Clayton Christensen, Taddy Hall, Karen Dillon, and David Duncan are the co-authors of Competing Against Luck: The Story of Innovation and Customer Choice. After years of research, the authors have come to one critical conclusion: our long held maxim—that understanding the customer is the crux of innovation—is wrong.
Customers don’t buy products or services; they “hire” them to do a job. Understanding customers does not drive innovation success. Understanding customer jobs does. The “Jobs to Be Done” approach can be seen in some of the world’s most respected companies and fast-growing startups, including Amazon, Intuit, Uber, and Airbnb, to name just a few. By understanding what causes customers to “hire” a product or service, any business can improve its innovation track record, creating products that customers not only want to hire, but that they’ll pay premium prices to bring into their lives. Jobs theory offers new hope for growth to companies frustrated by their hit and miss efforts.
Taddy Hall is a Principal and Leader of Strategic Innovation at The Cambridge Group. This team helps companies create regular, scalable innovation success via practical consumer demand driven innovation processes and applications. Hall is a Jobs Theory pioneer and leading practitioner, as well as a recognized authority in the fields of marketing, innovation, branding and competitive strategy. Hall is also responsible for original research and thought leadership for the Nielsen Innovation Practice. He was the lead author on the 2012, 2013, 2014, 2015 and 2016 Nielsen Breakthrough Innovation Reports. For more than 20 years, Hall has collaborated with Harvard Business School Professor and innovation authority, Clayton M. Christensen, on the publication of The Innovator’s Solution and Marketing Malpractice (HBR), as well as on numerous advisory and research projects. With Prof. Christensen, Hall has co-authored a book on Jobs Theory and the science of innovation titled Competing Against Luck: The Story of Innovation and Customer Choice (HarperCollins) scheduled for release in October, 2016.
Let’s start at the beginning. Tell us about your class – the first class Clay Christensen taught at Harvard Business School. What do you remember of that first class?
I remember this very tall, young fellow – he must have been 41 or 42 at the time – who walked into the class that first day and impressed us immediately with the deliberate way in which he talked. Instantly we realized this was not your ordinary college professor. He was very thoughtful. He was someone who thought deeply about the ideas he shared with us. I didn’t spend time with him outside class, but I kept bumping into him after the class was over – at the gym, and whenever I would come back to Harvard. Our first real engagement was with his second book where I started this journey in earnest, and then followed it with consulting projects. In 2005, we teamed up with Intuit’s Scott Cook to write Marketing Malpractice. The rest has been a long and continuous dialog about getting these ideas fully fleshed. Disruptive Innovation was a theory for competitive response, but it was not a theory for growth. That’s where Jobs Theory comes into play. It’s a theory for growth.
What is a Job? What is a Job to be Done? What’s all the fuss about milkshakes?
We’ve defined a job as the progress that an individual seeks in a given circumstance. This definition is key to understanding why customers make the choices they make. A Job occurs in the daily flow of life, in context. That’s to say that a Job can only be defined, and a successful solution created, relative to the specific context in which it arises. For us the essential unit of innovation work is circumstance. Let me explain. This is wildly different from the way most marketers make decisions about innovation. Most managers follow one or more of these four organizing principles in their quest to innovate: product attributes (the features, the technology, bells and whistles), customer characteristics (the demographics – eg. “do we have an offer for millennials?”), trending data (do we need a gluten-free product?) or competitive response (those guys have one, we need one too).
These are false guides. They don’t provide the granular value code that is resident in the circumstance – how a person evaluates their options in order to make a decision to make progress.
Ask – “What job is the customer hiring our product for?” In a real sense, we see that all products are services.
How does a customer hire and fire a product?
One of the things companies don’t pay enough attention to is the idea of firing a product. What has to get fired for my product to get hired? We may think about making our product more appealing, but we ignore what it will be replacing.
There are always opposing forces battling for the upper hand in the mind of the customer. Let’s look at the forces opposing change. We may be too lazy to change. We may just be stuck in our “habits of the present” – “it ain’t broke,” etc. Or, we may be fearful, filled with anxiety about a new purchase – “what if the quality’s bad?” Loss aversion is twice as powerful psychologically as the allure of gains, according to the psychologists.
On the other hand, there are powerful forces that compel change as well. “This product will help me make progress that will make my life better, or healthier, or safer.” Or perhaps the product in question is simply far superior to the one being used at present. If the forces opposing change are strong, a company can design and provide experiences that mitigate perceived risk and reduce the anxiety of moving to something new.
What are the five ways to uncover the Job to be Done?
In the book we discuss five ways to uncover Jobs to be Done:
- Finding a Job Close to Home – Some of the most successful startups in recent years have come from the founder’s personal Jobs to be Done. Think of Sal Khan’s Khan Academy.
- Competing with Nothing – Nonconsumption – sometimes Jobs Theory can uncover a new growth opportunity where none was apparent before. In the book we show how this worked for Southern New Hampshire University.
- Workarounds and Compensating Behaviors – Whenever you spot a consumer trying to create their own solution, you’re on to something. ING Direct saw the frustration that customers were experiencing and became the fastest growing bank in the US.
- Look for What People Don’t Want to Do – What if your customer is someone who doesn’t want to do something. CVS MinuteClinics were designed for customers who did not want to spend the time or money seeing the doctor at a traditional practice.
- Unusual Uses – Are your customers using your products in ways you never imagined? Arm & Hammer iconic orange box of baking soda has been hired to do many other jobs – from toothpaste, to deodorant, to household cleaner.
What are the three layers of a Job that a company needs to understand?
Clay has an illustration he uses in class to help students think about innovating around Jobs. The illustration tells us that it’s not enough to understand the Job. You’ve got to understand the right set of experiences for purchase and use of the product, and then integrate those experiences into a company’s processes.
Can you explain the three fallacies of innovation data – what they are and how to avoid them?
We’ve observed the tendency of managers to fall prey to what we’ve termed the “three fallacies of innovation data”:
- The Fallacy of Active Data: Instead of staying cognizant of and focused on the type of data that characterizes the rich complexity of the job (passive data), growing companies start to generate operations-related data (active data), which can seduce managers with its apparent objectivity and rigor but which is far removed from the true picture of the job.
- The Fallacy of Surface Growth: As companies make big investments in customer relationships, they focus their energies on driving growth through selling additional products to those customers or solving a broader set of their jobs, what we call surface growth-as opposed to staying focused on solving the core job better.
- The Fallacy of Nonconforming Data: Managers focus on generating data that conforms to their preexisting notions of the way they want things to be.
Passive data needs active management.
Clay has defined some boundaries for Jobs Theory. What are these boundaries?
Clay says that it’s easy to start using Jobs Theory for everything, in an attempt to understand a wide range of human motivations. If Jobs to be Done are described using adjectives and adverbs, it is not a valid Job. Secondly, if only products in the same class can solve a problem, then you’re not uncovering a Job. It’s important we don’t confuse a technical specification with a Job to be Done.
Thanks for your time, Taddy.
INTERVIEW by Christian Sarkar