Competing Against Luck by Clayton M. Christensen, Tadd Hall, Karen Dillon, and David S. Duncan
Cover & Diagrams
Is innovation inherently a question of luck? While good luck is never a bad thing, it turns out that innovation is more science than magic.
Jobs Theory is a tool to innovate in a meaningful (and profitable) way. If you take the time to understand the real "job" that your customers hire your product to perform, then competition, innovation, and strategies become clear.
In Competing Against Luck by Clayton M. Christensen, Tadd Hall, Karen Dillon, and David S. Duncan, learn how to emulate the methodology behind everything from baking soda toothpaste to Airbnb into your own business.
Top 20 insights
- The Theory of Jobs to Be Done, or Jobs Theory explores why customers choose certain products over others. People "hire" products to fill a particular "job" in their lives. For example, the job of a milkshake can be a reward for your child or to make a morning commute more enjoyable.
- In Jobs Theory, a "job" is defined as the progress of a person in a particular circumstance. In the author's milkshake case study, morning commuters chose the thick dessert because it staved off mid-morning hunger, provided energy, and was easier to consume on the drive than traditional breakfast foods like bagels.
- If you understand your product's "resume," it can help you understand what job your customers want to fill and what your competitors are. If you know a product's resume, you can change your approach and market your product as the best candidate. V8 doesn't just compete against sugary drinks and other juices but also raw vegetables.
- Circumstances help dictate the job for a product to fill and, by extension, predict customer behavior. Innovation should not focus solely on functional needs but consider other aspects such as social and emotional ones. A daycare might be conveniently located and affordable, but parents will emphasize trust and safety.
- Analyze your product's job as if it's a mini-documentary about your customer while they try to make progress in a specific situation. Look at the goal, struggle, and obstacles. Take note of what the person does to "make do" until they reach their goal. What tradeoffs will they purposefully make?
- Once you understand your customers' "Job to Be Done," you can bring your company's goal into sharp focus. You can reveal opportunities to innovate or make your product more attractive. For example, Intuit created QuickBooks because customers used Quicken to "make do" as they managed their businesses finances.
- There is no one right way to identify Jobs to be Done. Don't fixate on the tools you use, but rather the information you seek and how you piece observations together. You don't have to throw out data you have already gathered -- look at it all through a new lens.
- Sometimes Jobs to Be Done defies traditional data predictions. Sony temporarily halted its Walkman cassette player when market research predicted its failure. Sony founder Akio Morita chose to observe how people lived and predicted what they might want instead. Sony sold over 330 million Walkman units and began the age of personal music devices.
- If you focus too much on the functionality of your product, you can overlook the real reason your customers use it -- or don't. Proctor & Gamble designed a disposable diaper for Chinese consumers. Despite a lack of competition, it wasn't until P&G addressed the emotional component – better sleep and cognitive development for baby – that the product sold well.
- Consider what your product will replace because customers will want to stick with it even when it doesn't work. Airbnb storyboards different emotional moments for its future hosts and guests to preemptively address concerns that could make them return to old solutions, i.e., stay with friends and family or book a hotel.
- Nobel prize winners Daniel Kahneman and Amos Tversky proved that loss aversion is twice as powerful psychologically as the allure of gains. It is essential to understand how customers make do with other products so you can overcome those obstacles. Online bank ING Direct reassured customers that it was a "real" business with physical bank cafes.
- Each product or service sells an experience. Competition with similar functionality will always pale in comparison to the emotional component you offer. American Girl dolls are more expensive than other brands, but they offer an emotional experience that allows young girls and their parents to bond over stories and visits to the store.
- When brands clearly identify their Job to Be Done and do it well, that product or service becomes synonymous with the job it performs. In England, to vacuum is to "Hoover," and everyone is prone to "Google" a topic on the internet. This phenomenon is a sign of a strong purpose brand.
- Once you identify a purpose for your brand, don't veer far from it. Volvo declared its primary purpose was to be safe in the 1920s. When Ford purchased the company, it changed course to compete with luxury vehicles and changed Volvo's brand purpose. Volvo became profitable again later once it returned to its original message.
- Customers may not see your company's processes, but customers can feel them. Focus your team's process around what job your customer hires you for instead of productivity or efficiency. Jobs like "peace of mind," "a way to lower cholesterol," or "safety" will keep your sights trained on innovation.
- Jobs Theory changes how you measure success; everything from internal financial performance criteria to external customer benefits. Amazon focuses on when orders are delivered as opposed to shipping costs. Review your process from the customer's viewpoint to identify pain points and define solutions clearly.
- When you review numbers, remember that data is not the phenomena — the primary function of data is to represent the phenomena. It creates a simulation of reality. However, passive data, like all data, is subject to bias and requires active management.
- There are three fallacies of innovation data: reliance on operational data that describes products and customers but not the jobs they perform; concentration on growth instead of improvement; and preference for data that conforms to preexisting business models. Remain vigilant to make sure you don't fall into these traps.
- When your company's Job to Be Done is well articulated, it creates meaning in employee duties at every level. Meaningful jobs eliminate the need to micromanage teams because employees are motivated by how their work fits into an overarching process to help customers get their jobs done.
- Ultimately, all successful solutions to Jobs to Be Done can be considered services — even if you sell a product. Carefully design experiences for your customers that overcome any hesitation they might have to "hire" you and "fire" their existing solution.
A "Job to be Done" is the task that a consumer needs to fulfill by using a product. When a consumer feels pain, due to a lack of functionality or emotion, then there is a job to be done. Products fulfill the jobs that consumers have. For example, V8 tomato juice is the solution to the consumer's job of wanting to eat daily vegetables.
Jobs Theory doesn't care about who did something and when. It doesn't drop transactions into categories like "new or existing customer," "male or female," or "between of the ages of X and X." Understanding the job you want to fill is about clustering insights into one big picture rather than a lot of small ones.
A product's "resume" is an imaginary document that describes all the qualities, skills, and capabilities of the jobs that said product fulfills. It also describes the way in which users of that product use it in real life, as opposed to how it was designed or meant to be used. For example, toothpicks are not only used to clean your teeth but are also used to solve a myriad of other jobs. The same applies to a milkshake, a milkshake's resume should list all the skills and capabilities it has to solve the jobs it faces, which in turn generate consumer experiences.
Solving the mystery
Jobs theory is a "whydunnit," not a "whodunnit."
Your ultimate goal in using Jobs Theory is to understand the "why" so you can supply the "what." As with any theory, anomalies can and will make themselves known along the way. You must be open to uncovering them and use them as an opportunity to strengthen your product's Job to Be Done.
Not all products or services will apply to this theory. For example, commodities traders don't rely on emotional or social circumstances. A computer can make rational decisions to get the job done.
Jobs to Be Done can help you better understand and meet or exceed your customers' expectations for everything else.
Give your product a job interview
"Tell me about yourself."
Before you have your "ah-ha" moment with Jobs Theory, you'll need to sit your product down for a serious interview. What are its qualifications, skills, and willingness to do the job at hand? What was it designed to do versus how people use it?
Another method to uncover your product's resume is to imagine that you are a film director making a documentary about it. Instead of detailing how the product idea came about and how great it is, your film crews follow and interview customers to learn their stories.
Ask questions like:
- What are the experiences customers seek to make progress toward their goal?
- What obstacles can you remove?
- What are the social, emotional, and functional dimensions of this situation?
By the end of this process, you should have a better idea of your products' value regarding what job(s) it can perform. You may also be surprised to find that customers use your product for something you didn't intend for it to do. Customers often opt to use an inferior product to make do.
Above all, you must clearly define what job customers hire your product or service to do. Organizations that lack clarity in this regard risk using a one-size-fits-all solution that satisfies no one at the end of the day. When you deeply understand your products' jobs, new avenues for growth and innovation come into focus.
You will begin to see "jobs-based" segments, including "nonconsumers" who do not buy your product. Understanding why they passed you by can create lucrative opportunities.
Mission statements are often phrased in a generic way that employees find hard to use as a guide for action and making decisions, much less innovation. Just like any goal, you need to be more specific. It's not enough to say, "I want to lose weight," or "I want to get more customers." You need to be more specific.
Instead, create a sense of purpose that drives action: "We solve problems this way because we know what matters and why."
Be wary of jobs described in adjectives and adverbs, such as "convenience." That might be an experience necessary for the job to be done, but it is not the job itself. Use verbs and nouns, such as "I need to write books verbally, removing the need to type or edit by hand."
Jobs to Be Done are not technical specifications. "I need insulation that is tough and impervious to moisture" is not a job, but "I want my family to feel comfortable when it's hot or cold out while lowering the cost of energy" is.
Example: the dining room table dilemma
A midsize Detroit-area building company in the mid-2000s was trying to sell new homes and condominiums. They targeted "downsizers" – those who were retiring, divorced, etc. The company priced the units to meet its target consumer, and they had over 80 customization options to make each unit their own. However, all the bells and whistles weren't making a difference, especially in a declining market.
A man named Bob Moesta tried everything to sell these units, from focus groups to granite countertops to newspaper ads. It wasn't until he interviewed people who purchased one of the company's units that he began to understand the hesitation. It all came down to the dining room table. Downsizers were agonizing over which items to leave and which to take to their new homes. The biggest obstacle was finding a place for their dining room tables. It was an emotional decision. It turns out they didn't care about all the features they could customize.
Customers kept saying things like, "As soon as I could figure out what to do with my dining room table, I was free to move." The tables represented family memories and not being able to fit them into a new home was a stumbling block to signing on the dotted line.
The job to be done was not to "help people get into a smaller home," but rather "moving people's lives." So, they changed their focus. The architect reduced the size of the spare bedroom and extended the dining room so a standard dining table would fit. The company gave customers a choice of three variations for finished units to help ease the burden of making choices. They provided moving services, two years of storage and a sorting room on-site to help comb through belongings without the pressure of a looming move date.
When Detroit's housing market was already struggling, the company raised profitability that covered the extra costs of moving and storage. They grew the business by 25%.
5 ways to uncover jobs to be done
Five key methods to uncover what jobs need to be done:
1. If you want something done, do it yourself.
Understand the unfulfilled jobs needed in your own life. Sheila Marcelo started Care.com, the online matchmaking service for childcare, pet care, senior care, etc., after struggling with her own childcare needs.
2. Why not?
Even a mature market can find ways to innovate by exploring why consumers DON'T buy. Kimberly-Clark, manufacturers of incontinence products like Depends, realized that only a tiny percentage of people that suffer from incontinence would use their product because of the stigma. This discovery led to the development of Silhouettes, natural products that look and feel like regular underwear. Kimberly-Clark was able to expand its own business without cannibalizing its market share.
3. Watch the do-it-yourselfers.
People are creative in the way they avoid products or processes that don't give them value. Trying to organize a group of people for a restaurant reservation can be a massive hassle if you call the restaurant, then your friends, then the restaurant again. Instead, they might make a reservation and see who shows up. The OpenTable app allows groups to make reservations in real-time, avoiding this hassle altogether.
4. Look for what people don't want to do.
Often, "negative jobs" can become the best innovation opportunities. Harvard business school alum Rick Krieger and some partners started QuickMedx, the forerunner of CVS Minute-Clinics, after several frustrating hours waiting for his son to get a strep-throat test at the doctor. In this case, the customer didn't want to see a doctor. The customer needed a quick fix. Minute-Clinics are now available in more than 1,000 CVS locations, so you don't have to.
5. Look for unusual uses.
You might be surprised to find that people use your product for other jobs you didn't intend or imagine. Customers used NyQuil as a sleep aid, so ZzzQuil was developed. In the late 1960s, Church & Dwight found that customers used its baking soda for multiple uses besides cooking. This observation led to new products such as the first phosphate-free laundry detergent, cat litter, carpet cleaner, air fresheners, deodorant, etc. Arm and Hammer uses baking soda in multiple products — in everything from toothpaste to hand cream.
Define a job with specificity to ensure that it is functional. As the author explains: ""If products can only meet the architecture of the system or product within the same product class, the concept of the Job to Be Done does not apply."
For example, if you determine that the job you want your product to fill is, ""I need have to a chocolate milkshake that is in a 12oz. disposable container,"" customers need not stray from the milkshake category to achieve this. But that's not their goal. Customers want to ""hire"" a milkshake for a multitude of reasons that compete with other products. ""I want a cold, refreshing snack that I can eat while I'm driving because my car's A/C is out"" is a much different reason. Now you're competing with an ice cream bar, a Slurpee, a cold piece of fruit, etc.
Data: not seeing the forest for the trees
In an ever-changing world, data is king. or is it? think of data as a piece of a puzzle. it has distinct characteristics such as whether the customer is new or returning, age range, how they paid, etc. jobs to be done is like viewing the entire puzzle put together. data by itself isn't made redundant — but you can combine your knowledge to see the big picture instead of focusing on the pieces.
For this reason, you might go with your instinct because data doesn't always reflect customers' real needs and wants. American Girl founder Pleasant Rowland was unable to find dolls that would help her connect with her nieces. A focus group – the only one she would sit through at the behest of her team – insisted that pre-teen girls would not be interested in dolls, much less learn about history. They were wrong.
OnStar earned an estimated $2.5 billion in revenue and $500 million in net profit for GM annually despite negative net assets. GM initially designed the service for its luxury customers. The company was surprised to find that cost-conscious Chevy drivers were just as likely to purchase OnStar as Cadillac owners. It turned out users "hired" OnStar for peace of mind, not "nice to have" services.
You don't sell a product; you sell an experience.
OnStar had barely hit the market when Hurricanes Katrina and Rita battered the Gulf Coast in 2005. The company found itself inundated with calls from panicked drivers that needed help but did not buy a plan that included real-time directions. The company decided that anyone calling from the affected areas could receive all On-Star features without paying for an upgrade. It was a tricky maneuver that the founding CEO, Chet Huber, described as "cobbling together with duct tape and Velcro" to make it work. This new mission created more work for OnStar employees, but they were energized by the sense of purpose – offering peace of mind.
Three fallacies of innovation data:
Utilize data, but be wary of these common traps when doing so:
- Active Data vs. Passive data: Growing companies often begin to generate operations-related data (operational data) instead of Jobs to be Done, which doesn't offer the whole picture.
- Surface growth: Companies focus energies on driving growth by selling more products to existing customers instead of focusing on how to solve the core job of the product better.
- Conforming data: managers focus on generating data that conforms to their preexisting business models. Conforming restricts data from showing what you need to see and instead shows what is comforting to believe.
Why do some innovative ideas that sound great at the time never take off, while others that seemed unlikely to succeed to disrupt an entire industry? Because when you understand why your customer hires your product or service, you can do the job they hired you for better. That is innovation.
If you know how innovation works, you don't have to rely on luck – although it never hurts.