NATURAL ENTERPRISE: FILLING AN UNMET NEED

“Find a need and fill it”. I have heard this quote from no fewer than a dozen successful business leaders. Ted Rogers, son of the inventor of the alternating-current radio tube (that allowed radios to be powered by electricity), and one of Canada’s most successful entrepreneurs in his own right, recognized a need for more varied radio and television programming in Canada, so he bought up some new and very inexpensive licenses, for FM radio stations (when there were no FM stations and few FM radios), and for Cable TV distribution (when there were very few cable distributors or customers). Ted usually starts his speeches with the six-word quote that began this paragraph.

Entrepreneur Magazine lists ‘find a need and fill it’ as Rule #1 for business start-ups. Chuck Frey’s ‘Innovation Tools’ says these six words lie at the root of any business success. It’s the most important business advice you can give.

But what does this mean? It means that every successful enterprise’s offerings (products and/or services) meet four criteria:

1. They fill an unmet business, social or consumer need.
2. The enterprise understood why the need wasn’t already being met, and overcame those obstacles.
3. The enterprise has the competencies to effectively create and deliver offerings that fill that need.
4. The enterprise has the resources to bring those offerings to the marketplace.

This may sound like a simple recipe, but it’s actually quite difficult to achieve. The market for products and services, though far from perfect, is reasonably efficient at identifying and satisfying needs. If you find an unmet need, there is almost surely a reason why that need isn’t being met by some other enterprise. You need to find out what that reason is, and overcome it. And then you need to gather a team of people with the collective competencies to design, produce, market and distribute the product or service that meets that need, and the resources (physical, financial and intellectual) needed to do so effectively. Easier said than done.

The key to doing this is in research, the difficult, time-consuming (but usually inexpensive) process of discovering the who, what, when, where, why and how of unmet needs. There are two kinds of research: Secondary research entails reading and browsing online to gather information that has already been published about the market, and need, and the possible solutions to it. Primary research entails talking to people directly to answer these questions, gathering unpublished information and intelligence. Successful needs identification usually stems from primary, not secondary research.

How do you go about doing this? To some extent it will depend, of course, on what the business idea is. You’re going to have to be creative and patient and methodical in solving the all-important problem of identifying what the market needs, which is not already being satisfied by existing products and services. That means you’re going to have to take the time to learn a lot about the marketplace, and about customers. Here are some ideas to get you started:

• Look at changes and trends in the marketplace: What’s hot, and what new needs will the demand for suddenly-hot products and services spawn? How are consumer attitudes changing? How are buying behaviours changing? How is the market changing to respond to changing consumption patterns?
• What are people complaining about? Every complaint reflects an unmet need.
• What problems are businesses facing? What’s keeping executives awake at night? What could you offer that would let them sleep better?
• What do people think there’s never enough of? Sustained shortages represent business opportunities.
• What are the gaps in products and services? In The Support Economy, Shoshana Zuboff describes the next economy as one where the customer’s needs are met ‘end-to-end’. People don’t have time or patience to fill in the product and service gaps, like when the great product breaks down and there’s no backup, or when the daycare service closes two hours before they get home from work. A gap implies an unmet need.
• Likewise, is there a new service that you could ‘wrap around’ an existing product or service to make it more valuable? (Offering haircuts and rinses in people’s homes and offices, or dinner on the commuter train, for example.)
• In Innovation and Entrepreneurship, Peter Drucker identifies seven areas of innovation opportunity resulting from discontinuities, all of which can be used to unearth unmet needs:
• Unexpected occurrences (if Kerry wins in November, what new market opportunities will that present?)
• Perception/reality incongruities (when we realize that greenhouse gases will bring about massive climate and environmental change in our lifetimes, how will consumer needs change?)
• Process weaknesses or needs (some believe advertising has no future: if they’re right, what will business need in order to get information to consumers in other ways?)
• Industry and market changes (what will $160/barrel oil mean to us all?)
• Demographic changes (with a huge number of people retiring in the next 10-20 years, what will they do with their time?)
• Buyers’ attitude and priority changes (consumers see file-sharing as a work-around for CD price-gouging and TiVo as the solution to lousy program offerings and excess commercials — what does that mean for these industries?)
• New scientific and business knowledge (how will RFID devices change the way we live, shop, work, and protect our privacy?)
• Look at basic, overarching human needs: Health, safety, education, time, decent quality of life, meaning, recreation. How are our experiences of these things currently unsatisfactory, and how might they be improved?
• What great ideas failed, and why? Maybe they were ahead of their time, and their time is now.
• What’s happening to transform certain industries, or economic sectors like education, public health, and even defense, and how might those transformational ideas, products, processes, technologies and models be applied in other industries and economic sectors?
• What are big corporations looking to outsource? Could you offer them what they need in those areas?
• What small “niches of need” exist in big business that other big businesses can’t be bothered to address? (Event planning for example).
• What small “niches of need” exist in consumer markets that big, unspecialized businesses can’t be bothered to satisfy?
• What new regulations exist that need compliance tools, processes, advice on compliance, and assistance?
• Is there a market somewhere in the world for something we take for granted but they don’t have at all? And vice versa, do people in some other countries take for granted things that we have never considered selling here? In Europe, for example, some movie theatres offer excellent cuisine and fine wine — would that work in North America?

So now you’ve identified an unmet need, or, better, a whole raft of them. How do you investigate why these needs aren’t already being met, and identify the competencies and resources that your enterprise will need to galvanize to fill those needs? The successful entrepreneurs I know all say they talked to a lot of people — potential customers, potential suppliers, prospective competitors, experts in business startups, industry experts, market analysts, and others — before they did anything else. The more people you talk to, the more you will learn, the closer the consensus of those people will approximate the true marketplace for your idea, the more alternative ideas you will be able to consider, the less likely you will hit the landmines that undo so many businesses with great ideas who rush prematurely into the market with suboptimal solutions. As you do your research, keep asking these questions until you’re highly confident that you know the answers:

• What exactly is the need?
• Who exactly is the customer (the group that has that need)?
• What are the alternative solutions to it? What are the benefits and drawbacks of each alternative? Which, all things considered, are the best, affordable alternatives?
• Who is offering, and who could easily offer, each of those solutions? Why aren’t they already offering these solutions?
• What competencies and what resources would your enterprise need to have to bring the best alternatives to market?

No matter how wide a net you cast, you will probably be able to winnow the list down to a very few viable alternatives for each of a few needs that you believe your enterprise could competently satisfy. The best way to decide among these alternatives and needs is to do even more, mostly primary, research. Take a sketch or a prototype of your solutions (that’s plural) to a significant cross-section of prospective customers and ask them to choose between them. Ask them how much they’d pay for it. Ask them what’s wrong with it and what’s missing. Ask open-ended questions (not just multiple choice or true/false, the way so many telephone ‘surveys’ do) and listen and take notes on the answers. If you’re genuine and enthusiastic you can gather extremely valuable and reliable information this way, information you cannot get any other way, and which no one else will have.

You’ll also learn a lot about the research process, and you’ll get better and faster at it the more you persevere. I know researchers who are the de facto Subject Matter Experts on a lot of subjects, far more informed, and better able to substantiate their opinions, than the gurus who have worked in the industry all their lives. Good primary researchers have the benefit of current information gleaned directly from the horses’ mouths, a lot of them — the Wisdom of Crowds.

You might think it takes a lot of gall to get so many people to give you so much information and to offer their opinions free of charge. But entrepreneurs and researchers I know tell me people are often glad to help, and to offer their opinion, as long as the demand on their time is modest and that the solicitation is polite and personal. That means, ideally, face-to-face, with the telephone used only to secure an interview with them. Prepare to wear out a lot of shoes doing your research.

Because business’ products and services are so diverse, it’s hard to generalize beyond this point about the process of Filling an Unmet Need. As the next three chapters will show, not only does going through this painstaking and time-consuming process almost guarantee you success, it can also dramatically reduce the amount of time, effort and money you need to spend promoting and marketing your product or service (you’ve already met a lot of your first customers, and if you fill their unmet needs they will spread the word to others — and take some pride in having played a part in your success), and it can even reduce the amount of money you need to raise to launch the enterprise. But most importantly, you should follow this process, gruelling as it may be, because it works. If you doubt me, talk to any successful entrepreneur about the value of doing this, and you’ll be convinced.

In fact, this book, and the university-level Distance Learning course being built around it, came about precisely by this process: Prospective entrepreneurs, MBA students and professors I had been talking to over the past year kept telling me there was an urgent need for proven, comprehensive, practical business advice for entrepreneurs, both those looking to start their first business and those disenchanted with the struggle and disappointment that ‘traditional wisdom’ about entrepreneurship had led to. So I’m confident that this book will be a success and prove the entire point of this chapter, and without the need for a massive book publicity campaign.

* As the book nears completion, I’ve taken the liberty of revamping the order and the organization of the chapters somewhat. Chapter 11 (Day to Day operations) will now become part of an expanded Chapter 5 (Improvisational Planning and Day to Day Management), with additional material on self-managed enterprises (defined goals, roles and collaboration processes), on entrepreneurial decision-making (communication, consultation and consensus-building), personal productivity improvement and management by ‘walking around’. Chapter 10 (Launch & Life Cycle) is being renamed Business Evolution and will be the final chapter in the book (an excerpt from this chapter, describing organic life-cycles, complex adaptive systems, succession planning and ‘natural death’, will appear next week in this blog). The material on Innovation will be spread across three chapters: The Importance of Innovation (why it has been historically the #1 driver of business success); An Innovation Culture (including how to develop core innovation competencies); and The Innovation Process. Confused? A complete table of contents will appear with next week’s instalment. The final book will also include about 50 ‘mini-case studies’ drawn from my personal experiences with entrepreneurs, and from some of the leading literature on entrepreneurship: Success stories of companies that have exemplified Natural Enterprise, and war stories of those that, mostly, have not. Many thanks for all the comments from readers that have helped make writing the book a joy, and a truly collaborative experience!