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How to Size Your Market

Welcome to the next lesson in our online JTBD course. You will learn how to size your market using jobs-to-be-done innovation methods. In this video, we will explain how to avoid lethal market sizing mistakes and how to size your market using customer willingness-to-pay data.

We hope you will share and like the video on YouTube.

Sizing Your Market Transcript

Welcome to the Market Sizing lesson in the thrv Jobs-to-be-done Innovation Course. I am Jay Haynes, the Founder & CEO of thrv.

As we saw in the previous lesson, in business, the market always wins. So if you are on a product, marketing or sales team, it is critically important that you size your market correctly.

Your revenue and profit growth is a direct function of your market size. In this lesson, we will show you how to size your market using jobs to be done innovation methods.

Avoiding Lethal Market Mistakes

As we saw in the previous lessons, Blackberry, Britannica and Kodak all lost billions of dollars because they defined their markets incorrectly. This lead directly to their failure. This was also enormous lost opportunity for growth because Apple, Google and Facebook created trillions of dollars in equity value in the exact same markets.

So how do you size your markets to avoid lethal market mistakes?

In the previous lesson, we saw that these traditional market definitions are flawed because they all use a product as a key variable. Jobs Theory shows that that your customer’s are not buying your product, they are hiring your product to get a job done. So your customers Job is your true market.

In 2006 Microsoft thought there was a huge iPod market. And this made sense using the traditional market sizing equation of product price times the number of buyers. Apple had sold 200 million iPods at an average price of $150, making this a $30 billion market using the traditional equation. This is a HUGE market even for Microsoft. With all their resources and their gigantic customer base, Microsoft launched the Zune. And it was a TOTAL failure!

Their market sizing was the fatal flaw because there is no such thing as the “iPod market.” This supposed $30 billion market is now approximately ZERO! Product-based market sizing always leads to failure because all products change over time, but your customers job-to-be-done is a stable target to hit.

How to Size Your Market

To size your market, first define your critical customer as the job beneficiary. In a previous lesson, we saw how critical this is.

Then, identify your customer’s functional job, as we did in the previous lesson. Together, your job beneficiary and their functional job define your market. To size your market, you want to know what your critical customer, the job beneficiary, is willing to pay to get their job done. need curve market sizing

With this data, you can then plot the results on what we call a Need Curve. This looks like a traditional economics demand curve of price and quantity, but we are plotting the customer’s willingness to pay and the number of customers, the job beneficiaries, in the market. The area under the Need Curve is your market size. The Need Curve enables you to identify the size of your low cost customer segments and the size of your premium customer segments. As a result, the need curve helps you identify hidden opportunities for accelerated growth.

You can use a quantitative survey to get willingness to pay data in consumer, business, and medical markets.  Let’s look at an example in a consumer market.

Willingness to Pay Data in Consumer Markets

As we saw before, if we were competing with Apple and Google Maps and we wanted to size this market using the traditional definition, the navigation app market would be an entirely unattractive market because the leading products are free. But we know the true market in this example is not navigation apps. It is the job of getting to a destination on time.

In this example, when we surveyed customers we asked them, "At what price per month would you be willing to pay to get to your destinations on time?"

In the survey, you can ask a series of questions to calculate a range of your customer’s willingness to pay. Plot your survey data on a chart to identify the the Need Curve and calculate the size of your market. how to size your market

In this market example, even with free competitors, including Apple and Google, there is a $2 billion premium customer segment that is willing to pay a premium price for a solution that helps them get the job done better.

Why do high-grown customer segments and market opportunities like this exist even when the leading products are free?

Because there are unmet customer needs in your market.

 

We hope you will share and like this video you YouTube.

In the next lesson, you will learn how to identify your customer’s needs in their job. Identifying your customer’s needs is a critical step to satisfying unmet needs better than competitors in your market.

Visit us at thrv.com to get our free how-to guides and try our jobs-to-be-done software for free.

 

Posted by Jay Haynes in markets , 0 comments

How to Define Your Market

Welcome to the next lesson in our online JTBD course. You will learn how to define your market using jobs-to-be-done innovation methods. In this video, we will explain what a market is, types of customer jobs and how these jobs work together in consumer, business and medical markets.

We hope you will share and like the video on YouTube.

Define Your Market Transcript

Welcome to the Markets lesson in the thrv Jobs-to-be-done Innovation Course. I am Jay Haynes, the Founder & CEO of thrv.

In business, the market always wins, so correctly defining your market is critical to your success.

In this lesson we will look at how to define your market using jobs-to-be-done innovation methods. If you are on a product, marketing or sales team, your success depends on satisfying customer needs better than competitors in your market. This bring us to the critical question for this lesson.

What Is a Market?

What market are you actually in? Traditional market definitions are fatally flawed because they all use a product as a key variable. For example, the traditional Addressable Market is traditionally defined as all the units sold in a product category times the price per unit, and the Serviceable Market is the units of a product type times the price per unit.

All of these definitions are flawed because all products change over time. If you define your market using a product - for example, the iPod Market - you are trying to hit a moving target. Product defined markets lead directly to failure.

As we saw in an earlier lesson, BlackBerry thought there was a market for keyboard devices and they lost $50 billion in equity value. Britannica thought there was a market for encyclopedias and they lost almost 100% of their sales in just 6 years. Kodak thought there was a market for film and went from $30 billion to bankruptcy. Companies fail when they define their markets based on their products. Product-focus ironically leads your team directly to failure. And today, technology enables products to change at a rapidly accelerating rate. This is why companies fail. Forty percent of the Fortune 500 will no longer exist in just 10 years because their products will be obsolete.

Jobs Theory shows that your customers are not buying your product. They are HIRING your product to get a job done. This means that your customers will fire your product when a new product helps them get their job done faster and more accurately. This is why Apple, Google and Facebook became three of the most valuable companies in history in the exact same markets as Blackberry, Britannica and Kodak.

Customers Just Want To Get Their Job Done

The core idea of defining your market based on your customer’s job-to-be-done dates back to 1960s and Professor Theodore Levitt. His famous Harvard Business article examined why industries repeatedly failed to identify new growth opportunities and competitive threats when products changed. He was famous for saying, “Customers don’t want a quarter-inch drill, they want a quarter-inch hole.”

In other words, your customers don’t want your products, they want to get their job done. This concept is true in any market, including yours. For example, consumers don’t want records, CDs or iPods. I am old enough that I even owned 8-track tapes in the 1970s. how to define your market

In this market, we all fired our old products, not because we wanted to get rid of our record collections but because the job is to create a mood with music. We all switched to new products that get this job done faster and more accurately. This happens in every market because your customer’s job is your true market.

In 2006 Microsoft made the fatal mistake of thinking there was a huge iPod market. With all their enormous resources they created an iPod competitor called the Zune, which they launched right when the iPod was becoming obsolete and it sales were falling off a cliff.

Don’t make this same mistake!

Products change but your customer’s job-to-be-done is a stable target for your team to hit. This is an important concept to remember. Your market opportunity might be bigger than you think, if you define your market using your customer’s job. We will look at market sizing in the next lesson.

We have seen how you can define your market using your customer’s job with examples in consumer markets. But the idea that your customer’s are not buying your product, they are hiring your product to get a job done, is true in business markets as well.

For example, CIOs don’t want block chain or WEP, which are product technologies. They want to obtain insights from data, which is a job-to-be-done. Similarly, Salespeople don’t want CRM software, they want to acquire customers. This is their job to be done. It is their goal, independent of the products they use.

And Jobs Theory works in medical markets as well. As we saw in an earlier lesson, patients don’t want syringes, they want to obtain a blood sample to diagnose their health. This is a medical job-to-be-done. Because products always change, very soon, you will likely never have to have another needle painfully inserted into your arm to obtain a blood sample. Similarly, surgeons don’t want stents or angioplasty balloons, which are medical products They want to restore artery blood flood. This is another job-to-be-done.

You should redefine your market using your customer’s job.

Let’s look at how you can identify and define your customer’s job-to-be-done - in other words, your market. How do you even know what your customer’s job even is?

3 Types of Customer Jobs

It is important for your team to identify the three different types of customer jobs in your market.

The first type of job is the customer’s functional job. This is the main goal customers are trying to achieve independent of any products or solutions they might be using today.

The second type of jobs are emotional jobs. Customers are, of course, real people with real human emotions. Emotional jobs are personal: how customers want to feel about themselves. And social. Social jobs are how customers want to be perceived by others.

And your customer’s have consumption jobs. Consumption jobs relate to using a solution to get a functional job done. Consumption jobs include interfacing with a product, learning to use a product, purchasing it, maintaining it and repairing it.

define your market

All three types of jobs are important to analyze because helping your customer get these jobs done better than your competitors is what creates the best customer experience with your product.

Let’s look at some examples of how these jobs work together in consumer, business and medical markets.

Consumer Markets

In a consumer market, new parents need to get a baby to sleep through the night. This is a functional job. As new parents try to get a baby to sleep through the night, they feel emotions, including feeling anxious about being a good parent. Avoiding anxiety is an emotional job. And parents need to purchase solutions to get a baby to sleep through the night like swaddle blankets, bedding, and nighttime diapers.

Your goal as a product, marketing, and sales team is to satisfy unmet needs in all three types of your customer’s jobs. We will explain unmet needs in much more detail in another lesson.

Let’s look at a few more examples of function, emotion, and consumption. As we saw in a previous lesson, the JTBD in this market is to get to a destination on time. This is the functional job that defines the market. As people execute this job, they want to avoid feeling anxious about being perceived as unprofessional by being late to a meeting.

A consumption job in this market is to interface with a product while traveling. If your customer cannot easily interface with your product, they won’t be able to get their functional job done.

Business Markets

Business markets have functional, emotional and consumption jobs as well. As we saw before, salespeople need to acquire new customers. This is the functional job, the goal salespeople need to achieve. Salespeople have emotional jobs, including being perceived as valuable to their team. And they have consumption jobs including maintaining current prospect information.

Medical Markets

The function-emotion-consumption pattern works in medical markets as well. As we saw, patients need to obtain a blood sample. This is a functional job in a medical market.

Patients want to reduce their anxiety about the procedure, which is an emotional job.

And patients may have to learn-to-use a new medical device like a micro needle array. This is a consumption job related to using a product.

All three job types are important to analyze because they determine your customer’s experience with your product. But defining your customer’s functional job correctly is critical because your customer’s functional job is your market.

Let’s look at how you can identify and define your customer’s functional job.

Defining Your Customer's Functional Job

Defining your customer’s job at the right level of abstraction is critical to ensuring that the theory is useful. Companies often struggle to define what their customer’s job even is. A functional job has three elements:

First, it is a goal that your customer is trying to achieve. Remember, a job and your market is not your job, it is your customer’s job. It is your customer’s goal and the problem they need you to solve.

Second, a functional job has an action verb and an object.

And third, a job cannot contain any mention of a solution, a product, a service or a technology.

Let’s look at a consumer example.

Consumer Jobs-To-Be-Done

A consumer might say, “I need to play MP3s.” Is this a job? Is it therefore a market?

Let’s use our three criteria to find out. 

First, is this a goal? Yes, this is something consumers want to do.

Second, does it have an action verb? Yes it does - “play.”

And does the action verb have an object? Yes it does - “MP3s.” So is this a job? Is it a market?

This is not a functional job because it contains a solution: MP3s. MP3s are a product format, which makes this an unstable definition of a market. And since formats, like all technologies and products, change over time, “play MP3s” is not a good definition of a market. As we saw before, the job is to create a mood with music. This is a stable definition because people have been creating a mood with music forever.

Business Jobs-To-Be-Done

Let’s look at another example in a business market. Businesses use software to run their companies, and they need to “install software.” Is this a JTBD? Is this a market? Let’s use our tests.

Businesses do install enterprise software, so it is a goal.

It also has an action verb and an object.

However, note that “install” is a consumption job. If you could achieve a goal without installing software, would you? Of course. Not long ago, installing business software used to be a large business for service firms, but today, cloud and SaaS applications are eliminating the need to install on-premise enterprise software.

Over time, new products emerge to eliminate or reduce the need to execute consumption jobs in order to use the product. This make sense because your customers don’t buy your product to interface with it or to learn to use it or install it. They buy your product to get their functional job done. As a result, the consumption job is not your market.

In this example, what about the word “software”? Software is an object, and it is a solution, but it is also a big enough platform that it is stable, like an aircraft. We will discuss platforms in more detail in later lessons.

Medical Jobs-To-Be-Done

Finally, Let’s look at an example of a medical job-to-be-done.

In a medical market, a patient, doctor, or nurse might say they need to “Monitor blood pressure.” Is this a job, is it a market? Again, Let’s use our tests.

Is it a customer goal? Yes, patients need to monitor their blood pressure.

It also has an action verb and an object.

And it has no solution.

But why do patients want to monitor their blood pressure? Is their end goal just to monitor?

It is important to analyze the level of abstraction of any job statement. Monitoring is an example of a step in achieving a higher-level goal. While there may be an opportunity in the short-term to provide a better product that does a better job of monitoring blood pressure, monitoring is not the end goal for a patient. define market

A patient, of course, monitors their blood pressure in order to optimize their health. If you have a health condition, blood pressure can be a key input. But the goal, therefore the job, and thus the market, is to optimize health. With higher level jobs like "optimize health", you can be more specific about your market definition.

For example, a patient who has diabetes needs to optimize their health with diabetes, so this is a specific job and therefore a market based on a health condition.

Different health conditions represent different markets because they are specific goals that different patients need to achieve, independent of any products, services, drugs or therapies they may use.

Level of Abstraction

You can specify level of abstraction for many types of jobs.

For example, parents need to instill a behavior in a child. But like health conditions, there are many types of behaviors, each of which defines a specific market.

For example, parents need to instill behaviors in their children to prevent anger, to learn music, or to resolve a dispute.

When defining your customers functional job, use these three tests, and use action verbs like these to help you identify your customer’s goals. You can refer back to this list when working with your team to define your market based on your customer’s job.

How to Identify JTBD

When identifying your customer’s job, you should conduct customer interviews, and analyze research to identify your customer’s goals independent of any solutions. Apply the three rules for jobs to ensure you have a well-defined market.

Defining your market using your customer’s job is just the beginning, but it has profound implications for everything your product, marketing, and sales teams do for your company.

We hope you will share and like this video you YouTube.

In the next lesson, you will learn how to size your market using your customer's job. This is critically important, since your revenue and profits are a function of the size of your market.

Visit us at thrv.com to get our free how-to guides and try our jobs-to-be-done software for free.

 

Posted by Jay Haynes in markets , 0 comments

How to Identify Your Critical Customer

Welcome to the next lesson in our online JTBD course. You will learn how to identify the critical customer in your market. In this video, we will show you how Nest succeeded by targeting a different customer in the thermostat market than the incumbents.

Identifying the critical customer in your market is the key to avoiding customer mistakes that have ruined once great companies. 

And we hope you will share and like the video on YouTube.

 

 

Define Your Customers Transcript

I am Jay Haynes, the Founder & CEO of thrv. In this lesson, we will show you how to use jobs-to-be-done innovation methods to define and identify the critical customer to serve in your market. 

In this lesson, you will learn why traditional customer definitions are flawed, and how these flaws in your customer definitions and personas can result in your competition stealing your customers and your market share.

The key to your company’s success is building, marketing, and selling products that satisfy customer needs better than competitors in your market. This brings us to the key question for this lesson. 

Who Is Your Customer?

To describe customers, companies often create personas or fictional characters who represent a user or customer type. Customer personas are often based on characteristics, including demographics like age, gender, and income, geographics like region or zip code, and psychographic, behavioral or situational characteristics.what's wrong with Personas in JTBD?

For example, in a consumer market, you might create two different personas. Paul is younger, urban with a master’s degree. Kate is older, rural and has a high school education. In business-to-business markets, you might create customer personas based on industry verticals, like medium-sized consumer packaged goods companies, or East Coast financial services companies. 

While personas can be useful in certain contexts, the problem with personas is that characteristics do not cause people to buy products. Customers buy new products because they struggle to get a job done at a price they are willing to pay, regardless of their persona or their characteristics.

Let’s look at an example with Apple and Google Maps. Who are the customers to target in this market? 

In this market, the underlying customer’s Job-to-be-done is to get to a destination on time. This is the reason people use Apple and Google Maps. We will define customer jobs in much more detail in the next lesson. But in short, your customers job-to-be-done is a goal they are trying to achieve, independent of your product or your solution. 

So who are the customers to target in this market? Who struggles to get to a destination on time?

If we created two personas using traditional characteristics, these two personas would NEVER be in the same customer segment because they have VERY different characteristics. But could they both struggle to get to a destination on time in the same way? 

The answer, of course, is yes. 

In this case, they both struggle to get to destinations on time because they both make frequent and unfamiliar stops. In other words, these two very different customer personas actually have the same unmet customer needs in this market. We will explore unmet needs in much more detail in later lessons. 

Is There a Better Way to Identify My Customer?

Since traditional personas based on characteristics can be limiting, we need a better way to answer the question, "Who is your customer?" The traditional dictionary definition of a customer is one that purchases a commodity or service. At first, this seems to make sense, since getting someone to purchase your product is how you generate revenue. But defining your customer as a purchaser is limiting because Jobs Theory shows that your customers are actually not BUYING your product, they are HIRING your product to get a job done. Let’s look at a medical market example to explain this in more detail. 

Obtaining a blood sample is a medical job-to-be-done. Patients visit a trained phlebotomist who draws their blood with a syringe to obtain a blood sample. This market exists because patients need a blood sample to diagnosis their health. Patients are the ones who benefit from an accurate diagnosis from a blood sample. So patients are the Job Beneficiary and a Phlebotomist is the Job Executor who executes the job for the patient. 

The critical customer in any market is the job beneficiary. This is the person who benefits from successful execution of the job, regardless of their influence on the purchase decision. This is an important concept to remember. Markets exist because of job beneficiaries, not job executors or product purchasers. In this market, the insurance company is the dictionary definition of a customer who pays.

They are the purchaser of the procedure to obtain a blood sample, but they are not the reason the market exists. Patients are. If a new innovation helps patients obtain a blood sample faster and more accurately, the insurance company is more likely to purchase it. This is exactly what is happening in this market.

A company called SeventhSense has created a device that enables a patient to painlessly obtain their own blood sample at the touch of a button. This happens in every market because markets evolve to remove job executors as customers. This is an important concept to remember. If you are targeting job executors in your market, you are at risk that your competition will launch an innovation that gets the job done for the beneficiary without the executor. 

Identifying Customers in the Consumer Market

Let’s look at another example in a consumer market. In the market for thermostats, thermostat makers sold to professional contractors, who installed the thermostats in people’s homes. Thermostats sold for $30 to $60. Again, Jobs Theory shows that your customers are actually not BUYING your product, they are HIRING your product to get a job done.

And this is true for thermostats. Homeowners are hiring thermostats to achieve comfort in their home.This is the homeowners job-to-be-done. So the homeowner is the true customer in this market because they are the one who benefits from successfully achieving comfort in their home. They are the job beneficiary, the critical customer in the market. Contractors are the Job Executor. They help execute the job (in this case by installing a thermostat) on behalf of the job beneficiaries. Companies targeting executors as their customers are at risk because new solutions will evolve to get the job done for the beneficiary.

And this is exactly what happened in the thermostat market. A new company called Nest launched a thermostat targeted directly at the job beneficiary, the homeowner, rather than the contractor. Nest was priced at $249 against the competition's $30 pricing. Nest included a screw driver to eliminate the need for a homeowner to call a contractor.JTBD Nest Example

The incumbent Thermostat makers initially dismissed Nest’s strategy and pricing. But nest grew fast and took market share from the industry leaders. They were acquired by Google for $3.2 billion dollars. Why did Nest succeed? 

Because the job beneficiary, the homeowner, had unmet needs in the job of achieving comfort that they were willing to pay to satisfy. In a later lesson, we will show you how to to use quantitative surveys to identify unmet customer needs, underserved segments, your customers’ willingness to pay, and the true size of your market opportunity.

Identifying Customers in the Business Market

Let’s look at one final example in a business market. Companies need to enable secure data use for their employees, for example to access email and company data. This is a business-to-business job-to-be-done. One solution for companies is to install on-premise software like email servers and ERP and CRM systems.

IT Managers would manage these complex systems to execute the job of enabling secure data use for employees. But cloud SaaS software emerged to enable employees to securely use data on their own, without the need for IT managers. This is another example of markets evolving to remove job executors as customers. These examples show that the key customer in your market is the job beneficiary.

And remember your customer is a real person with real goals they need to achieve in their personal and professional lives. In other words, your customer has jobs they need to get done. To identify your customer, the job beneficiary, first identify the type of customer you are targeting if you are targeting consumers, you can define the job beneficiary by stages of life. For example, are they parents or retirees? 

If they are parents do they have toddlers or teenagers? You can identify consumer job beneficiaries by activity as well. For example, are they travelers, homeowners, or car buyers. It is important to define your customer as a job beneficiary because the job they need to get done is the market you are in. We will show you how to define your market using your customer’s job in the next lesson. 

if you are targeting business customers you can identify job beneficiaries by the functions they perform at the company. For example, are your business customers in finance, product, engineering or human resources. And you can identify business job beneficiaries by industry.

For example, aviation, telecom, or financial services. You can identify your customer by a cross-industry function, like VP of Operations and you can get specific to an industry, for example, Maintenance Directors in the aviation industry are responsible for ensuring the airworthiness of an aircraft.

In medical markets you can identify job beneficiaries, the patients, by health condition like diabetes, cardiovascular disease or cancer. And you can identify additional beneficiaries and executors by function like, surgeon, radiologist or administrator. 

In markets where the purchaser is not the job beneficiary, you should define and identify the purchaser, like an insurance company in medical markets. It is critical to understand the job beneficiaries in your market and to know how many there are in your target geography. Their willingness to pay to get the job done is your market opportunity.

In later lessons, we will show you how to calculate the most important numbers: how much revenue and profit growth can you generate in your market by targeting your critical customer, the job beneficiary.

We hope you will share and like this video!

In the next lesson, we will answer the question, "What is a market?", and show you how to define your customer’s job-to-be-done to help you avoid lethal market mistakes that have ruined once-great companies. 

 

Posted by Jay Haynes , 0 comments

How to Beat Apple and Google

We are excited to launch our #JTBD YouTube channel today to help your product team use Jobs-to-be-Done innovation methods. Our first 15 minute video covers all the basics of JTBD and shows how you can use JTBD to beat your competitors. Imagine you are on a product team and your mission is to beat Apple and Google. How would you do it?

In this video, we use Apple and Google Maps as our example competitors because they are two of the most successful competitors in history and they seem impossible to beat. But JTBD methods can reveal weaknesses in even the most successful competitors.

A good way to test if a product management or innovation method will work for your company is to apply it to your competitors. Does it help you reveal competitive weaknesses? Does it help you identify unmet customer needs? Does it help you generate and prioritize the best product ideas for your roadmap?

In this short video, you will learn how to use JTBD to beat even the most feared competitors, like Apple and Google. We will show you how to identify unmet customer needs using your customer's job, how to measure competitor weaknesses, and how to generate product feature ideas that will create more customer value and help you win in your market.

We hope you enjoy this video. We will be posting more videos to help you use JTBD at your company. And we hope you will share and like the video on YouTube.

 

 

Posted by Jay Haynes , 0 comments

How to Save WeWork

 

hieu-vu-minh-_VoH3f9kx1w-unsplash
Photo by Hieu Vu Minh on Unsplash

 

As recently as three months ago, WeWork was a high-flying startup headed for an IPO with a $47 billion market cap. Since then, they have suspended IPO plans indefinitely, sold their private jet, fired their CEO, laid off thousands of employees, and suffered a valuation drop of 80%.

According to SoftBank, the majority shareholder, WeWork is now worth $4.9 billion. By some estimates, the paper worth of their property and equipment ($6.7B) is greater than the valuation. With Adam Neumann’s corporate malfeasance dominating the headlines, it’s easy to overlook the fundamental reason for their downfall: WeWork and its investors miscalculated the size of their market. All the cost cutting in the world won’t earn WeWork’s shareholders a return on their investment. The only way to save WeWork (and SoftBank’s shirt) is to find a new market big enough to warrant such an enormous valuation.

WeWork Miscalculated Its Market Size

Even before WeWork published its S1, Wall St analysts were asking how WeWork was different from any other commercial real estate landlord. IWG/Regus, for example, had more space, more revenue, and, wait for it, profit. Yet, IWG currently has a market cap of $3.56 billion. So what made WeWork different?

WeWork's S-1 devotes a lot of space to explaining the company's high valuation. To summarize there were 3 key points: 1. Technology; 2. Employers are willing to spend a lot on office space and there are a lot of employees; 3. WeWork wasn’t just about commercial real estate it was about building a community. This means they can enter new markets such as their nascent forays into housing and education.

Here are the problems with those justifications for WeWork trading at exorbitantly higher multiples that IWG. Let’s start with the technology statement.

Technology is not a market. Nobody wakes up in the morning thinking “gee, I need more technology.” As Theodore Levitt famously said, “Nobody wants a quarter inch drill; they want a quarter inch hole.” The same is true for technology. Nobody wants the tech itself, they want to get something done and tech helps them do it faster. As a result, technology cannot increase how much the world is willing to pay for a place to work. Technology can help provide a better customer experience and decrease the cost of delivering that great experience for people who need a place to work. But all that does is enable WeWork to potentially capture a larger share of the same market. It doesn’t increase the market itself. This is how Wall St viewed WeWork’s coworking spaces. They asked ‘in what way is the market bigger than what we’ve seen from IWG?’

This brings us to point number two, how WeWork calculates its market size using product price * number of buyers. In the S-1, WeWork estimates there are 255 million people with desk jobs in their 280 target cities. They then cite a data point from CBRE and Cushman Wakefield that employers spend a weighted average of $11,700 per employee for occupancy costs. 255 million * 11,700=approximately $3 trillion. There is a huge problem with this formula. The willingness to pay for office space exists on a curve, with a small number of companies willing to pay a lot and a large number of companies willing to pay a lot less. Taking an average number rather than the area under the curve, inflates the market value tremendously. To use their data to calculate a much more accurate market size, we'd have to see the distribution of spend/employee.

In any case, Wall St evidently didn't go along with this and continually compares WeWork's underlying metrics and Market Size to IWG.

If you can’t justify the valuation in co-working or office space, then you have to expand the mission. In this way, it makes sense that WeWork tried to characterize itself as a "community" company and enter other markets: residential housing and education. Unfortunately, they failed to demonstrate ways of delivering in those markets that were significantly better than what customers get today. If the solution is not better than the competition, people will not switch and growth will not happen.

A Historical Aside

From early 2011 to late 2013, I worked at Patch, AOL’s hyperlocal news network, now owned by Hale Global, a private equity fund. I was the Director of Consumer Product during a proxy battle that saw activist investor Starboard Value try to gain sufficient AOL board seats to shut Patch down. AOL won the battle but lost the war, selling Patch to Hale Global. Coincidentally, Artie Minson, current Co-CEO of WeWork, was the CFO of AOL at the time.

Much ink has been spilled on AOL’s large investment in Patch. Here’s my take: the size of AOL’s investment in Patch led shareholders to demand growth that was incongruent with the size of the only market in which Patch was successful: local news. On the inside, we didn’t discuss the problem in these terms, but we reacted to it as such. Our internal traffic and revenue growth goals were ambitious and had to be in order to justify the investment to the board and The Street.

When our local news traffic and ad revenue fell short of the goals, we looked for other areas of expansion: photo sharing, blogs, social networking groups, classifieds, crowd funding...a Patch Credit Card was even in development. We didn't get enough traction in any of these areas and Wall Street didn’t buy the story. Patch was sold to Hale Global.

Since Hale acquired Patch they have re-focused on news and ads, and have reported profits. With a lower investment and a lower valuation, Patch’s expectations outside the eye of Wall St are right-sized for the market in which it performs well. I don’t know the financials of Patch’s sale to Hale Global. It has been widely reported that AOL invested $120 million/year in Patch at its peak, and the terms of the sale were not disclosed. Your guess is as good as mine.

When the investment and the valuation of a business are in conflict with the size of its market, people lose money.

WeWork Has to Enter a Large Market With a Solution That Satisfies Unmet Needs

To think about how WeWork can find a large enough market, it’s worth taking a moment to consider: what is a market?

The most common way to hear analysts define markets is by the product people are buying. This leads to terms like “the office space market,” “the cloud services market,” “the phone market,” “the mp3 player market,” “the encyclopedia market,” or “the film market.”

“Wait a minute,” you may be thinking to yourself, “nobody buys MP3 players, encyclopedias, or film anymore. Why did you use those examples? Those markets don’t exist!”

And that is precisely the problem with thinking about markets in terms of products. Some day a new technology will lead to a new product that causes no one to buy the old products. Products and technologies change every day, which causes product markets to disappear.

History is littered with examples of once great companies that focused on improving positions in markets defined by products and then failed. Kodak failed in the film market. Britannica failed in the encyclopedia market. With the Zune, Microsoft failed in the MP3 player market. While those companies were investing in improving their products, other companies created entirely new products based on new technologies that caused nobody to need film, encyclopedias, or MP3 players.

It’s hard to blame Kodak, Britannica, and Microsoft for these mistakes. If you plug products that don’t exist and don’t have buyers yet into a traditional market sizing formula, product price * number of buyers, you get a zero dollar market. So then you try to guess how many people will buy the product and the whole enterprise starts to feel very risky. It seems much safer to invest in the existing products whose market size you know for sure, right?

Wrong. All product-based markets will eventually go to zero as the old products are replaced by the new. As Jobs Theory states, “Nobody is buying your product, they are hiring it to get a job done. When a new product can get the job done better, they will fire the old product.”

We can use this insight to create a more stable definition of a market and a more accurate market sizing formula. Instead of defining the market as a product, we can define it as a job-to-be-done. If we stipulate that the job is a goal customers want to achieve independent of any solution, we now have markets that stand the test of time. Furthermore, if you want to position yourself better in a job-based market, you need to be the one who will find the new product to get the job done better rather than clinging to your old product.

Using the Jobs definition of a market, instead of the “mp3 player market,” we have the “create a mood with music market.” Instead of the “film market,” we have the “share memories” market. Instead of the encyclopedia market, we have the “find information market.”

To size the market, we can use customers’ willingness to pay to get the job done rather than the price of the product. This enables us to size markets regardless of the new product and helps us see opportunities to create value. Imagine how scary it would be to invest in a new product (the iPhone) that would kill your cash cow (the iPod) using the traditional market sizing formula. But, if you looked at how much people were willing to pay to “create a mood with music on the go,” “talk to their friends and family on the go,” and “use the internet on the go” much better than they could do before, investing in the iPhone wouldn’t have been scary at all. Those markets together represented an enormous opportunity. And considering the willingness to pay to get the job one helps you understand why Apple was able to charge $500 for the iPhone when Steve Ballmer preferred Microsoft’s $99 mobile phone strategy in comparison.

So if a market is a job-to-be-done and the size of the market is the customer’s willingness to pay to get the job done, what job should WeWork look at?

Here is the criteria:

  1. The willingness to pay (the market size) has to support a valuation greater than $47 billion for SoftBank to make a return on its investment
  2. WeWork has to have a believable path to satisfying needs in the job better than the competition.

Let’s take a quick look at the two “markets” WeWork already tried to expand into: housing and education. The core jobs here would be “secure a place to live” and “learn something new.” The willingness to pay likely varies significantly across segment, but it’s pretty safe to say these are very large markets. However, the projects underwent heavy criticism. Most likely few people believed WeWork’s solutions for these jobs satisfied unmet needs and would enable WeWork to grow in these markets.

While thinking about this problem, I came across a lengthy NYTimes aritcle from Feb 2018 called The Rise of the WeWorking Class. In part, it tells the story of Mabel Luna, a WeWork customer:

“She hung up her shingle as a private C.P.A. Though she never advertised, she quickly outgrew herself; she told me that 90 percent of her customers have come through WeWork, either via hallway run-ins or through the social-networking features of its mobile app. She had several clients in the building — including a brewer of natural alcoholic kombucha, a sole-proprietor attorney and the German sunglasses manufacturer by the printer.”

Mabel used WeWork to acquire customers and grow her business. The acquire customers market is enormous. It’s the advertising industry and the CRM industry. Google and Facebook have grown to multi-hundred billion dollar market caps in this market.

Here’s how WeWork can figure out if it can realistically take share in this market and generate sufficient equity value:

  1. Identify the key customer to target: Is it a solopreneur like Mabel, small businesses, large businesses, all of the above?
  2. Identify the market: What is the job they will target? Is it acquire customers? Grow sales? The trick here is to avoid splitting hairs and articulate the goal in the language of the customer.
  3. Identify the market size: What is the willingness to pay to get this job done?
  4. Identify the unmet needs: In what ways are customers struggling to acquire customers? In other words, what are the key problems WeWork can solve?
  5. Identify the customer value: How will WeWork productize what it has done for Mabel to help customers satisfy their acquire customers needs better than any other solution they could use?

Answering these questions will lead WeWork to define a de-risked product strategy. Jobs-to-be-Done customer research can answer all of these questions *before* building the product. It is much cheaper to execute the customer research to de-risk the opportunity than it is to build a failure.

Posted by Jared Ranere in market size, wework, markets, valuation, patch, starboard , 0 comments

Should Facebook Allow Lies? A JTBD Perspective

 

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Facebook has been in the news for allowing a Donald Trump ad that makes untrue statements: essentially lies. They have been defending this by claiming (i) protection of “free speech” and (ii) that politicians are already fact-checked.

This obviously has big risks for Facebook. Users could revolt and leave the platform, regulators could crack down and fine them, and the growing chorus of politicians who want to break them up could get even bigger and louder. And most importantly, advertisers (Facebook’s true customers) could spend their advertising dollars elsewhere if they feel pressure from their customers.

Facebook has enormous power due to its network effect, but it is not invincible. All companies, like all species, go extinct at some point. As CNBC reports, A Washington University study found that 40% of the Fortune 500 will no longer exist in just 10 years.

Species fail when they cannot adapt to their changing environment. And the same is true for companies. Customers “fire” current products and “hire” a new one, when a new product enters the market (the “environment”) that gets the customer’s job done faster and more accurately. Think of Blackberry, Britannica and Kodak—once dominant companies that failed when competitors (Apple, Google, and Facebook) stole their customers and their market share.

Facebook might be successful in the short-term allowing lies in its ads. A fascinating look at why this is can be found in Susan Blackmore’s The Meme Machine. She argues that memes are a second replicator like genes. Genes are replicators and they have created all species (see Richard Dawkins, The Selfish Gene).

“Genes are instructions for making proteins stored in the cells of the body and passed on in reproduction.... Memes are instructions for carrying out behavior stored in brains (or other objects) and passed on by imitation.” Memes are replicators that have created human minds. But memes don’t have to be true to spread rapidly and widely. So Donald Trump can be successful buying ads that get liked and shared on Facebook because a meme’s ability to spread (e.g. “Joe and Hunter Biden are corrupt”) is not dependent on how true it is.

So Facebook can make money selling lies. It is that simple. But should they?

Companies that shortcut their customer’s jobs-to-be-done (JTBD) ultimately will face consequences. The CEO of Wells Fargo was forced to resign because they shortcut their customers jobs by fraudulently charging them fees for accounts they didn’t want. Wells Fargo should have focused on getting consumers finance JTBDs done better. Instead, they took a shortcut to profits through fraud.

Facebook is shortcutting their users’ and advertisers’ jobs-to-be-done by selling lies. Facebook uses "Free Speech" to defend keeping lies on its platform. But more important than the legal question, is whether or not lies on its platform serves its users.

The jobs-to-be-done that Facebook’s users are “hiring” the platform to do include sharing memories and staying connected with friends. But they also include staying informed about current events and determine how to vote to help their lives. According to the Pew Research Center, about four-in-ten Americans (43%) get news on Facebook.

So how can Facebook avoid selling lies?

It can keep and satisfy its users (consumers) by actually helping them stay informed with the truth so that they can make better decisions in their lives. Over time, products will emerge to get the consumers’ jobs done better. This is why Facebook grew rapidly. Facebook, combined with mobile phones with cameras, replaced film and destroyed Kodak because the internet is a faster and more accurate way to share memories (which is a consumer JTBD).

Either Facebook will continue improving how it helps consumers stay informed and make decisions about their lives (another consumer JTBD) or another company will do it faster and more accurately and replace Facebook. Through this lens, it's clear that lies are an existential threat to Facebook. In the short term, lies (fake memes) can spread rapidly and generate profits via advertising, but in the long term any product that fails to get the consumer’s job done will go extinct.

No one, not even Mark Zuckerberg, can beat evolution.

Facebook’s advertisers, of course, are their true customers (they generate their revenue) and advertisers are “hiring” Facebook to acquire new customers (the advertisers’ job-to-be-done). If consumers no longer use Facebook because lies don’t help them with their jobs, then advertisers will be less successful acquiring customers on Facebook and will leave the platform as well.

This type of downward spiral can happen very rapidly for a company, so the threat to Facebook, is very real. In 2007, Blackberry’s market cap ($80 billion) was 4x larger than Apple’s when the iPhone launched. It is now effectively zero. This can happen to Facebook, and it might all start with little lies.

 

Posted by Jay Haynes , 0 comments

Getting to the Truth - Stop Ignoring What Customers Want

 

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“Every lie we tell incurs a debt to the truth. Sooner or later that debt is paid.”

-- Valery Legasov, chief of the commission investigating the Chernobyl disaster, in HBO’s Chernobyl

Here’s a description of a company that may sound familiar:

Behind the efforts of an intuitive, dynamic leadership team who is excellent at selling, the company enjoys early growth, enough to invite substantial investment or acquisition.

The new shareholders are excited, they expect growth to accelerate when their cash infusion is put to work. They believe the likelihood of a substantial return on their investment is strong.

But expectations are not met.

The sales team is reporting a slowdown in their pipeline. Not only are they closing fewer deals, but marketing is sending them fewer prospects.

Marketing and sales look at the product team and say, “Tell me you have something exciting on your road map for us to sell!” The reply is a litany of optimizations to their existing product. Marketing has little confidence that these iterations will generate interest from new customers. Product agrees and laments that the executive team asked them to prioritize the low-hanging fruit.

Together, the teams march to the c-suite with a compelling argument for a research budget.

Sales says, “We don’t have anyone that’s excited to make a purchase.”

Marketing says, “Our lead gen rate is declining.”

Product says, “We’ve optimized our product but it doesn’t seem to make a difference.”

They say they need to find out what customers are really looking for. They want to know if they have product/market fit and the slowdown is a blip on the radar or if they need to innovate their messaging or product or both. The research will give them evidence.

“You don’t need that!” says the CEO who spearheaded the early growth, “I sold our product to our existing customers. They are your proof! It’s impossible that there aren’t more people who need our product. You just need to turn their light bulbs on!”

Three months later, the trends have not reversed and the conversation repeats itself. This time the executive team is open to research because now the board is on their case to accelerate growth and is questioning the current plan. They have their own pressures to generate a return on their investment.

The CEO approves the research but says, “Make sure you include our existing customers and warm leads in the research.”

When the results come back, the product team points to research subjects that say, “We are not focused on the problem you solve; we have no budget to address it; it’s really not an issue for us.” The product team’s interpretation is, “we better go find another problem to solve that is pressing.”

The CEO points to the small sample of existing customers and warm leads and says, “But what about these people? They are validating that our current plan is the right one. Stay the course.”

Six months later, there is a new CEO.

________

The quote at the beginning of this post refers to the USSR’s alleged culture of prioritizing their global reputation above the truth. That culture trickled-down to the staff of the Vladimir Ilyich Lenin Nuclear Power Plant at Chernobyl.

The show opens in the aftermath of an explosion in the plant’s reactor core. The management on duty refuses to believe that the reactor has exploded in spite of all evidence to the contrary. As the staff reports evidence of the explosion to management, the denials continue.

Here’s how Craig Mazin (Chernobyl’s screenwriter and showrunner) writes one particularly stark moment of denial. In this scene (p. 46 of the screenplay), Sitnikov works for Dyatlov, the manager on-call during the explosion.

SITNIKOV: I walked around the exterior of building 4. I think there's graphite. In the rubble.

DYATLOV: You didn't see graphite.

SITNIKOV: I did.

DYATLOV: You didn't. YOU DIDN'T. Because it's NOT THERE

The only way for graphite to get to the exterior of the building is for the reactor core to explode. However, built correctly, it would have been “impossible” for the reactor core to explode. An explosion would indicate that someone had made a mistake and done their job poorly. In the Soviet culture, it was more important to appear flawless than to own-up to the mistake and fix the problem.

In fact, we learn later in the series (SPOILER ALERT!), that the plant was built incorrectly. Because of a design flaw and a poor choice of materials, the failsafe mechanism that would have enabled the Chernobyl staff to shut the plant down and avoid the explosion, did not work. Even worse, Soviet physicists and officials were aware of the flaw, but hid it.

Hiding the truth caused tens of thousands of deaths according to the Union of Concerned Scientists, with a study later conducted by Greenpeace that estimated an additional 10,000 - 200,000 deaths in the years following.

Eventually, the truth bore out.

________

Organizations that operate from a place of fear, whose leaders reinforce their own beliefs and whatever will make them look good, rather than leading the search for truth, sit on a ticking time bomb.

It can be scary to admit mistakes and take the sometimes drastic actions to correct them. What will your boss think? What will your team think when they find out that they’ve been working against an exhausted plan?

Most likely, they will be happy you’ve realized it’s time to change directions. Often the last person to realize a plan has lived out its useful life is the very person who devised it. Everyone else already knows.

It’s important to go out and figure out what your true market is, how big it is, and whether or not your current product can seize the opportunities in it. The market and the truth will always win. And no matter how much you love your product for helping you get that early growth, your customers don’t want it. They want to get their job done.

You know what’s more expensive than doing the research to identify your customer’s unmet needs in their job-to-be-done? Continuing to market the wrong message and sell the wrong product.

You know what’s worse than owning up to incorrect assumptions? Dealing with the fallout.

 

 

Posted by Jared Ranere , 0 comments

How to Cut through the Clutter with Smart Product Positioning

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Issue: Too Much Competitive Noise

Positioning your product is key to fostering a unique connection with your customers. When a product or brand is positioned well, it’s easy to point out. There’s no confusion around what the product does, it makes it clear how it differs from its competitors, and when new products are launched, everything feels succinct and connected. And when customers are ready to buy, that clarity is what will drive them to choose your product over any competitors.

However, instead of creating an overarching market position, companies often rely on product features to position themselves as more valuable to the competition. This is a mistake as competitors can simply launch new features and continue to beat you with the same approach - an unending game of feature catch-up continues. Customers won’t be able to understand the difference and will get confused about what solution they should turn to for help.


Traditional Way: Positioning with Product Features  

It’s likely that you’ve studied various best practices when it comes to product positioning, including Harvard Business School Professor Michael Porter’s definition.

Michael Porter defined a competitive position in his 1985 book Competitive Strategy as a way of achieving competitive advantage. Porter identifies four different competitive positions based on broad or narrow market focus and product cost or product feature differentiation.

Cost Leadership Position

A cost leadership position means that you are targeting the broad market, but you have lower costs than your competitors. So you can generate more profits with higher margins, or you can lower your prices to customers and take more market share. Walmart is an example of this. They are known for low prices.

Cost Focus Position
Porter's cost focus position is when you focus on a narrow or niche market with a low-cost product, such as Huawei.

The Differentiation Leadership

The differentiation leadership position is when you satisfy needs with your product differently than your competitors in the broad market. Apple’s iPhone is a great example of this.

Differentiation Focus Position

The differentiation focus position is when you satisfy needs with your product differently than your competitors in a narrow or niche market.

Although this breaks down the different approaches, how do you execute on this positioning method? How do you apply this to your market and your product?

You are probably already using industry best practices to lower your costs. But because you and your competitors are likely using the same best practices, lower costs on their own are likely not enough to lead you to success unless you are in a true commodity market.  So your focus should be on differentiating your product’s value. Unfortunately, Michael Porter doesn’t tell you how to do this. He also doesn’t explain how you should determine if you should target the broad market or the narrow market.


JTBD Way: Focus on the Job Steps

The key difference in JTBD positioning is that you don't use the product features to position the brand or product. Instead, you look at the steps a customer takes to get a job done and you focus on those steps.

In order to identify the best competitive position, you need to first identify the underserved customer segment using needs in the job. Who is struggling the most with this particular JTBD? After that, you’ll break out the job steps within the JTBD and identify the underserved job steps with unmet customer needs. Focusing on those specific unmet needs in the job steps is where you can begin to create a unique position.

Benefit:  Generate Growth from Consistent Positioning

JTBD makes it easier to generate growth out of new products because it helps companies avoid being stuck in a "product-focused position". Companies often fear launching and selling a new product because it may confuse their brand position with customers. For example, retailers might say they could never provide a service because customers don't know them for that.

If you make yourself known for a job or steps within a job then it's easier for the team to believe they can release a totally new product and easier for customers to buy into it.

Posted by Jay Haynes , 0 comments

3 Tips for Adopting a Product Management Framework

 

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Product Management frameworks are exciting to learn and frustrating to implement. As a product manager myself and a framework teacher, I totally understand the appeal. Being a product manager is a messy job. You’re constantly trying to explain to your peers what you do. You didn’t go to school for it. And every day you have to motivate really smart people who don’t report to you to align with your vision and decisions. In the least, frameworks provide a comforting structure. At best, they align and focus your team, leading to operational rhythm and achieving your goals much faster than you anticipated.

As a Jobs-to-be-Done trainer and consultant, I’m obviously a huge fan of frameworks. In the past few years of helping dozens of large and small companies with Jobs-to-be-Done, I’ve repeatedly seen the enthusiasm of learning something new followed by the struggle to implement the lessons. Those who overcome the struggle reap the rewards.

The phenomenon is not unique to Jobs-to-be-Done. Here’s a pattern you have likely experienced with any framework:

  1. Hype: Your team reads some articles or even a book about a framework and gets amped about using it to fix broken processes, operations, decision-making, etc. and hit the targets you’ve been missing.
  2. Thrill of Education: You bring in expert trainers to teach the framework to your team. The session is one or more days, and your team happily attends. They believe this new framework has great promise, the training will be a nice change of pace, and you ordered great food. At the end of the workshop, momentum is at its peak. The trainers were inspiring, and the team is excited yet a little intimidated about putting the framework into practice.
  3. Cannon Shot: The day after training you and your colleagues are shot out of a cannon. You spend the morning unburying yourself from the emails you didn’t answer while you were in all-day sessions. You look on everyone’s calendars to find time for the “Framework Implementation Meeting.” The next available slot is in two weeks. (While you were in the session the rest of the company slammed you with meeting requests). While you wait for the follow-up meeting, your team falls back into its operational patterns. That’s ok, you think, they need to finish their current projects, and there’s a bunch of research to do before we can really use this framework. The follow-up meeting can wait.
  4. Land of the Forgotten: This is where your dreams of fixing your broken processes fade. Your follow-up meeting got rescheduled. Finance told you to wait for next quarter to get budget for the research. Half of your resources are working on tech debt. Growth has slowed so much there are whispers of re-org--definitely not a good time to start something new. Your team, your work, your company, and your career remain on the descending path they were on before you learned about the framework.

Don’t let this happen to you. I’ve learned from experience so you don’t have to. Here are three tips to implementing frameworks. Break the pattern and use frameworks to improve your team and achieve your goals.

1. Don’t Add, Change

Frameworks can be extremely powerful, but they cannot add hours to a day. Not only is it unrealistic to ask a maxed-out employee to add something to their plate without taking something off, it’s demoralizing. We’ve all been on the wrong end of that equation, and as a product manager, you’ve already learned this lesson from your engineering team.

Engineers can only handle a finite number of story points in a sprint. If you want to prioritize a new item, you have to de-prioritize something else.

The same is true for Product Managers. You are not superhuman.

To help your team adopt a new framework and the work that goes with it, change their responsibilities.

Change their metrics of success. Change the way they write specs and user stories. Change the meeting schedule. Change the deployment schedule. Change your criteria for decision-making. Change the process for decision-making. Change one of these things, all of these things, or a new thing not listed here, but change something.

Presumably, the reason you got excited about the framework in the first place is that something wasn’t going right on your team and you thought the framework could fix it. Articulate that something. Isolate it. Before you introduce the new framework, offer it to your team as the candidate for change and tell the team, “I expect the framework to replace this thing we do today.” If you do it right, adding the framework decreases the work.

2. Use The Framework Right Now; Waiting Is a Slow Death

The training session ends, everyone is excited, and they think, “I’m really looking forward to spinning up a new project that will be right for this, but I have to finish my current project first.”

Two weeks later...fire alarm! Your team interrupts their current project to put out the fire. It takes another two weeks to clear the smoke. Now, they’re back on the project. At lunch one day, someone remembers, “Weren’t we going to adopt that framework?” “What would be a good project for that?” “We should talk about that when I’m back from vacation.” You get back from vacation to 500 emails. The framework is forgotten.

Waiting to implement a new framework will kill it.

Meanwhile, you continue with your old processes, decision-making, and operations that you thought were so broken that you needed a new framework. And every day you do that, you are spending money on development that isn’t achieving your company goals because they were chosen under the old, broken decision-making rubric. Your budget dwindles and you tighten your belts, “We can’t implement something new now; we’re in crisis!”

Here are two ways to avoid this death spiral:

  1. Come up with a project (or multiple projects) that will use the framework before you train your team in it.
  2. Don’t wait for a special project. Insert the framework into whatever your team is doing today even if you can only make incremental improvements, which brings us to tip number three.

3. Perfect is The Enemy of The Better

Often when you learn a framework, you learn it from an expert who has spent years using, advancing, and teaching it. The framework is full of new terms with very precise definitions. There are specific research, analysis, and decision-making techniques. There are wrong ways of doing things with seemingly disastrous consequences. Leading practitioners have long-standing arguments about the right way to do things. The experience can be intimidating, like you’re walking on a minefield. One wrong step and BOOM.

It can make you feel like using the framework requires perfection and a tremendous amount of work. You can’t use human-centered design without observing your customer in their natural setting. You can’t be Lean without lighting your road maps on fire, allocating all of your engineering resources to instrumenting every pixel of your application to measure user behavior, and hiring a coach for every team. You can’t use Jobs-to-be-Done without doing dozens of user interviews, running lengthy surveys, and executing a detailed analysis of every competitive feature against every customer need.

All of the above activities are valuable and help you mitigate the risk of investing in the wrong product ideas but none of them are necessary to get started with a framework.

You can use a framework before executing all of the research, training everyone in your organization, and building out the infrastructure to support it. Remember, the framework was appealing in the first place because something about your current work habits was broken and you were not realizing your aspirations. Even if you start with a small piece of the framework, even just the way of thinking, it will be better than what you were doing before. Start with that while you invest in full implementation.

For example, if you’re implementing Jobs-to-be-Done, before you do all the research, create a hypothesis about the job your customer is hiring your product to do. Make sure it doesn’t include a solution. Then pick a feature your team is *currently* working on (don’t wait for a new one, see above). Ask, “How would this help our customers get the job done? Which struggle with the job does it help our customers overcome? Does it satisfy that need faster and more accurately than their current solution?” Then refine the feature based on these answers to try and satisfy the need better than the competitive solutions.

Because you didn’t do your customer interviews yet, maybe your job will not be at the perfect level of abstraction or you’ll articulate it in a way that’s not exactly in the customer’s language. Maybe the need you identified is not the *most* unmet need because you haven’t done your survey yet. Perhaps you’ll miss an element of the existing solution that makes your speed assessment a bit off. But at least you’ll have a justification for developing the feature that is clearly connected to a customer problem, builds your team’s customer empathy, aligns your team with the customer’s goal and a clear goal for your feature, and potentially leads you to refine your feature and increase your likelihood of success with it. Those are a lot of benefits even though you are still far from implementing the framework perfectly.

In parallel, you can do all the work related to getting the full value of your framework, but don’t wait for that. In the meantime, your team can perform much better than they do today.

Posted by Jared Ranere in INNOVATION , 0 comments

Why 95% of Product Teams Fail at Defining Customer Needs

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Issue: Disagreement on Customer Needs

Your goal as a company is to build, market and sell products that satisfy customer needs better than competitors. Although it may sound oversimplified, identifying exactly what your customer’s needs are isn’t so straightforward for many teams. Research published by MIT Sloan found that 95% of all companies do not have an agreed-upon definition of a customer need. It’s likely your team also tends to argue about this.

Without an agreement on customer needs, teams often use customer requests, sales requests, feature ideas, or technologies as inputs into product development. Although these may offer helpful insight into how to connect with your customer, none of them provide your team with an unchanging, consistent definition.

In this post, we’ll teach you how to define a customer need, how to identify customer needs in your market, and how to organize needs to make them useful for your teams.

Traditional: Relying on Changing Input to Drive Product Roadmap

With the traditional product development process, when a new launch fails to generate growth, your team is left to iterate or pivot using more changing inputs. By trying to hit a moving target, teams are basically guessing at what customers want. This eventually leads disagreements, arguments, and harmful company politics, and it ultimately leads to a company's death spiral. It is why products, companies, and often careers fail.

Blackberry, Britannica, and Kodak all lost billions of dollars in equity value because they did not have a stable and quantifiable definition of customer needs. They defined their markets based on changing products and technologies, not on stable jobs and needs. You need a detailed customer need definition to make Jobs Theory useful and actionable for your team and your company.


JTBD Way: Focus on Unchanging Customer Needs

The best way to avoid trying to hit a moving target is to focus on the customer’s job-to-be-done. A customer’s job never changes and JTBD provides you with clear criteria on how to identify the customer’s job steps and needs within the job. It serves as a stable target for your team to hit, regardless of what product, services, or technologies evolve. You can learn more about how to answer the question of what your customer’s job-to-be-done is in this post.

Similarly, your customer's needs in their job will not change either. Like the job itself, needs are stable over time because they are also independent of any product, service or solution.

Let's look at our Apple and Google Maps example with the job-to-be-done being “get to a destination on time.” This is a stable job that will never change as opposed to “figure out a route to work” or “catch the next bus.” Getting to a destination on time becomes the market in this case.

But if we want to build a superior product, knowing the job isn't enough. We need to double-click into the customer needs to determine what product features we should build to get the job done better than Apple and Google.

In order to get to a destination on time, a lot of variables come into play (e.g., know the arrival time, the address of the destination, how long it will take to get to the destination, the optimal sequence of planned stops and if the destination can be reached on time). These are all variables in the job. In order to achieve their goal of getting to a destination on time, consumers need to do something with each of these variables; they need to take actions on them (e.g, calculate how long it will take, determine the optimal sequence, etc.).  These actions along with each of the possible variables are what the customer needs to do to successfully achieve the goal and get the job done.

Since every customer need has an action and a variable, you can measure the speed and accuracy with which customers can satisfy a need. This is the true power of Jobs-to-be-Done. You now have the ability to measure the speed and accuracy of your customer's needs to determine why they are unsatisfied in a market.

Benefit: Align Your Team on Customer Needs

To recap, customer needs are actions a customer must take using variables required to get the job done. Customer needs in the job, like the job itself, are stable over time and they have no solutions. This means that your team will have a stable target to hit. Structuring needs this way makes Jobs Theory useful and actionable for your team. It provides them with a shared focal point and a clearer understanding of what they are building, selling and marketing to customers.

If you want to figure out the next steps in identifying and measuring your customer’s needs, take our Jobs-to-be-Done online course.

Posted by Jay Haynes , 1 comment

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