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The best entrepreneurs start businesses to solve problems. And, solving problems in new and better ways means a focus on innovation – whether it’s product or delivery or materials or timing, doing something different in a way that adds value is a competitive advantage. But when you innovate, you’ve got to get your priorities – and your incentives – right. Brent Beshore and David Cover recently talked with New Story Co-Founder and CEO Brett Hagler about innovating on philanthropic models as part of the company’s mission to create a more inclusive and affordable housing market for low-income families. 

The biggest takeaway on innovating right? Work from the problem out, not from the solution in.

Problem-first (Not Tech-first) Problem Solving

Innovation and tech aren’t synonymous, but it can sometimes seem like they are (especially in a social media environment that is, at the time this piece was written, chock full of AI news). The shininess of new technologies can be impossible to walk past – and, sometimes the promise bears out.

The danger in looking to tech first to provide innovative solutions is that it can be expensive to acquire and implement. And once you have that hammer, every problem starts to look like a nail. Brett describes the danger like this: “With any innovation, it’s really important not to talk about the shiny, exciting solution of the future without first really talking about the problem you’re trying to address.”

So what does problem-first problem-solving look like in practice? Two quick examples from New Story: 3D printing and payments.

3D Printing

The approach there was less “Wow, this sounds so exciting. This is amazing. Let’s see how this could work at scale.” It was more, “Man, there’s a really big problem of trying to do quality control at scale and not seeing ways that we can decrease costs using traditional building methods. How can we do that in a way that still has good design, is quality, and is desirable?”

Payments

We’ve been working with a company on a pilot using AI to help families that don’t have a traditional credit history or a track record that lenders can easily point to. So we’re [developing a program] having AI scrape data using their phone to help them create a better credit profile. But the problem is that many families are very hardworking, but they’re not banked in the traditional system. They’re probably not connected to a digital system either. So how do we help create a better credit profile for them?

The common thread linking these two stories is that, while the solutions they ended up with were tech-forward, the driving question was “What are we trying to solve for?” In the first case, it was how to be able to build more houses of better quality faster. In the second, it was finding a way to build credit histories for people who haven’t been connected to traditional banking systems. A laser focus on those underlying problems guided what innovation looked like, as well as how and what tech solutions were eventually developed and tested in the field.

And that testing is critical:

Our Innovation Lab does small, very early stage pilot testing to solve problems that have us banging our heads against the wall. Our approach is to identify potential companies, opportunities, or innovations that could work for the problem we’re trying to solve and then create a small test environment (whether it’s in the communities we work with or through our partners) to test the innovation.

For the record, you don’t have to have your own innovation lab to understand what problems technology will help solve, how and when to adopt new solutions, and how to innovate around and with technology. 

It’s about identifying and articulating the problem that you need to solve – for your business, for your customers, for your employees – and then honing creativity, curiosity, and ingenuity, experimenting frequently and at a manageable scale, documenting and iterating, and, when something works, swinging with focus and conviction. 

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