Companies that don’t want their future prosperity to suffer at the expense of present success need to complement their execution-focused toolbox and mindset with an innovation-focused toolbox and mindset.
Jobs to be Done
I wanted to figure out a way to identify the metrics that customers use to judge the value of newly released products early on in the product planning process.
Tying customer-defined metrics to the underlying process the customer was trying to execute was the key to success.
In late 1999, I had the distinct pleasure of introducing Outcome-Driven Innovation (ODI) and our research and segmentation techniques to Harvard Business School professor Clayton Christensen.
The results of that study showed that while the success rates of traditional innovation processes average 17 percent, the success rate of Outcome-Driven Innovation is 86 percent.
The reason for the success of ODI is simple: a company can dramatically increase its chances for success at innovation if it knows precisely what metrics customers use to measure success and value when getting a job done.
Companies fail frequently at innovation because they struggle to understand and rationalize all the customer’s needs. Jobs Theory provides a needs framework that makes it possible to categorize, define, capture, organize and prioritize customer needs. A strategy framework, built around Jobs Theory, enables a company to correctly categorize, understand, and employ the 5 strategies that drive growth. Outcome-Driven Innovation ties customer-defined metrics to the customer’s Job-to-be-Done, transforming every aspect of opportunity discovery, marketing and innovation. Prospective practitioners can assess their ability to put Jobs Theory and ODI into practice with detailed insight into a typical innovation initiative. Companies should employ a proven three-phased approach to build a competency in Outcome-Driven Innovation.
An effective innovation process must produce answers to the following questions: Who is the customer? What job is the customer trying to get done? What are the customer’s desired outcomes? How do they measure value? Do segments of customers exist that have different unmet outcomes? What unmet outcomes exist in each segment? What segments and unmet outcomes should we target for growth? How should we define our value proposition? How should we position our existing and pipeline products? What new products must we create?
WHY DO INNOVATION PROJECTS FAIL?
The goal of innovation is straightforward: to come up with solutions that address unmet customer needs.
In what I call the “ideas-first” approach, companies brainstorm or otherwise come up with product or service ideas and then test them with customers to see how well the ideas address the customer’s needs. In the “needs-first” approach, companies first learn what the customer’s needs are, then discover which needs are unmet, and then devise a solution that addresses those unmet needs.
This concept was touted by Tom Peters in Thriving on Chaos. Peters said companies should, “test fast, fail fast, adjust fast — pursue new business ideas on a small scale and in a way that generates quick feedback about whether an idea is viable.”
IBM founder Thomas Watson, who years ago said, “If you want to succeed, double your failure rate”.
Despite its popularity, academic support, and widespread use, the ideas-first approach to innovation cannot be counted on for predictable growth and is inherently doomed to failure. There are three reasons for this: First, generating more ideas does not meaningfully improve the probability that someone will come up with the optimal idea to satisfy unmet customer needs.
In any given market a customer has 50 to 150 needs. And anywhere from 5 to 80 percent of those needs may be unmet. Generating more ideas that fail to address unmet customer needs is misguided, and doing something bad faster does not lead to better results. A second reason why the ideas-first approach is doomed to failure: the evaluation and filtering processes are flawed.
The third reason why the ideas-first approach is doomed is that customers cannot articulate the solutions they want. In most cases, the customer is not a scientist, engineer, researcher or materials expert. They don’t know what solutions are possible, but why should they?
Why should a company depend on the customer to know the best solution? Why hire the customer to do the job of the marketing, development, and product planning team? Coming up with the winning solution is not the customer’s responsibility. It is the responsibility of the company.
Those who have recognized the inherent flaws in the ideas-first approach often attempt to follow a needs-first approach to innovation.
Over the years, many methods have been utilized to capture customer needs. These include focus groups, personal interviews, customer visits, and ethnographic, contextual, and observational research methods in addition to interviewing techniques such as voice of the customer (VOC), lead user analysis, and storytelling.
Marketing and development teams in particular have strongly opposing views on what constitutes an actionable need statement.
The sad reality is that despite all the talk about satisfying customer needs, there is very little understanding of what characteristics a customer need statement should possess and what the structure, content, and syntax of a need statement should be.
Today we know that obtaining inputs in the customer’s own words will more often than not result in the wrong inputs.
As amazing as it sounds, the truth is companies routinely try to satisfy customers’ needs without a clear definition of what a need even is.
How to get a handle on customer needs is an unsolved mystery — and that mystery is killing innovation. Before a company can succeed at innovation, managers must agree on what a need is — and the types of needs those customers have. The key to solving this mystery lies in Jobs-to-be-Done Theory.
JOBS – TO – BE – DONE NEEDS FRAMEWORK
Imagine the implications of knowing all your customer’s needs.
Clayton Christensen said: “Customers don’t buy products; they pull them into their life to make progress.”
Jobs-to-be-Done Theory provides a framework for:
- categorizing, defining, capturing, and organizing all your customer’s needs
- tying customer-defined performance metrics (in the form of desired outcome statements) to the Job-to-be-Done
While applying Jobs-to-be-Done Theory over the past 25 years, I have developed the Jobs-to-be-Done Needs Framework
This framework introduces the types of customer needs that must be considered to gain a deep understanding of what a customer is trying to accomplish. They include:
- the core functional Job-to-be-Done,
- the desired outcomes tied to the core functional Job-to-be-Done,
- related jobs,
- emotional and social jobs,
- consumption chain jobs,
- the buyer’s financial desired outcomes.
While a job describes the overall task the customer is trying to execute, an outcome is a metric the customer uses to measure success and value while executing a job.
The goal of innovation is to devise solutions that address unmet customer needs.
One important factor that cannot be overlooked is that most markets are not homogeneous — meaning in nearly every market, customers do not agree on what needs are unmet.
The Jobs-to-be-Done Needs Framework provides an important function. Given all the customer insights that companies consider each day, the framework reveals what inputs are needed, how they should be categorized and organized, why they are captured, and how they should be used. The framework brings order to a historically chaotic practice.
THE CORE FUNCTIONAL JOB-TO-BE-DONE
People buy products and services to get a job done. The job the end user is trying to get done is the core functional job.
The core functional job is the anchor around which all other needs are defined. It is defined first, then the emotional, related and consumption chain jobs are defined relative to the core functional job.
When defined correctly, a functional Job-to-be-Done has three unique and extremely valuable characteristics:
First, a job is stable; it doesn’t change over time.
Second, a job has no geographical boundaries.
Third, a job is solution agnostic.
DESIRED OUTCOMES ON THE CORE FUNCTIONAL JOB
While defining the functional job correctly is important, uncovering the customer’s desired outcomes (the metrics they use to measure success when get the job done) is the real key to success at innovation.
We follow a strict set of rules when constructing desired outcome statements — for example, they are purposely designed and structured to be measurable, controllable, actionable, devoid of solutions, and stable over time.
RELATED JOBS
Knowing what those related jobs are is important as it can lead to the creation of a platform – level solution that gets many jobs done.
EMOTIONAL AND SOCIAL JOBS
Emotional jobs define how customers want to feel or avoid feeling as a result of executing the core functional job. Social jobs define how the customer wants to be perceived by others.
CONSUMPTION CHAIN JOBS
The jobs along the product lifecycle are called consumption chain jobs. Each consumption chain job is comprised of its own distinct set of desired outcome statements.
Consumption chain jobs impact the customer journey and experience.
FINANCIAL DESIRED OUTCOMES
It is not uncommon to find that buyers consider 40 to 80 financial outcomes (metrics) when making the purchase decision.
THE JOBS-TO-BE-DONE GROWTH STRATEGY MATRIX
A company must decide what strategy should be pursued to ensure it wins in the marketplace.
When we use Jobs-to-be-Done Theory to examine product successes and failures, we observe the same phenomenon time and time again: new products and services win in the marketplace if they help customers get a job done better (faster, more predictably, with higher output) and/or more cheaply.
The Job-to-be-Done Growth Strategy Matrix, a framework that illustrates when and how these strategies should be used.
THE JOBS-TO-BE-DONE GROWTH STRATEGY MATRIX
The product/service strategies introduced in this framework are defined as follows:
- Differentiated strategy. A company pursues a differentiated strategy when it discovers and targets a population of underserved consumers with a new product or service offering that gets a job (or multiple jobs) done significantly better, but at a significantly higher price.
- Dominant strategy. A company pursues a dominant strategy when it targets all consumers in a market with a new product or service offering that gets a job done significantly better and for significantly less money.
- Disruptive strategy. A company pursues a disruptive strategy when it discovers and targets a population of overserved customers or nonconsumers with a new product or service offering that enables them to get a job done more cheaply, but not as well as competing solutions.
- Discrete strategy. A company pursues a discrete strategy when it targets a population of “restricted” customers with a product that gets the job done worse, yet costs more. This strategy can work in situations where customers are legally, physically, emotionally, or otherwise restricted in how they can get a job done.
- Sustaining strategy. A company pursues a sustaining strategy when it introduces a new product or service offering that gets the job done only slightly better and/or slightly cheaper.
Once a company knows where in the matrix its target customers can be found, it can adopt the appropriate strategies for each segment.
A differentiated strategy works when a highly underserved segment of customers is targeted with a premium-priced offering that gets the job done significantly better.
A differentiated strategy is attractive because it enables a company to enter a market at the high end, capture significant profit share, and work its way down market over time to gain additional market share.
A dominant strategy is always the most appealing approach for a new market entrant to take because incumbents cannot defend against it.
Incumbents are less likely to create such a product or service because it could dramatically cut their margins and may require an investment in a new product platform, capabilities, and resources.
Companies can win in overserved segments with products that enable customers to get a job done more cheaply, but not as well as competing solutions.
A discrete strategy is employed as a separate (discrete) part of an existing product strategy: with a discrete strategy, a company takes an existing product and sells it in a unique situation that justifies a higher price. Pursuing a discrete strategy can be very profitable.
A sustaining strategy is good for products or services that get the job done just slightly better and / or more cheaply. We define “slightly” as less than 5 %.
Customers generally will only switch to a new product if it gets the job done upwards of 20 % better — which is characteristic of a differentiated or dominant strategy.
OUTCOME DRIVEN – INNOVATION
While Jobs-to-be-Done is the theory, Outcome-Driven Innovation is the process that puts it into practice.
ODI links a company’s value creation activities to customer-defined performance metrics related to the job they are trying to get done.
ODI offers a rigorous, controlled approach to needs gathering, needs-based segmentation, competitive analysis, opportunity identification, idea generation and validation, market sizing, and the formulation of market and product strategy. The result is a predictable approach to innovation.
DEFINE THE CUSTOMER
Before a company can understand the customer’s needs, company managers must agree on exactly who the customer is.
Through our work, we have discovered that there are three key customers types (or job executors) that must be considered:
- The end user (or functional job executor), the product life cycle support team, and the purchase decision maker. The end user is the person who uses the product or service to get the core functional job done.
- The product lifecycle support team is comprised of the people who install, set up, store, transport, maintain, repair, clean, upgrade, and dispose of the product.
- The purchase decision maker is responsible for seeking out and evaluating alternative offerings and deciding which to buy.
DEFINE THE JOB-TO-BE-DONE
Making the core functional job the unit of analysis is the cornerstone of successful innovation.
Defining the core functional Job-to-be-Done correctly is a prerequisite to predictable success.
When defining the core functional job make sure it is defined as a functional job, not as a hybrid functional/emotional/social job.
Define the job, not the situation: Do not define the Job-to-be-Done as a situation that a customer finds himself or herself in. Rather define the job around what the customer decides to do in that situation.
Define the job statement in the correct format: A job statement always begins with a verb and is followed by the object of the verb (a noun). The statement should also include a contextual clarifier.
Job statement = verb + object of the verb (noun) + contextual clarifier
A job map is a visual depiction of the core functional job, deconstructed into its discrete process or job steps, which explains in detail exactly what the customer is trying to get done. A job map does not show what the customer is doing (a solution view); rather, it describes what the customer is trying to get done (a needs view).
A job map is not a customer journey or customer experience map. These activities are consumption chain jobs that are captured and treated separately.
Analysis of hundreds of jobs has revealed that all jobs consist of some or all of the eight fundamental process steps:
- define,
- locate,
- prepare,
- confirm,
- execute,
- monitor,
- modify and
- conclude.
Desired-outcome statements must conform to a specific structure and follow a set of stringent rules.
A desired outcome statement includes a direction of improvement, a performance metric (usually time or likelihood), an object of control (the desired outcome), and a contextual clarifier (describing the context in which the outcome is desired).
Outcome statement = direction of improvement + performance metric + object of control + contextual clarifier
Market segmentation is a method that companies use to target unique offerings to groups of customers that will value them. The only way to discover segments of customers with unique sets of unmet needs is to segment the market around unmet needs.
The unmet needs of today represent the winning value propositions of the future.
To secure a winning value proposition, a company must:
- know where in the job the customer is underserved,
- secure the value proposition that communicates to customers that their needs can be satisfied,
- do everything in its power to satisfy the targeted unmet needs better than its competitors.
An innovation strategy, as we define it, is a plan that details which outcome-based segments and which underserved outcomes a company is going to target and how it is going to target them (either with existing offerings, improved products and services, or altogether new offerings). The innovation strategy also outlines the order in which the segments will be targeted and provides a timeline for implementation.
Deciding which unmet desired outcomes to target for growth is the essence of strategy and the most important decision a company will make.
To prioritize the opportunities, we employ the “opportunity algorithm”. This algorithm enables us to determine which outcomes are:
- important to customers
- not satisfactorily achieved with the solution(s) they are currently using to get the job done
THE OPPORTUNITY ALGORITHM
The mathematical formula we use is as follows: Opportunity score = outcome importance + (outcome importance – outcome satisfaction)
The opportunity algorithm and the opportunity landscape are invaluable tools when trying to figure out which outcomes to target for growth.
An effective market strategy should align the strengths of a company’s product offerings with the customer’s unmet needs.
We recommend the following steps:
- Decide which offerings to target at each outcome-based segment.
- Communicate the strengths of those offerings to customers in the target segment.
- Include an outcome-based value proposition in communications.
- Build a digital marketing strategy around unmet outcomes.
- Assign leads to ODI-based segments.
- Arm the sales team with effective sales tools.
Many companies process all leads in the same way even though customers have different unmet outcomes. However, using a short 5 – 10 question survey (on a website or lead-generation tool), a company can accurately determine which outcome-based segment a specific prospect belongs to.
Approaching a customer with the right value proposition and a clear understanding of their situation and unmet needs goes a long way to building credibility.
An effective product portfolio strategy will guide a company in:
- improving its products to better serve the unmet needs of customers in each targeted outcome-based segment
- will offer a solution that eventually gets the entire job done on a single platform
Why reinvent the wheel? Innovation does not necessarily require invention. Innovation is the ability to use technology (existing or new) to address an unmet customer need.
BECOMING AN ODI PRACTITIONER
I think it is safe to predict that companies will become more customer-centric, job-focused and outcome- driven.
In most companies that have adopted Jobs Theory and ODI, there is no shortage of possible applications.
In the first phase of an ODI engagement, the ODI practitioner must secure, scope, plan, and initiate the project. The 15 steps that the ODI Practitioner must take to effectively execute the first phase of a project are as follows:
- Familiarize the organization with the benefits of JTBD theory and ODI.
- Select a project to pursue using ODI.
- Define the goals of the ODI project.
- Scope the ODI project.
- Define the project timeline.
- Select the ODI project team.
- Determine what types of needs must be captured for the project.
- Create screener (s) to recruit candidates for job map interviews.
- Recruit candidates for job map interviews.
- Prepare the job map interview guide.
- Understand the characteristics/structure of a job statement.
- Conduct customer interviews to define the core functional Job-to-be-Done.
- In complex markets, conduct quantitative research to define/validate the jobs that a platform solution gets done.
- Conduct customer interviews to create the initial job map.
- Gain the project team’s preliminary agreement on the Job-to-be-Done, job map and project plan.
In the second phase of an ODI engagement, the ODI practitioner must capture a complete set of customer needs.
The 18 steps that the ODI Practitioner must take to effectively execute the second phase of a project are as follows:
- Create screener (s) to recruit candidates for outcome-gathering interviews.
- Determine the format for conducting outcome-gathering interviews.
- Prepare the outcome-gathering interview guide.
- Recruit customer interview candidates for outcome-gathering interviews.
- Understand the characteristics of a desired outcome statement.
- Understand the structure of a desired outcome statement.
- Conduct outcome-gathering interviews.
- Uncover desired outcome statements on the Job-to-be-Done.
- Net desired outcome statements (organize, refine, finalize).
- Uncover related jobs. Uncover emotional and social jobs.
- Uncover relevant consumption chain jobs.
- Uncover desired outcomes on relevant consumption chain jobs.
- Uncover the buyer’s financial desired outcomes.
- Uncover factors that explain why some customers struggle more than others.
- Gain the project team’s agreement on the final job map, outcomes, and other statements.
- Evaluate existing and pipeline products against needs (team exercise).
- Create the qualitative research deliverable.
In the third phase of an ODI engagement, the ODI practitioner must create, test, deploy and manage a survey that is fielded to a statistically valid sample of the customer population.
The 18 steps that the ODI Practitioner must take to effectively execute the third phase of a project are as follows:
- Determine the unit of analysis for the quantitative survey.
- Design the sample plan.
- Determine how to weight the data.
- Define any unique data analyses that are required.
- Construct the screening questions for the quantitative survey.
- Construct the profiling questions for the quantitative survey.
- Construct the willingness – to – pay questions for the quantitative survey.
- Format the outcome questions in the survey instrument for optimal results.
- Gain the project team’s agreement on the survey (instrument and questionnaire).
- Select a vendor for data collection.
- Translate the completed survey into required languages.
- Program the survey for fielding.
- Pilot / test the survey for fielding.
- Field the survey.
- Monitor the survey progress.
- Prepare analytical tools for data analysis.
- Receive the data from the data collection vendor.
- Verify the data is valid (clean the data).
In the fourth phase of an ODI engagement, the ODI practitioner must use the quantitative data that was collected in the previous phase to conduct Outcome-Based Segmentation analysis, competitive analysis and other analyses as required.
The 10 steps that the ODI Practitioner must take to effectively execute the fourth phase of a project are as follows:
- Weight the quantitative data.
- Create Outcome-Based Segmentation models.
- Determine which segmentation model to use.
- Conduct the analyses needed for segment profiling.
- Determine what variables underlie the segmentation model (complexity factors).
- Create a data-driven profile/description for each segment.
- Determine what outcomes are underserved/overserved in each segment.
- Determine the strengths and weaknesses of competitors in each segment.
- Identify which outcomes are most influential in the customer’s willingness-to-pay in each segment.
- Complete commonly requested data analyses.
- Create the opportunity discovery deliverable.
In the fifth phase of an ODI engagement, the ODI practitioner uses the information resulting from the previously conducted data analyses to formulate a market strategy.
The 12 steps that the ODI Practitioner must take to effectively execute the fifth phase of a project are as follows:
- Determine the strengths of existing and pipeline products (team exercise).
- Determine what outcome-based segments and outcomes to target.
- Define the value proposition for each outcome-based segment.
- Define the value proposition for the product category.
- Determine what existing and pipeline products to target at each segment.
- Determine how to message each product.
- Determine how to integrate the new value proposition into existing company promotional channels/materials, e.g., the website, etc..
- Propose an outcome–based digital marketing strategy, e.g., AdWords campaign, SEO optimization, etc..
- Create a customer acquisition tool that assigns customers to segments Gain the project team’s agreement on the market strategy.
- Create the market strategy deliverable Educate the sales / marketing team on executing the market strategy.
In the sixth and final phase of an ODI engagement, the ODI practitioner uses the information resulting from the previously conducted data analyses to formulate a product strategy.
The 10 steps that the ODI Practitioner must take to effectively execute the fifth phase of a project are as follows:
- Determine the weaknesses of existing and pipeline products (team exercise).
- Determine what outcomes to target to address competitive weaknesses.
- Determine what value creation opportunities to address in each segment.
- Determine what cost reduction opportunities to address in each segment.
- Facilitate ideation to improve existing products Facilitate ideation to improve pipeline products.
- Facilitate ideation to conceptualize new products/platforms.
- Gain the project team’s agreement on the product strategy.
- Create the product strategy deliverable for each product.
- Create the product strategy deliverable for the product portfolio.
