Jobs to be Done: Theory to Practice Page 8
Bosch could see whether and where DeWalt or Makita had strengths that were adding cost but not value, as represented by outcomes with strong satisfaction values, but low importance scores. With this insight, Bosch was able to avoid adding features that were unnecessary and costly.
ODI-based competitive analysis reveals customer insights that are not ordinarily available to an organization. Knowing how customers measure value and how competing offerings stack up enables an organization to create products and services that get the job done better and/or more cheaply, which is the ultimate goal of any innovation process.
VII. FORMULATE THE INNOVATION STRATEGY
Is there a way to choose an innovation strategy that relies on something other than gut feelings and hunches? The answer is yes: there is a highly reliable way to pick a winning innovation strategy. An innovation strategy, as we define it, is a plan that details which outcome-based segments and which underserved outcomes a company is going to target and how it is going to target them (either with existing offerings, improved products and services, or altogether new offerings). The innovation strategy also outlines the order in which the segments will be targeted and provides a timeline for implementation.
It’s easiest to understand the process when you see it in action. Consider the work we did with the Bosch circular-saw product team. One segment we discovered through Outcome-Based Segmentation was comprised of tradesmen that mostly cut 2x4s. Customers in that segment were overserved because they were getting more benefits than they needed or wanted from the saws they were using. They made short cuts where precision did not matter and all their needs were satisfied. On the other extreme, we found a underserved segment of tradesmen who routinely made long, finish cuts that required precision, and who often had to make angle cuts that required them to adjust the blade height and angle. That segment had 14 unsatisfied outcomes.
With knowledge of these segments, we were able to formulate the innovation strategy. Success in any market comes by helping customers get a job done better and/or more cheaply, and Bosch had a number of options to consider. One option was to target the overserved segment with a circular saw that got the job done more cheaply (a disruptive strategy). While a viable option, it did not align with Bosch’s desire to create a premium-brand circular saw for the North American market. Another option was to introduce new laser-based technology to the market. While this sounded exciting, that technology would have had little impact on getting the job done better and would have added to the cost, a sure recipe for failure.
The option that Bosch pursued was to stick with existing technology and to add features to the platform that would address the 14 underserved outcomes in the one underserved segment, yet cost less than competing solutions (a dominant strategy). This was their innovation strategy. They knew precisely what segment and unmet outcomes to target and what technology platform to use to achieve their goals. Bosch engineers addressed the unmet needs with the CS20 circular saw, which was the company’s best-selling circular saw in North America for over 10 years.
When building an effective innovation strategy there is no room for hunches or guesswork: the qualitative, quantitative, and analytical methods that comprise our ODI process provide the insights needed to formulate a robust and reliable innovation strategy.
VIII. TARGET HIDDEN GROWTH OPPORTUNITIES
Deciding which unmet desired outcomes to target for growth is the essence of strategy and the most important decision a company will make. Everything a company does is tied to this decision.
To make this decision, we again rely on the statistically valid quantitative data we gathered to conduct the Outcome-Based Segmentation analysis. One quantitative study usually provides us with all the data we need to effectively execute the entire ODI process.
Once the outcome-based segments are discovered and segments are targeted for pursuit, we are ready to determine which unmet needs should be targeted in each segment to (i) help the customer get the job done better, and (ii) help the customer get the job done more cheaply.
To prioritize the opportunities, we employ the “opportunity algorithm.”This algorithm enables us to determine which outcomes are (i) important to customers, and (ii) not satisfactorily achieved with the solution(s) they are currently using to get the job done.
THE OPPORTUNITY ALGORITHM
The mathematical formula we use is as follows:
Opportunity score = outcome importance + (outcome importance – outcome satisfaction)
This formula calculates the opportunity score for each desired outcome statement, thus revealing those that represent the best opportunities for growth. For example, if 200 out of 270 circular saw users (74% or 7.4 on our scale) rate the outcome “minimize the likelihood that the cut goes off track” a 4 or a 5 for importance (on a scale of 1–5, with 5 representing highest importance), and only 75 of the 270 users (28% or 2.8 on our scale) rate the satisfaction of the outcome a 4 or a 5 (on a scale of 1–5, with 5 representing greatest satisfaction), then that outcome has an opportunity score of (7.4) + (7.4 – 2.8) = 12.0. In our experience, an opportunity score of 10 or greater indicates that the outcome is underserved.
THE OPPORTUNITY LANDSCAPE
The opportunity landscape shows visually which outcomes are under-and overserved. As shown in the figure, there are three main sections: (1) the underserved section (on the right), which includes all outcomes with an opportunity score of 10 or greater, (2) the appropriately served section (in the middle), and (3) the overserved section (on the left), in which outcomes’ satisfaction exceeds their importance.
All the outcomes included in the quantitative survey are plotted on this landscape, revealing with a high degree of precision where the targeted segment is under-and overserved.
This approach clearly points out which outcomes to target for growth. The upper right section of the landscape points out the “table stakes,” which are important outcomes that existing products satisfy and that new products must also satisfy to win in the marketplace. The overserved outcomes in the left-most area become targets for cost reduction. If existing products include costly features that address these overserved outcomes, replacing them with lower-cost features can help customers get the job done more cheaply.
The outcomes in the lower part of the shaded area on the right are the most underserved. Addressing those outcomes will enable the customer to get the job done better.
Ask yourself what the chances are of developing a product or service that addresses underserved outcomes if the development team doesn’t know what those underserved outcomes—unmet needs—are. You will rightly conclude that the chances are extremely low.
But what if the development team knows precisely what those underserved outcomes are? The chances for success go up dramatically. This is the power of Outcome-Driven Innovation.
The opportunity algorithm and the opportunity landscape are invaluable tools when trying to figure out which outcomes to target for growth.
IX. FORMULATE THE MARKET STRATEGY
The Outcome-Driven Innovation process includes qualitative research methods that are used to discover the customer’s Job-to-be-Done and their desired outcomes. It also includes quantitative research methods that are used to discover outcome-based segments of opportunity and to identify which desired outcomes in each segment are underserved—these are needs that are unmet. With this information in hand, a company has the customer-centric, data-driven inputs it needs to formulate a market strategy.
An effective market strategy should align the strengths of a company’s product offerings with the customer’s unmet needs. This is best accomplished through the marketing activities shown in the figure below. We recommend the following steps:
(1) Decide which offerings to target at each outcome-based segment.
(2) Communicate the strengths of those offerings to customers in the target segment.
(3) Include an outcome-based value proposition in communications.
(4) Buil
d a digital marketing strategy around unmet outcomes.
(5) Assign leads to ODI-based segments.
(6) Arm the sales team with effective sales tools.
Let’s look at how each element of the market strategy is enhanced when it is informed by outcome-based market research.
Decide which offerings to target at each outcome-based segment
The first step in defining the market strategy is to determine which current product offerings to target at each of the outcome-based segments that have been discovered. This should be decided based on “fit”: choose the offerings that best satisfy the unmet outcomes of customers in each outcome-based segment. For example, we once helped a manufacturer of industrial pumps discover a segment of customers that were underserved because they frequently encountered conditions that led to cavitation (the formation of air bubbles). The company had a number of products that addressed this problem well, but it had never targeted those products at the underserved segment with the right messaging. Knowing to target those offerings at that segment was the first step to success.
Communicate the strengths of those offerings to customers in the target segment
In one of Strategyn’s first engagements, we helped Cordis discover that one of its existing products satisfied a number of outcomes that were not well satisfied by top competing offerings. The “un-messaged strengths” of this product were subsequently communicated to customers. The result was a significant increase in market share: from 1.5% to 5% over the next six months. Knowing that a product has features that are a competitive strength in a segment of the market is an important insight when it comes to aligning a product portfolio with customer needs.
Include an outcome-based value proposition in communications
Using ODI, Coloplast’s wound care division discovered a segment of wound care nurses that had 15 underserved outcomes, 10 of which were associated with making sure a wound did not get worse. While Coloplast’s competitors focused on how their products helped wounds heal faster, Coloplast decided to go with an outcome-based value proposition. It promoted the fact that its products would “prevent complications” and highlighted the product features that addressed the associated outcomes. With this new value proposition, the company achieved double-digit growth in less than six months.
Build a digital marketing strategy around unmet outcomes
When potential customers use Google to find and evaluate product alternatives, they rarely start by entering the product name and model because they have yet to discover it. Rather, they enter keywords or phrases that are associated with the “Job-to-be-Done,” such as a job step or a specific desired outcome they are trying to achieve. With ODI-based research, these keywords and phrases are known to the company, which can use them as the foundation for online campaigns, dramatically improving buyer awareness of its product. Any time a potential customer uses Google to find out how to address an unmet outcome they will see the company’s ad and find its product. A similar strategy can be used to improve SEO results for those same keywords.
Assign leads to ODI-based segments
Many companies process all leads in the same way even though customers have different unmet outcomes. However, using a short 5–10 question survey (on a website or lead-generation tool), a company can accurately determine which outcome-based segment a specific prospect belongs to. With this insight, the prospect can be guided toward the solution that will best address their underserved outcomes.
Arm the sales team with effective sales tools
Lastly, the sales team can be taught how to identify what outcome-based segment a customer or prospect belongs to and guide the conversation accordingly. Approaching a customer with the right value proposition and a clear understanding of their situation and unmet needs goes a long way to building credibility. In 2014, Arm & Hammer’s Animal Nutrition Division used ODI to align its offerings, messaging, and sales efforts around certain underserved segments and outcomes it had discovered. The result was impressive: the Animal Nutrition Division achieved 30% year-to-year revenue growth from 2013 to 2014 without changing its product or pricing—a clear demonstration of the power of aligning marketing and sales efforts around the customer’s Job-to-be-Done.
X. FORMULATE THE PRODUCT STRATEGY
An effective product portfolio strategy will guide a company in (i) improving its products to better serve the unmet needs of customers in each targeted outcome-based segment, and (ii) will offer a solution that eventually gets the entire job done on a single platform.
Once the underserved outcome-based segments are uncovered and prioritized, the company can take the seven courses of action shown in the figure below for each segment:
(1) Borrow features from other company offerings.
(2) Accelerate offerings in the pipeline and R&D.
(3) Partner with or license from other firms.
(4) Acquire another firm to fill a gap.
(5) Devise a new feature set.
(6) Devise new subsystems and/or ancillary services.
(7) Conceptualize the ultimate solution.
Let’s look at how each activity is enhanced when it is informed by outcome-based market research.
Borrow features from other company offerings
Why reinvent the wheel? Innovation does not necessarily require invention. Innovation is the ability to use technology (existing or new) to address an unmet customer need. Knowing exactly what outcomes are underserved in a target segment, a company can analyze its product portfolio to see if any of its current products or services possesses a feature that addresses one or more of those outcomes. This can save significant development time and effort.
When we helped Microsoft discover opportunities to improve its software assurance offering, it turned out that many of those opportunities could be addressed with tools the company used internally to get the job done. Instead of starting from scratch, the assurance teams were able to package internal products for commercial use.
A catalog of product features and the desired outcomes they address could be a valuable asset for any company, but especially for big company with hundreds or even thousands of offerings. Such a tool makes it possible for product teams across the company to leverage what the company has already invented.
Accelerate offerings in the pipeline and R&D
When we helped Cordis discover opportunities in the angioplasty balloon market, one underserved outcome rose to the top of the list: “minimize the likelihood of restenosis”—that is, the recurrence of the blockage. Upon receiving this insight, my contacts at the company told me that the R&D team was working on a device, called a stent, which had the potential to address this unmet outcome. Recognizing the size of the opportunity and the importance of being first to market, the R&D team put additional resources on the project and was the first to market with a product that generated $1 billion dollars in revenue over the next few years.
The stent had already been in the works, but it was just one of about 40 initiatives in total. It was only when the company gathered and prioritized its customers’ underserved desired outcomes that it realized that the stent deserved more funds and attention. Other initiatives were less lucky: those that did not speak to customers’ needs were defunded altogether.
Leveraging efforts that are all ready under way can save time and effort when creating products and services that will get the job done better.
Partner with or license from other firms
We have often worked with hardware manufacturers that discover many of the underserved outcomes remaining in the market cannot be addressed with a hardware solution: a software or service offering is required. At that point, it makes sense to partner with or license from a firm that has expertise in that area.
Knowing precisely what needs are underserved makes choosing a partner easier. For example, we worked with an automobile manufacturer that discovered it did not have the capabilities it needed to address the underserved outcomes in a market of int
erest. With the list of prioritized underserved outcomes in hand, we evaluated over 100 possible partners. The goal was to look at the potential partners and determine how well they could address each of the underserved outcomes. Through this analysis, we found the three firms that held the most promise. The company interviewed management from the three firms and eventually picked an effective partner.
A prioritized list of underserved outcomes makes the perfect scorecard against which to evaluate firms that will help you get more of a job done and/or get the job done better.
Acquire another firm to fill a gap
Arm & Hammer’s Animal Nutrition Group acquired a business, Vi-COR, that provided it with a complimentary product to use in its dairy business. The framework they used to help justify the acquisition was grounded in ODI-based research: the group was able to demonstrate that its current offering failed to get the entire job done and showed that Vi-COR’s products were going to help address some high-priority underserved outcomes.
Vi-COR also provided a service component that helped address other top opportunities identified in dairies. Company management determined that Vi-COR was operating in a very important niche, providing a very important solution to dairy producers. Without the ODI prioritized list of underserved outcomes, the company might have overlooked this important potential acquisition.