- Lesson #1: Demography is not destiny
- Lesson #2: Dig beyond the choices to the motivations
- Lesson #3: Determine triggers and obstacles
- Lesson #4: Understand context first, then provide solutions
This article was written by Steve Wunker.
The shock of Donald Trump’s upset win is settling in, and we look forward to innumerable post-mortems on how forecast models went astray. The assumption is that next time we’ll have more precise predictions. But what if that faith is misplaced? After all, missing forecasts happens all the time in the private sector, whether companies end up with a runaway hit or a total bust. What can we learn from Trump’s stunner that won’t just tweak our prediction models, but cause us to fundamentally re-think them?
This article was written by Steve Wunker.
With more and more companies adding “jobs to be done” to their innovation tool kits, the amount of misinformation about Jobs Theory has grown enormously. Clayton Christensen – the Harvard Business School professor credited with popularizing the theory – has repeatedly spoken of the need to get the theory right and to be careful in how we use the terms associated with the theory. If we’re not clear about the boundaries of the theory and how we use words such as “jobs,” he warns, the theory can lose its predictive power and its utility. In the spirit of keeping the theory well-defined, we’ve decided to bust three common myths we’ve heard about “jobs to be done”:
Read more in our latest article for Forbes.
This article was written by Steve Wunker and Dave Farber.
As Google Glass fades to distant memory, yet another alliterative wearable is trying to turn our faces into cameras. Why? Even Google — a company that we trust to develop self-driving cars and deliver burritos by drones — was heavily maligned for daring to add a camera to our glasses. The criticism was unrelenting: the glasses were expensive, they looked ridiculous, and they could be used to covertly take video of others without their knowledge. In some ways, Snapchat’s Spectacles address those concerns. They’ll retail for roughly one-tenth of what early adopters had to shell out for Google Glass, and the Spectacles camera has lights to indicate when it’s filming. How fashionable they are remains to be seen.
If you ask them, customers have a lot of needs—they want bigger, faster, more efficient, more variety. Most companies chase after this laundry list of to-do’s, churning out solutions that are increasingly elaborate and feature-laden. Sometimes they end up with a bullet train; other times, you get green-colored ketchup.
On the other end of the spectrum, we’ve seen companies direct their innovation efforts towards finding radical ways to do less—which correspondingly allows them charge less to their customers. These businesses are veterans at making tough trade-offs; they relish in ruthlessly and imaginatively funneling down to the bare bones of what their customers need. There are many ways to go about this cost-cutting, but the end result is almost always a transformative approach to the industry. We call this Costovation.
An example of this down-market innovation is Omenahotelli, a Scandinavian chain of budget hotels where just two things are guaranteed: a cheap rate and a central location. Anything else—like a lobby, receptionist, or even housekeeping services—is not part of the deal. Guests receive passcodes to unlock the front door and then self-service their way through their stay in highly-standardized rooms. Omenahotelli runs on a simple concept—price and location above all—and is as innovative as it is lean. It’s perfectly suited for budget travelers exploring an expensive part of the world.
Here are two key lessons about innovation that we’ve gathered from businesses that excel at Costovation.
Lesson #1: Innovation doesn’t have to be about more. We live in a world of ever-expanding phone display screens and 1000 flavor soda fountains, but catering to our ever-evolving whims comes at the expense of simplicity in the back-end supply chain. In contrast, one technique for Costovation involves rallying around the single most pressing customer need. It’s the opportunity to do just one or a handful of things very well.
Millennials are no longer turning to their banks for advice. In fact, over 70% of Millennials would rather go see their dentist than listen to what banks have to say. Since the financial meltdown of 2008 the perception of banks has been significantly marred. Trust has been eroded and loyalty ruined. Adding fuel to the fire, today’s digital revolution is poised to impact the financial services industry in a way that hasn’t been seen since the ATM was introduced in the 1970s. Technological progress is affecting every sector of the industry including asset management in the shape of robo-advisors. These robo-advisors are growing at unprecedented rates by meeting Millennials’ jobs to be done – an important segment to attract as Millennials are now the largest generation in the US and are about to command the largest share of wallet in the US with an estimated $7 trillion in liquid assets by 2020.
Over the past few years, Jobs to be Done (“JTBD”) has emerged as one of the leading tools for innovators. As companies struggle to figure out which products will become breakthrough innovations and which will fall flat, companies large and small have time and again found that Jobs to be Done can provide the answer. Netflix co-founder Reed Hastings has talked openly about using JTBD to disrupt the video rental industry. General Mills regularly employs the theory to develop new product lines so it can hit its growth targets. Johnson and Johnson has even started listing familiarity with JTBD as a qualification for those applying for front-end innovation jobs. But despite the acclaim the theory has garnered and the obvious successes that have been born from it, organizations that stop with merely uncovering customers’ jobs are still launching products that struggle in the market. Ford is the latest casualty.
In March, Ford launched Credit Link — a pilot program that would let three to six customers share the lease on a new car. Through the program, customers would all have access to the new car, using an app to divvy up driving times and payments however they wished. Three months into the pilot, not a single customer has signed up. Some quick analysis has shown good traffic to the program’s website, but the number of conversions remains at zero.
Most new startups fail. That’s particularly true in the food and beverage space, where entrepreneurs often have great homemade products but lack the resources and business expertise to get their products to the next level. However, those skilled few that do succeed can be valuable bellwethers for how the industry will evolve. What’s more, the startups that take off often have important lessons for even the biggest consumer goods incumbents. That’s because those that succeed don’t do so based on luck. They thrive because they take a different view of the market – one that focuses on consumers’ jobs to be done.
The team at Mass Innovation Nights – an organization that helps local entrepreneurs promote their businesses – recently hosted an event to connect New England food startups with media members and innovation experts. Several of the companies featured at the event were already showing promise. Looking at how those businesses got their start and why they’re gaining so much traction, we’ve extracted three lessons that any consumer goods company would be wise to pay attention to. And in the process of learning from these young companies, we may well get a better idea of what’s coming down the road in the food and beverage realm.
On two recent occasions, we’ve heard about tech-savvy companies solving common problems with one of the least innovative products we can think of – socks. Kind of fancy socks, but socks nonetheless. Oddly enough, that pretty quickly made a lot of sense. That’s because innovation isn’t really about solving complex challenges, developing fancy technology, or even having that phantom “Eureka!” moment. Companies that develop breakthrough new products do so by responding to newly relevant customer needs. More specifically, they find ways to address under-satisfied jobs that customers are trying to get done in their lives, or they alleviate the pain points that stand in the way of getting those jobs done. To better understand how a Jobs to be Done mentality can help break down problems until the right solution seems obvious, we’ll look at how two companies – Yondr and Netflix – have started addressing real customer needs using little more than some socks.
We’ll start by looking at Yondr, a company that satisfies two different types of jobs – functional and emotional – that have become increasingly relevant in recent years. Yondr essentially makes socks for smartphones. Once individuals put their phones in the socks, the socks lock and prevent those individuals from using their phones until they step outside of a defined geographical area. On the functional side, Yondr is helping venue owners and performers combat the problems that have developed as phones have become more advanced. Concert venues and comedy clubs, for example, now have a way to prevent attendees from capturing and posting images and videos of their events – an issue that has become increasingly problematic as phones with high-quality cameras have become ubiquitous. Similarly, testing centers can have students put their phones in these socks before taking tests, preventing them from accessing the Internet or copying testing materials. On the emotional job side, Yondr’s socks also give individuals a way to more fully experience the events they’re at by taking away the temptation to view the event through the screen of a phone or to rely on their phones as a social crutch rather than interacting with other attendees.
Although Yondr’s “socks with locks” may seem like a particularly clever idea, finding the need for such a solution is actually quite intuitive. It simply involves giving some thought to how the world is evolving, finding those jobs that are either new or more important than they once were, and learning where customers struggle to get those jobs done to their satisfaction. In this case, cell phones have become both more widespread and more powerful. Instead of thinking about how to incrementally improve phones and add more functionality, Yondr looked at a broader set of stakeholders to understand what jobs they were trying to get done – and where they were struggling – in this new smartphone-first era. It quickly became clear that among other needs, there were under-satisfied jobs related to protecting IP rights and sensitive content. Framed in that light, a simple sock with a locking mechanism provided a fairly obvious solution.
As the year winds to a close, the time has come to take a closer look at some of the most innovative products and services that have sprung to life this year. Thousands of new products launch every year. According to recent data from Nielsen, 85% of those innovations fail, and 70% of sales come from just 20% of newly launched products. Put simply, most success comes from a very small number of new products. So, who were this year’s big winners, and what makes them different?
This article looks at four products and services that launched this year with the potential to meaningfully impact their industries. In particular, it looks at how the Jobs to be Done concept — first popularized by Harvard Business School professor Clayton Christensen — can explain why these four innovations have so much potential. Our Jobs to be Done framework looks at eight discrete parts of the market landscape, with each revealing just one piece of the puzzle.
Looking through the lens of four of the most innovative solutions to be launched this year, we’ll explore how the parts of the framework can be used to predict how consumers decide the fate of new products and services.
Much of this week’s tech excitement has been around the size, shape, and display of the new iPhone 6. Perhaps the most important long-term implications, however, will come from Apple Pay, Apple’s new play in mobile payments. Apple Pay – enabled by Near Field Communication (NFC) – is hardly a noteworthy technology innovation. Despite limitations in point-of-sale (POS) infrastructure and relatively slow roll-out in the corresponding phone technology, Google Wallet and others long ago made mobile proximity payments a mass possibility. NFC has been around for roughly a decade. At the same time, companies such as Square have been steadily popularizing mobile payment solutions for both consumers and smaller merchants.
So, why is Apple Pay significant? Much like with Apple’s past successes, the relevant technology is now being integrated into a larger business model innovation. Somewhat serendipitously, this business innovation nicely coincides with shifting consumer behaviors and demands for retailers to upgrade POS terminals. In particular, Apple Pay benefits from five key advantages that might allow Apple to be the driving force in fueling the growth of the US mobile payments market.
Note: BestWatch recently came to New Markets looking to size various target markets using Jobs to be Done, and to develop a strategy for adjusting its product portfolio. The name and industry of BestWatch have been disguised.
BestWatch’s challenge was one that many companies face, though this fact was of little comfort to BestWatch’s executives as they watched their deadline grow closer. BestWatch had seen exceptional growth in its relatively new line of high-end watches, but analysts were warning that highly anticipated smartwatches would soon be adorning wrists everywhere. With a board of directors meeting looming, BestWatch’s executives needed guidance on whether to continue to invest in its high-end watch line. Historic sales data of other types of watches and bracelets suggested that BestWatch should continue to push its high-end watches. Meanwhile, advisors had averaged the wildly varying projections for smartwatches to determine that they indeed would be the next big thing. BestWatch hoped that Jobs to be Done could provide the real story.
“Jobs to be Done” is a term first popularized by Harvard Business School Professor Clayton Christensen. It is shorthand for a way to look at latent need in marketplaces and the wide variety of ways that people accomplish certain goals beyond just buying a product. For instance, a car buyer isn’t just purchasing a mid-sized sedan, but a way to express his personality, plan for a growing family, and impress his neighbors. He has many other ways of accomplishing those same jobs, and so an automaker has a broad range of competitors, as well as many hidden levers for getting those jobs done beyond everyday functional specifications such as turning radius and headroom.
For consumer goods executives, keeping up with all of the reports on how difficult it is to win in the industry might be just as difficult as actually winning in the industry. Countless articles and reports repeat Clayton Christensen’s statistic that 95% of new products fail, or note how very few new products end up being breakthrough innovations that meaningfully impact their categories. Many more detail how new product launches fail to meet a variety of specific metrics, such as covering development costs or having a material impact on the company’s growth trajectory. Most recently, however, Nielsen revealed its list of 14 Breakthrough Innovation Award Winners. Of more than 3,400 consumer goods product launches in 2012, only these 14 met Nielsen’s strict criteria for breakthrough innovation: (1) distinctiveness – delivers a new value proposition to the market; (2) relevance – generates a minimum of $50 million in year-one sales; and (3) endurance – achieves at least 90% of year-one sales in year two. Looking at the patterns among these 14 game changers reveals several best practices that consumer goods companies can leverage to create their own success stories.
My mentor Clayton Christensen, Professor at Harvard Business School and originator of the term “disruptive innovation,” is fond of saying that great innovations come from deeply understanding customers’ jobs to be done. Are “jobs” different from customers’ needs or sought-after outcomes?
Yes. All too often, marketers define “needs” in terms of product requirements, like the need for a car driver to have a cupholder. A driver’s “jobs” can be much more expansive. For instance, he may have a broader job to eat while driving, and still a broader one to avoid wasting time. Seen through this lens, an automaker has many more avenues for innovation than simply perfecting a cupholder. To address the job of eating while driving, the company may create a thin but sturdy tray that folds out from the center dashboard to hold a sandwich, and a tab under the passenger’s side dash where the driver can attach a small plastic trash bag. To help the driver avoid the feeling of wasted time, the company could e-mail its customers a weekly set of “best of” podcasts chosen to meet their interests. Importantly, the competition for getting a job done often is not in a company’s traditional product class, but instead customer frustration and doing nothing, or an alternative from a completely different industry. Examining jobs to be done can vastly increase the number of levers a company might pull to create innovative offerings.
In 2003, Clayton Christensen popularized an idea that he believes will be as transformative as his the concept he termed "disruptive innovation". The idea -- not yet as well known as disruptive innovation, but profoundly powerful -- was stunningly simple: instead of selling people products and services, help them to get jobs done in their lives. In many years of consulting with Christensen, I saw how this idea could lead firms to re-frame markets, address new types of competitors, and unlock vibrant sources of growth. Yet I also witnessed companies struggle to think about jobs-to-be-done in the sort of rigorous way needed to capture ideas precisely and translate customer insights into finished products and services. Read about a six-step process to apply the concept of jobs-to-be-done in my piece for Forbes.
This post was written by Steve Wunker. Click for more about how New Markets Advisors helps companies to re-frame markets through understanding jobs-to-be-done.
Radical change is scary. A revolution in business model brings forth images of Robespierre and the guillotine. Understandably, companies are hesitant to move radically when there are more conservative options. Yet there are times when firms need to at least scope out how this change could occur, because they find themselves tied to the tracks with a locomotive fast approaching.
American health insurance firms may now be in just such a situation. Health reform threatens to wipe out traditional sources of profit – Medicare Advantage, individual policies, and small group insurance – while imposing many restraints on pricing and plan design. Moreover, it may lead to commoditization of these payers’ offerings, and do little to address the long-term cost increases which have employers aggressively cutting back on the coverage they provide. To add to these challenges, in just four years the law will push insurers to become far more consumer-centric than ever before if they are to compete effectively on the forthcoming health insurance exchanges. American consumers report that health insurers are the third least-trusted industry they deal with, just behind tobacco and oil companies. It’s bleak.
In this environment, I spent the day at a large healthcare conference full of insurance executives. One might expect a brew of intense discussion and deep reflection. Not so. An example of innovation lauded in the conference was how one firm re-designed their forms to have more plain English. This is of course a good thing, but not much of a new business model.
We often see denial in the face of fundamental industry change. Pharmaceutical firms understood a long time ago that they would face a cliff of patent expiries around 2010, yet took years to charter new drug discovery programs, resulting in a substantial gap in their development pipelines. Oil companies are just now coming around to the realization that the electric vehicle is a major threat to their business. It is easy to find comfort in what our peer firms are doing, even when a gnawing feeling grows that we are all marching together to doom.
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