1 – Customer Problem
A look at the business model from the product manager's point of view
CANVAS 13 - Great guide on the business model, from the product manager's point of view
You are here ➔ 1 – Customer Problem
2 – Customer Segments
3 – Value Propositions
Value Proposition Formulation Map
4 – Customer Relationships
5 – Channels
6 – Revenue Streams
7 – Key Activities
8 – Key Resources
9 – Key Partners
10 – Cost Structure
11 – Eco-Social Costs
12 – Eco-Social Benefits
13 – KPI (Key Performance Indicators)
1 - Customer Problems
In the CANVAS 13 business model for the product manager, the first step is to identify customer problems.
This is critically important, as product development is based on solving these problems. To identify customer problems, the product manager must conduct thorough research, including qualitative and quantitative interviews with customers, surveys, and market analysis. This will help to better understand the needs and desires of customers and create a product that satisfies them. Understanding customer problems also helps to define the unique value proposition of the product, i.e., what makes the product unique and attractive to customers.
APM - Application Performance Management
APM tools help IT departments ensure that applications meet performance and user experience expectations, as well as monitor and manage the performance and availability of software applications.
In other words, it is the adaptation of the Product to the Market, which defines how to create value for our users. To create a successful startup, it is necessary to find a match between the product and the market (APM).
If we start with the solution, we may create something that no one cares about. This is disappointing, especially when effort, time, and money have been invested. Most startups do not survive because they cannot find an APM, which often happens if they focus on the solution and not the problem. There are many reasons to start with the problem, including increasing the probability of creating value.
Another key reason will be a simple and compelling story that will show the disappointment brought by the problem and people will be able to identify with this problem through the disappointment that is familiar to them.
"We help XYZ people avoid the ABC problem"
The main aspect we must start from and around which to build our product is the definition of the customer's problem and the implementation of its solution in the best possible way.
What can be important to an ordinary person? It could be something unique, for example, special content, a good price, or a well-known brand. For companies, practical things are important, such as saving money on hiring employees, access to market information, or the ability to avoid unnecessary expenses. For ordinary people, emotions play a big role. Even in games, it may be the emotions that make the gaming process unique. Because despite all the rational things in business, humans always remain creatures that experience emotions.
What can be valuable? The value of a product or service lies in what makes it special or useful. It could be its novelty, how well it works, how suitable it is for a specific user, its ability to help the user do something, its beautiful design, a cool brand, an affordable price, its ability to help the user save money or avoid risks, its availability, as well as its simplicity and ease of use. And here again, humans always remain creatures that experience emotions.
The main questions we must ask ourselves in the first stage
- What value do we bring to the customer?
- What customer problems do we help solve?
- What sets of products and services do we offer to each customer segment?
- What customer needs do we meet?
Identifying where the problem lies in the rating matrix
In the book Fall in Love with the Problem, Not the Solution, Uri Levine proposes the following approach to rating the problem, this is important for us because we are entrepreneurs and cannot solve the problem of a single user. Therefore, before moving forward, it is important to understand if our problem is where we can exist as a startup.
When thinking about the problem, we should consider this matrix and ask ourselves two questions:
- What is the size of the potential market? How many people have faced this problem? How many businesses have suffered because of it?
- Then, the most important question: how much does it hurt? The pain can be measured by one or two factors: breadth (it hurts a lot) or frequency (it bothers us frequently).
And now, after answering these questions, Uri Levine will help us determine if we have chosen the problem correctly.
- The "Winners" are easy to understand but hard to find. They are located in the upper right corner, where there are many users and a high frequency of use (value): think of Facebook, Google, WhatsApp, Telegram. If you ask someone how they found out about Telegram, it was probably through a friend's recommendation. All successful companies in the consumer sector grew from friends telling other friends. If a product is used frequently, the likelihood of this happening increases dramatically, because there will be many use cases for the product and many more opportunities to tell others about it.
- "Niches" can be very successful companies with enormous influence potential for a few (think of treating a rare medical syndrome). Or imagine creating a market for underutilized private jets. This model can save a lot of money, but it is relevant to a very small (and wealthy) potential market. Niches have a small potential market, but their frequency of use or value is very high. They are quite good companies.
- The "Losers" are in the region of the matrix where there are few users and a low degree of use/value.
- "Dreams and Nightmares" is the category of potential market "everyone," but where the cost is low or the use is rare; for example, a driver's license renewal service. Although going to a traffic accident is always perceived as a waste of time, this only happens once every five or ten years. People want to believe in their dreams, but in reality, in this case, they are nightmares because there is not enough value to be obtained through the potential market.
