and prototype product or service solutions. You then need to find out if there is significant enough market. Here are a few things you can do to get started:
- Conduct quantitative research with a statistically significant number of potential customers to validate that the problem exists and what segment of customers this problem affects.
- Do quick and dirty business models to fill in what you know and surface assumptions (download our template here).
- Conduct research to fill in the gaps.
- Validate your concept prototype with a statistically significant number of people and look for trends in their responses.
- Refine your business model and product/service concepts based on your results.
At The Next Lab, we often design experiments as you would in a science lab so the data we collect is actually reliable and we can confidently make business decisions with it. A lot of times, we use the insights we learn from the experiments to fill in the gaps for business models and scenario planning activities to help teams decide how to move business concepts forward.
Try this out and let us know how it went for you or if there’s any questions we can clarify for you!