Jobs Theory Blog

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. 

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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.

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.

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. 

 

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, marketing or sales team and your mission is to beat Apple and Google. How would you do it?

Using JTBD to Reveal Competitor Weaknesses

A good way to test if product management or innovation methods 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 product roadmap?

In this short video, you will learn how to use JTBD to beat even the most feared competitors, like Apple and Google. 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.

However, JTBD methods can reveal weaknesses in even the most successful competitors. Jobs theory shows that your customer is not buying your product, they are using your product to get a job done. They make new purchases because they struggle to get their job done. 

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. JTBD will help you and your team gain agreement faster on the best product ideas for your roadmap and come up with the best marketing messages.

Listen to Our Podcast!

You can listen to this episode of our “How Would You Beat?” podcast on Spotify, Apple, and YouTube. We will be posting more videos to help you use JTBD at your company. If you enjoy this video, please share it and like it on YouTube. 

To learn more about JTBD methods, why your customers are struggling to get their job done, or how to beat your competitors, contact us at thrv today.

 

 

 

 

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.

 

 

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.

 

 

 

“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.

 

 

Product positioning strategies are 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. When customers are ready to buy, that clarity is what will drive them to choose your product over any competitors.

Issue: Too Much Competitive Noise

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: Develop a Positioning Strategy with Product Features  

It’s likely that you’ve studied various best practices when it comes to product positioning strategies, including Harvard Business School Professor, Michael Porter’s, definition. In his 1985 book Competitive Strategy, Michael Porter defined a competitive position as a way of achieving competitive advantage. Porter identifies four different competitive positions based on either broad or narrow market focus, and either product cost or product feature differentiation.

1. Cost Leadership Position

A cost leadership position means that you are targeting the broad market but you have lower costs than your competitors. 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.

2. 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. These companies are able to build stronger brand loyalty making the market segment less attractive to customers.

3. Differentiation Leadership Position

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. This product positioning strategy, however, requires good research, effective digital marketing and a strong sales capability framework to get customers to understand the benefits offered by your product.

4. Differentiation Focus Position

The differentiation focus position is when you satisfy specific customer 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 these product positioning strategies? How do you apply this to your target market and your products?

You are probably already using industry best practices to lower your costs...but so are your competitors. 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.  Your focus should instead be on differentiating your product’s value. Unfortunately, Michael Porter doesn’t tell you how to do this. He also doesn’t explain how to determine if you should target the broad market or the narrow market.

JTBD Way: Focus on the Job Steps

The key difference in the jobs-to-be-done product positioning strategy 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-based segmentation to determine 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 develop a positioning strategy, and a marketing strategy, to create a unique position and help your target make smarter purchase decisions.

Benefit:  Generate Growth from Consistent Positioning

JTBD makes it easier to generate growth out of new products or services 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 good or 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. Contact thrv to learn more about using JTBD methods to create your own product positioning strategy.

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.

Issue: Poorly Defined Product Development Strategy

Your product strategy is everything. It will define your success or failure as a product team. So what is a product strategy? Does your product team even agree on the definition of a product strategy? Can you walk around your company, ask your colleagues, “What is our product strategy?” and get the same answer? If not, this is a serious problem.

A product strategy is very simple. It has three elements:

1. The customer you are targeting
2. The job (JTBD) you are going to help them get done
3. The product platform you are going to use to get their job done.

Let’s look at some examples. United Airlines has a product strategy (whether it knows it or not) to target sales professionals (the customers) who are acquiring customers (the JTBD) using airplanes and airports (the platform). Zoom has a product strategy to target sales professionals (the customers) who are acquiring customers (the JTBD) using web video conferencing (the platform).

You can see why JTBD product strategies are useful. First, it clarifies who your competition is. United probably didn’t think of Zoom as a competitor, but they are because they are competing for some of United’s most valuable customers. Covid just makes this excruciatingly clear. Second, if United’s product team could clearly articulate this as a strategy it would have lead to product innovations that would help sales people get the job done. It could have even lead to development of web conferencing and CRM tools that helped salespeople. This might seem outside an airlines “core competency” but that is the whole point.

Your  customers do not care about your core competencies, they care about getting their job done. United is in serious trouble, and not just because of Covid. It’s because Zoom (and other online tools) are helping salespeople acquire customers without getting on a plane.

Traditional Way: Company Focused, Not Customer Focused

Why is it so hard for companies to clearly define their product strategy? Some of the blame is with Harvard Business School.

In 1996, Harvard Business School Professor Michael Porter wrote a famous paper called “What is Strategy?” Companies often use Michael Porter's definition of strategy, since he was a pioneering academic in the field, famous for analyzing industries to determine competitive strategy. In Porter's view, “The essence of strategy is choosing to perform activities differently than rivals do.” Activities companies perform include manufacturing, engineering, distribution, marketing, and selling. For example, mobile phone companies each perform these activities but they have had very different results.

In many financial reporting periods, Apple has had 98% of the profits in the industry, but that isn't because Apple performs activities differently, as Michael Porter would predict. In fact, Apple relies on Samsung to perform some of their manufacturing activities. Apple has leading profit share because they satisfy customer needs differently than their competitors. Successful strategy satisfies needs differently than your competitors. Customer needs, not activities, should be the focus of your product development. 

This is why Michael Porter’s strategy definition is outdated. In 1996, Michael Porter didn't have the customer's jobs-to-be-done (JTBD) in his strategy toolkit. Performing activities differently than your competitors is important, but anyone can copy activities using industry best practices. Satisfying your customers JTBD in a unique way is much harder to copy.

Needs in your customer's job-to-be-done, not your activities, should be the foundation of your strategy because your customer's JTBD tells you what activities to perform so you can satisfy your customer better than your competitors. 

JTBD Way: Choose a Customer and Focus on Their Unmet Needs

A product development strategy requires you to make 3 simple choices:

1. Identify which job beneficiary to target.
2. Select which job-to-be-done to fulfill.
3. Determine which platform you are going to use to satisfy customer needs differently than your competitors.

Let's look at a well-known example to demonstrate why a JTBD-based product development strategy definition is more useful. We all have executed the job of “creating a mood with music.” While the products have changed dramatically over time, the job is stable and has not changed.  The needs in the job have not changed either.

One need in creating a mood with music is to find a new song for the mood. This need follows the job-to-be-done structure with an action and a variable. We can measure the speed and accuracy of different platforms satisfying this need. Let's look at how satisfying this need has changed over time with the arrival of new platforms that led to different product strategies.

In 1984, when the CD was released, finding a new song for the mood was time-consuming and often very inaccurate because you often couldn't find a new song. The speed was slow and the accuracy was low because consumers were forced to buy entire albums.

Then, CD players and changers emerged to help with this need by enabling consumers to search their library for songs. However, finding a new song for a mood was still time-consuming and not always accurate. The iPod, of course, was a huge improvement because it reduced the steps and time significantly. Accuracy was improved with the introduction of the iTunes store, (you still might have difficulty quickly finding a song for the mood, but now it’s because there are so many songs to choose from). 

Microsoft, on the other hand, was clearly not using customer needs in the job to create their product. In 2007, Microsoft’s Zune tried to copy what Apple was providing without making the experience faster or more accurate.

Pandora launched with a different product strategy using a new platform: streaming. Pandora's streaming and music taste algorithms satisfied this customer need faster and more accurately. When Pandora launched, it was signing up 90,000 new users per day because it satisfied unmet needs in the job faster and more accurately than its competitors.

These are great examples of how a product development strategy can lead to either success or failure. A company with enormous resources (Microsoft) chose the wrong product strategy (i.e. using a hard drive to satisfy needs in the same way as the iPod) and it led to failure. In contrast, Pandora chose a differentiated strategy to satisfy needs faster and more accurately and it took Apple an entire decade to launch a competing streaming service.

Benefit: Align Your Team around a Central Strategy

To recap, you create a product strategy by identifying a job beneficiary and job to target, and then choose a platform that will satisfy unmet customer needs faster and more accurately than your competitors. Once you’ve done those 3 things, you can begin the process of segmenting your customers based on their needs and act accordingly.

Using jobs-to-be-done as the foundation for your product strategy means you will have a strategy that is unambiguous and easy to remember. Everybody on your team is aligned and it gives you direction on what to do in your particular department to fulfill that strategy. It mitigates risk because you know whether or not you're building the right platform.

To learn more about jobs-to-be-done as a product development strategy, contact us today. Or take our free online JTBD Course.

Issue:  Miscalculating Your Real Competitors

Creating equity value in your company comes down to one thing - your ability to satisfy customer needs better than competitors in your market. This is why competitive analysis is critical to your product strategy. But often times, product teams use traditional “industry” research to identify their competitors, creating a product roadmap based mostly on what features are already in the market. The challenge with this thinking is that you risk playing feature catch-up while your real competitor sneaks up behind you and steals significant market share.

In this post, we will teach you how to identify your real competitors. You will also learn how to identify competitor weaknesses that you can exploit to create more equity value for your company with less risk.

Traditional Way: Feature Parity Drives Product Strategy

In traditional competitive analysis, product teams often compare their own product's features to a competitor's features. If Product A has all of the features of Product B plus a few more, then Product A has the advantage. In their minds, more features equal competitive advantage. The problem is that customers don't want features; they want to get their job done.

Focusing on feature-to-feature comparison is the wrong way to think about competitive differentiation. Your team will be constantly trying to catch up - with very little chance of actually doing so. If you've ever been on a team that is playing feature catch-up, you know it's like bailing water out of a leaky boat: every time you release a feature and think your work is done, your competition releases something new, racing ahead of you yet again. You will always be a step behind.

The problem is that customers don't want features;
they want to get the job done.

For example, Microsoft thought they caught up to the iPod by including all of its features in the Zune. Apple launched the iPhone. Microsoft tried to catch up again with the Windows Phone. Playing catch-up leads to failure.

Plus, just because it's market standard, doesn't mean it's the best way to do it. What seems like state of the art today will be archean tomorrow.

JTBD Way: Focus on Your Customer’s Unmet Need

Your customers' struggle to get the job done causes them to look for new competitive solutions to get the job done faster and more accurately. In order to beat your competitors, you have to start with where the customer struggles to get the job done and figure out where the competitor is failing. Where are they not getting the job done fast or accurately enough?

First, identify all the competitors (products, services, technology, or manual processes) that satisfy needs in each step in the job. Then calculate the speed and accuracy with which the competitors satisfy the needs in the steps.

Let’s look at an example of a customer job-to-be-done creating a mood with music.

The Zune team at Microsoft compared the Zune to the iPod using traditional product feature analysis. The Zune actually had more features than the iPod, including a Podcasting feature. But this analysis did not help determine if the Zune was going to take market share from the iPod.

This analysis is flawed because customers don't want features, they want to get their job done. Zune, for all of its features, was getting the job done in the exact same way as the iPod.

Pandora, however, had fewer features than the iPod, but because it had a different feature (automatically generated streaming playlists) that satisfied an unmet need in the job of creating a mood with music, it was able to grow successfully and create equity value.

This illustrates why your competitive analysis should not be based on feature comparisons - because feature comparisons are not predictive of your growth.  

The speed and accuracy with which the competitive solutions satisfy the needs are the benchmark for how good your new solution needs to be. If it does not satisfy the needs faster and more accurately, you have not given customers sufficient incentive to switch to your product.

Benefit: Lead Your Market, Instead of Following

Focusing on your true competitor, you will avoid the risk of wasting capital and feature catch-up. With Jobs-to-be-Done, you’ll figure out where the customer struggles to get the job done, and where the competitor doesn't help the customer get the job done fast or accurately enough.

Want to figure out your true competitor? Take our online Jobs-to-be-Done course today.

 

 

The Issue: Endless Roadmap Meetings and Too Many Product Ideas

Brainstorming can feel like the wild wild west of product planning. The unpredictability of idea generation sessions can derail productivity and leave your team more at odds than before. Despite its unruly nature, product teams still use open-ended brainstorming to identify new product ideas.

In this post, we will teach you how to generate winning product ideas for new features using unmet customer needs in a Job-to-be-Done. We include an example of how to beat Google Maps and Apple Maps using this technique.

The Traditional Way: Generating Ideas with No Objective Criteria

One of the most popular methods to generate new feature ideas is brainstorming. To facilitate the generation of new ideas, there is often only one rule in brainstorming - there are no bad ideas. In other words, your team is not supposed to use any criteria to judge new ideas on the assumption that this will enhance creativity.

Brainstorming has proven to be ineffective at generating valuable product ideas. The reason brainstorming is inefficient is because it doesn’t include any quantitative criteria your team can use to quickly and efficiently judge new product ideas. Those criteria are the unmet customer needs in the job.

The JTBD Way: Clear Criteria Focused on Customer’s Struggle

Because Jobs-to-be-Done identifies unambiguous and quantifiable customer unmet needs in your customer’s JTBD, your team can use these unmet needs as the criteria to judge your product ideas. This eliminates any opinion-driven decisions and instead frames all ideas in the context of whether or not they will help your customer overcome the struggle to get their job done.

Let's look at our example of Apple and Google Maps. What feature idea will help us beat Apple Maps and Google Maps?

How to use JTBD to Uncover Unmet Needs

We know that customers aren’t waking up in the morning saying, “I want to use a navigation app today!” Of course, not. Instead, they’re ultimately asking for something to help them get to a destination on time. This is the Job-to-be-Done that consumers are “hiring” navigation apps to do. Consumers getting to a destination on time is the underlying market for navigation apps.

 

Above are the 16 steps in the JTBD of getting to a destination on time. Job Steps are all the things a customer has to do to complete a job. Once we know the job steps, we identified the needs in each step to determine how customers struggle to get the job done. For example, customers need to determine the optimal sequence to make planned stops in a busy day.

Unmet needs in the job are the criteria
to use to generate and judge new product ideas.

To determine if this is a struggle, the thrv team asked consumers in a survey how difficult it is for them to determine the optimal sequence to make planned stops. We determined the customer's struggle by calculating a customer effort score. And we used customer effort scores to identify an underserved segment of customers who all struggle to get the job done in the same way.

This revealed that 86% of customers in the segment did not find it easy to determine the optimal sequence to make their planned stops. And for each customer need, we used the existing competitive solutions - in this case, Google Maps - to determine how quickly and accurately a customer can satisfy the need with the existing competitors.

In this example, satisfying this need takes five minutes or more and is only 20% accurate. With our quantitative data and analysis, we discovered that it takes too much effort for customers to satisfy this need with our competition - Apple Maps and Google Maps. These effort, speed and accuracy scores are your baseline for our idea generation. In other words, the unmet needs in the job are the criteria to use to generate and judge new product ideas.

How to Generate and Identify the Best Product Ideas - An Example Product Idea

Let's use this unmet need to generate and judge new product ideas. How can we help consumers determine the optimal sequence to make planned stops faster and more accurately?n To help them determine the optimal sequence in their busy day, one idea was to create an assistant service. A customer could call a remote assistant who would have access to their calendar, assess their stops, routes, and likely arrival times. And then make recommendations to re-order their stops. We can score this idea using the speed and accuracy of satisfying the unmet needs with our Assistant Service features. And we can assess the likely resulting customer effort.

Our second idea is called Sync & Optimize. This idea includes syncing with a user's calendar to determine the stops in their day. And to create an optimization algorithm that will factor in which stops can be moved, what the likely local traffic conditions will be at the time, and any atypical travel conditions like traffic or weather that may occur as the departure time approaches. The Sync & Optimize feature automatically and instantly optimizes the sequence of their planned stops.

Want to see how these two product ideas compare? Learn more in our online course.

The Benefit: Ditch the Debates and Align Your Team with Less Risk

Jobs-to-be-Done provides you with clear, objective criteria to generate and identify the best product ideas so you can end debates and build features your customers actually need and want. JTBD helps align your team with your customers and helps you get faster executive approval on your product roadmap.

Quick Review: To identify the best feature ideas, determine the JTBD and the steps, quantify the unmet needs in JTBD and segment customers, finally analyze and calculate the competitive speed & accuracy baseline for each of the unmet needs. Then you are ready to use the unmet needs to quickly generate and judge the best product feature ideas.