Understanding what makes some products significantly more successful than others in this day and age, and how innovation should be carried out have been the running themes in the books reviewed on our blog so far. Our last attempt in this regard was our review of The Innovator's DNA by Clayton Christensen et al., which suggested a rather descriptive, qualitative approach to improving the innovation process. This month's book, Jobs to Be Done: Theory to Practice by Anthony W. Ulwick, with its methodology firmly planted in the fundamentals of scientific management, offers a stark contrast to The Innovator's DNA.
Anthony Ulwick is no stranger to researching and writing on innovation. Actually, it turns out that the job-to-be-done concept, which focused on customer needs and was widely publicized by Clayton Christensen, was developed by Ulwick. Jobs to Be Done is built around what the author calls "the Outcome-Driven Innovation (ODI) framework" (more on this later), and he tells us that he got his inspiration for this from techniques such as Six Sigma and Five Whys. These techniques aim to improve quality by focusing on the root causes of defects and minimizing variability. Ulwick seems particularly influenced by Six Sigma, with its emphasis on statistical modeling and iterative processes. Throughout the book, the author strives to quantify the innovation process so that it becomes more of a science than art.
Ulwick's North Star in his analysis is the customer needs. He asks himself two questions: “How do the customers define success? What metrics do they use to assess a product?” Relying on customers' perception of a product to understand how much the product help them solve their pain can sound somewhat “unscientific,” especially for someone willing to give innovation a more scientific footing. However, there is a logic to Ulwick's approach. Although a customer's evaluation of a product is purely subjective, it is the right kind of subjective, because it looks at a product through a customer lens and the purchase decision itself is a subjective one, based on the customer's opinion of the product.
Ulwick's technique is based on uncovering the customer needs, discovering the customer-defined metrics, and using those metrics to improve the product. He calls his approach the Outcome-Driven Innovation. The ODI framework defines outcome as a metric the customer uses to measure success while executing a job. Desired outcome statements are formulated in a certain way that describes what the customer wants to do and how, like "cut wood in a straight line," or "automatically turn on the heater every time it is below 7°C and I start the engine." There can be 50 or more outcomes while dissecting a core functional job. Actually, the case studies in the book cite 165 or even 300 desired outcome statements.
After the desired outcome statements are formulated, the customer is asked to put a number on how important he thinks a particular outcome is and how satisfied he is with the current offerings. Then all the outcomes are laid out in a diagram that depicts the "Opportunity Landscape" and shows the company which segment of the market to target.
The outcomes that are satisfied at a high level despite not being valued by the customers are deemed “overserved.” In this overserved segment where there is an abundance of options and no pressing need for the solution to a problem, offering a more affordable option and better value for money can disrupt the market. Gaining this understanding can be invaluable as it prevents a company from investing in features that sound cool but doesn't serve a vital need for customers.
The outcomes that are not satisfied well enough by the product despite being highly valued by the customers are considered "underserved." This segment lends itself to a dominant strategy where a company can offer a product that will do the same job better and at a lower price point.
Linking customer needs to market segments, and market segments to market strategies are what set Jobs to be Done apart. The book starts with a focus on individual customer needs and minor complaints, and paves its way to a full-fledged company strategy that works. ODI reportedly raises the success rate of the innovation process from 17 percent to 86 percent by shedding light on what customers value in a product, which is undoubtedly impressive.
Ulwick also argues against the wisdom behind the “fail fast” mantra common among today's startups. This mantra advises startups to act upon their ideas quickly, test them, and pivot to something else without having to invest significant resources in ideas that don't work. For Ulwick, though, a strategy that depends on churning out as many ideas as possible without understanding first what the customers need is a waste of time. In his opinion, any innovation effort should be informed by what customers look for in a product.
The point Ulwick makes about the uselessness of customer personas built around demographic data or psychological traits is a true revelation. We are accustomed to categorizing people according to various combinations of attributes such as age, sex, profession etc. Jobs to be Done makes it clear that any categorization that cannot be validated by statistical analysis is bogus. We need to study customer needs like a statistician would do and try to turn them into metrics so that they become actionable and a common language can be built around them.
Although the ODI framework is, in theory, applicable to every industry, it doesn't look easy to implement for startups. Tasks like defining the job map, interviewing customers to ascertain desired outcomes (Ulwick suggests administering the survey to a group of 180 to 3000 job executors), and statistical analysis of the data gathered are quite resource-intensive and are well beyond the means of a startup. That's why the author advises these organizations to outsource such tasks to his company, Strategyn. Enterprises have the money and human resources necessary for such an ambitious task. Not all enterprises may stand to benefit the same from the ODI framework, though. Manufacturing companies may expect to gain more as processes involved in the use of products like cars, machinery, home appliances, etc., which customers physically interact with, better lend themselves to statistical scrutiny.
On the other hand, software products should be harder to crack for the ODI framework as the customer experience offered by these products involves cognitive processes that are more challenging to decipher. Still, the analytical approach introduced by the ODI framework can help executives at a software company or even a startup analyze the product, consumption chain, and customer experience they offer and make high-impact changes to the processes that need to be improved.
Jobs to be Done is an exciting book for readers interested in the literature on innovation. It encourages readers to think in terms of customer needs instead of products, features, or ideas, and delves deeper into the innovation process than most other books in the genre. By teaching you how to uncover customer needs, it shows you where you should invest your time and money, and charts an open route to success. The Outcome-Driven Innovation is no walk in the park, but the promise of success makes it worth a shot.