Root Causes Could Destroy your Symptoms Business

By Jonathan Crowder on February 15, 2019

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I’ve been spending a bit of time lately considering the difference between businesses that address root causes as opposed to those that are based on treating a symptom of the underlying problem.  For these purposes, we’ll define a root cause as the most fundamental psychological, structural or economic reason for a customer’s issue.  When I refer to a "symptom business,” I’m referring to a company that seeks to solve some important but non-root cause of customer pain.  As I refine my thinking on the topic, I’ve begun distilling it to a few principles:
 
  1. In a basic sense, the enterprise value of most businesses is largely a product of the magnitude of the customer problem being attacked and how efficiently / effectively that pain is resolved.  Businesses that attack root causes end up being superior on both fronts.
  2. While many businesses resolve symptoms of underlying problems, they’re both less durable and less valuable on average than businesses farther up the causal chain.
  3. The farther up the causal chain a product or service is, the greater the number of relevant symptoms it can be used to resolve.
  4. Symptoms businesses are easily disrupted by startups that solve root causes.  
  5. By contrast, the only way to compete with a business resolving the root cause of a customer pain is by executing more effectively.  This is more difficult.
  6. Truly great businesses may resolve the root cause of more than one customer pain point, or the root cause of pain for more than one customer set.
 
Since we’re using terminology that’s often associated with medicine, let’s take an example from that field.  For instance, let’s take a class of drugs that is addictive and causes negative side effects in a large segment of the population: opioids.  
 
What is likely to be the better, more durable, more valuable business?  Is it a digital health solution that allows providers to better track and limit patient access to these drugs?  Or would it be a replacement for that class of drugs that is similarly effective, non-addictive and with fewer side effects?  Ceteris paribus the second is a better, more durable business — it negates the need for the first.  (Of course, a digital health solution might be used to address issues in other classes of drugs that have similar problems, but you get my general point.)  Still better would be a business that reduced the incidence of pain in the first place by preventing the underlying conditions or incidents that cause pain.  
 
All the same principles apply in a broader business context, and the truly great digital businesses of our era understand this.  Google, Facebook and Amazon all resolve at least a few fundamental customer pains, and do so for several customer types.
 
I realize this seems obvious, but it’s surprising how regularly companies get it wrong.  This is often a lethal mistake.  Sometimes it’s the case that the root of a problem may be either too complex or technically challenging to resolve presently.  But as you build your company, I’d urge you to spend the time to deeply understand the customer problem you’re attempting to solve, and when possible build a product that attacks the root cause.