Most business leaders you encounter will agree that innovation is key to their company’s overall health and future growth.
According to a McKinsey Global Innovation Survey, a whopping 84% of executives surveyed agreed that innovation (defined as creativity plus delivery) was critical for their business. Despite this, just 6% of those same leaders reported being satisfied with their company’s innovation performance.
Companies know more about their customers than ever before. So why do they continue to fail at innovation, creating products that have no market or never realized meaningful return on investment?
Customer Data May Be Pointing You in the Wrong Direction
In the September 2016 Harvard Business Review article, “Know Your Customers’ ‘Jobs to be Done’”, authors Clayton M. Christensen, Taddy Hall, Karen Dillon, and David S. Duncan point to the misinterpretation of customer data as a cause of misguided innovation.
They argue that while companies are collecting an overwhelming amount of demographic and psychographic about their users, this information is not what should drive product innovation decisions. The article explains:
Consider the case of one of this article’s coauthors, Clayton Christensen. He’s 64 years old. He’s six feet eight inches tall. His shoe size is 16. He and his wife have sent all their children off to college. He drives a Honda minivan to work. He has a lot of characteristics, but none of them has caused him to go out and buy the New York Times. His reasons for buying the paper are much more specific. He might buy it because he needs something to read on a plane or because he’s a basketball fan and it’s March Madness time.
The information collected about Christensen, while descriptive, does not offer a clear explanation as to why he chooses to purchase a certain product (in this case, an issue of the New York Times).
Focusing on this type of user data is not only unhelpful, but can also lead companies astray. It is tempting to attribute trends and similarities in user attributes as correlation between customer segments, however it would be inaccurate to base any decisions on these correlations as they do not indicate true causation between the attributes and purchasing decision. The customer’s attributes are not what have led them to choose one product over another.
If Not Customer Data, Then What?
This of course raises the question, if demographic and psychographic customer data do not explain why a customer purchases a product, what does? What is the missing piece of customer information that companies need to guide sound and profitable innovation?
Christensen, Hall, Dillon, and Duncan make the compelling case to spend less time focused on the attributes of customers, and instead focus on the specific situations in which a customer (or user) purchases a product (or a solution a company offers). This will help deduce what a customer is seeking to accomplish when they purchase a product. In other words, what is the customer’s job-to-be-done? What have they “hired” this product to help them accomplish?
This has come to be known as jobs-to-be-done theory. Ryan Singer of Basecamp provides a great example: a 30 year old male on one Friday night may order a delivery pizza, and on another Friday night in the same month, the same 30 year old male may go out to an expensive Italian dinner. Here, the attributes of the individual are not defining the decision he is making, but rather the situation he is in is determining the purchase decision, as each situation has a very different job-to-be-done (a lazy Friday night in after a long week at work vs. a highly anticipated date night).
The fact that the customer is a 30 year old male is not what is driving the purchasing decision. Rather, it is the type of night the individual wants to have, influenced by emotional and situational characteristics. A job-to-be-done is not a product or a specific solution, but rather is the higher purpose for which a customer would buy a product, service, or solution.
Source: Samuel Hulick via Alan Klement’s Medium article, “What Is Jobs to be Done? (JTBD)”
A Brief History of Jobs-to-be-done Theory
Jobs-to-be-done is not a new concept. The jobs-to-be-done theory and its role in innovation date back as far as 1942, when Austrian-American economist Joseph Schumpeter introduced the term creative destruction in his book Capitalism, Socialism and Democracy.
In coining creative destruction, Schumpeter recognized that new inventions upend existing solutions, eventually causing outdated solutions to be destroyed as new, creative innovations come to market. This concept was furthered by famed engineer and management consultant W. Edwards Deming. Deming, a vocal proponent of innovation, was famously quoted as saying, “It is not necessary to change. Survival is not mandatory” (whether or not this is the precise phrasing is a discussion for another time).
Deming believed that while improving an existing product served some purpose, eventually another company would come along and introduce a new product or solution, causing customers to switch. In order to stay on the cutting edge, he believed you must anticipate the best way to satisfy a customer’s need today, tomorrow, five years from now, and so on.
This is evident in present day jobs theory, as customers will continue to “hire” the same product to complete their job if it does it well. If the product fails to complete the job, the customer will “fire” one solution in place of hiring another more successful solution.
Uncover Unknown Competitors
Jobs-to-be-done can be helpful in competitive analysis as well. Products hired in place of a fired solution may not always be considered perfect substitutes for one another. Taking time to identify a customer’s job-to-be-done can help companies identify potential competitors previously overlooked.
For instance, if a particular car dealership is trying to attract millennial first-time car owners in major city, they are not only competing against every other car dealership in the area, but all other competing services and products that can achieve the same job-to-be-done at the satisfaction of the target customer. If the job-to-be-done of this particular customer is to cheaply and reliably commute to work everyday, competitors could include public transport, rideshare, short term car rentals, or bicycles as well.
Jobs-to-be-done Are Complex, and Often Emotional
There are many different types of jobs a person has to accomplish every day. They can be small or large, important or not so important, predictable or unpredictable. The goal of a job-to-be-done involves evolving oneself from an existing life-situation into a preferred one, and thus jobs-to-be-done are often complex and usually have deep emotional and social factors. These underlying emotional and social factors become key to understanding a customer’s motivation.
Charles Revson, Founder of Revlon cosmetics was famously quoted saying, “In the factory, we make cosmetics. In the drug store, we sell hope.” By having a clear understanding of the job his customers were hiring Revlon to accomplish in their lives, he had a framework to utilize to innovate and market his products.
Applying Jobs-to-be-done Theory
So, how can jobs-to-be-done theory help companies guide successful product innovation? While customer analysis, focus groups, personas, and competitive analysis can provide good starting points, Christensen and his co-authors suggest focusing on searching for (and solving) problems that previously had unsatisfactory solutions or no solutions at all through job-to-be-done interviews.
A successful innovation will not only help a customer solve their job-to-be-done, but will address any anxieties or inertia that may be holding them back from accomplishing it, or even beginning to search for a solution. Look to identify areas of non-consumption, workarounds consumers may have invented to address a unmet need, products being used in unintended ways, or address common tasks consumers dread.
Source: The ReWired Group
It can be tempting to focus on innovating for what consumers may claim they need in focus groups, reviews or feature requests, and while customer feedback in important, place greater importance on revealed preferences (clearly demonstrated through user analytics and data) rather than stated ones. Consumers often do not realize the underlying job they are trying to get complete when using a certain product or solution, and thus it may take some digging before it is uncovered.
If at all possible, avoid mentioning your product or proposed solution when executing a job-to-be-done interview. Start with discussing a competitor (direct or indirect), and unpack the emotions and behaviors from the last time the customer made a purchasing decision. Discussing the entirety of a previous purchasing decision can help reveal smaller related jobs to be done in conjunction with the main job, as well as the functional and emotional aspects of the job that can help define feature requirements down the road.
As many companies continue to miss the mark on innovation, jobs-to-be-done theory provides a consistent process to help companies drive profitable innovation. By establishing customers jobs-to-be-done, companies can begin to align not only their innovation efforts, but internal processes, customer experience, and brand identity as well. This will help companies create and sell cohesive solutions to their customer base as they grow and evolve, and ensure a positive customer experience when the hire their products.