The market position of IKEA International A/S is based on this latter job. Its in-stock, take-it-home-and-assemble-it-yourself kits are seen as valuable features by its customers, not as inadequacies that are tolerated in order to get discount pricing because they need furniture now. Those customers also value IKEA’s racks of kitchen utensils, linens and other home decorations, because the job is to outfit and decorate the dwelling. To accommodate the many customers who are young couples, in-store child care is a crucial aid in getting the job done. Without this package, IKEA could only help customers do a piece of their job. For its customers, the IKEA experience is delightfully different from a visit to a retailer that is trapped in the traditional positioning paradigm, attempting to appeal to a lower-income “demographic” by selling lower-quality furniture.4
Sometimes the job a customer needs done is “aspirational.” The need to feel a certain way — perhaps macho, pampered or prestigious — arises in many of our lives on occasion. In such situations it often is the brand itself, more than the functional dimensions of the product, that does the job. When we find ourselves needing to do one of these jobs, we can hire a branded product — Gucci, Louis Vuitton, Virgin and so on — the very purpose of which is to provide such experiences.
The Real Competition: Other Job Candidates
Although most marketers view their competitors as those who make the same category of products, this is generally only a small subset of the “job candidates” that customers consider hiring. Consider, for example, a job that arises millions of times on morning subway trains and buses. Crowded commuters want to pass the time productively. A free, single-section, easily folded newspaper calledMetro has been positioned for this job and is read daily by tens of millions of people. It does not simply compete against the major metropolitan dailies; it competes against conversation with strangers, paperback novels, iPods, mobile phones, BlackBerries and boredom.
Automakers are not competing only with other automakers to fill the “my-car-is-my-office” job. They are competing against companies that help people be productive when they’re not in home or company workspaces; such companies are Starbucks Corp.; Franklin Covey Co., a developer of time-management and productivity seminars and products, headquartered in Salt Lake City, Utah; Research in Motion Ltd., developer of the BlackBerry and e-mail products, based in Waterloo, Ontario; and mobile-phone service providers. Even as automakers struggle to sustain premium prices for the feature-laden cars they introduce every year, customers whose cars are their primary offices show a remarkable willingness to pay very high prices for the services that carmakers aren’t offering, just to help them get this job done.
Because segmenting by job clarifies who the other job candidates really are, it helps marketers to compare the strengths and weaknesses of each of the products that compete, in the customer’s mind, for the job and to derive the attributes and experiences that would be required to do the job perfectly. Marketers who segment by product and customer category just can’t see as clearly the competition that comes from outside their product category and therefore are not in an informed position to compete effectively.
Doing the Job of Finding the Job
How can marketers figure out the jobs-to-be-done segmentation scheme in their markets? The jobs that customers are trying to get done cannot be deciphered from purchased databases in the comfort of marketers’ offices. It requires watching, participating, writing and thinking. It entails knowing where to look, what to look for, how to look for it and how to interpret what you find.
Where to Look
There is a hierarchy that consists of places where researchers who are seeking opportunities to generate new growth might look for jobs that customers need doing. The first step in the hierarchy is the current customer base. Peter Drucker got it right: “The customer rarely buys what the business thinks it sells him.”5 Companies almost always find that their customers are using their product for different jobs than the company had intended. Often they learn that the product does one of these quite well, but they see customers force-fitting it for other jobs, putting up with its inefficiencies because it’s their only option. Such situations are opportunities to modify the product and its marketing mix so that it can compete more effectively and gain share against job candidates in other product categories.
In the second step of the hierarchy are people who could be your customers but are instead buying competing products to get their jobs done. Subtle differences that seem inconsequential when comparing products within a category can be very important when the job is the unit of analysis. The third step in the hierarchy of growth opportunities is exploring disruption. Disruptions take off when “nonconsumers” are trying to get the job done and simply are constrained from good solutions by the complexity and cost of existing products.
When the customer is a business.
If your customer is a business, the job it needs to do is generally obvious: Make money. Selling a product to an organization that helps it make more money in the way it is structured to do so is a great way to justify premium pricing. This often isn’t as easy as it seems, however, because most employees in customer companies have a limited, local understanding rather than a companywide perspective about how money is made.
Hill-Rom Co., a medical equipment company in Batesville, Indiana, grew its share of the hospital bed market by figuring out how to understand what drove its customers’ profitability even more astutely than the customers did. Like most companies, Hill-Rom employees made contact with its customers’ employees at many levels. Its senior executives visited with the senior hospital administrators, the company deployed its market researchers to work as orderlies on hospital wards, salespeople called on purchasing people, service technicians interacted with hospitals’ maintenance staffs and employees in the financial departments of each company negotiated on how and when to pay for their purchases of beds. Unlike most companies, however, Hill-Rom convened regular meetings of all employees who had contact with specific customers’ employees in order to piece together an insightful view of the levers the company could affect that would improve its customers’ profitability.
One key insight from these meetings was that nurses, who account for a significant share of hospitals’ operating costs and whose interactions with patients strongly influence perceptions of the quality of care, were spending inordinate time on tasks unrelated to nursing — picking up things from the floor that patients had dropped and solving television problems, for example. By adding features and functions to their beds that obviated many non-nursing tasks, Hill-Rom differentiated its beds in ways that helped hospitals make more money. Hospitals readily paid premium prices to get those improvements. These insights did not come from segmenting markets by small, medium and large hospitals. They came from understanding the job — the levers that drive hospitals’ profitability.6
As Hill-Rom discovered, developing a multidimensional perspective on a corporate customer’s profit engine pays off. A question to a person involved in a business-to-business purchasing process is as simple as, “How did you decide that you were paying an acceptable price for this purchase?” and can yield useful insights about the levers that drive the customer’s profit engine.
When the customer is an individual.
Understanding the jobs-based structure of markets where the user is an individual entails different techniques than when the customer is an organization. The research methods that work best depend upon the customer’s position along a spectrum. One extreme comprises situations where the job is “knowable,” such as with milkshakes and mobile-office automobiles, in which commonly available products are being employed every day, and yet suppliers haven’t deciphered what customers are really hiring their products to do. At the other extreme are ill-defined situations in which neither the company nor the customer can articulate the job to be done.
How to Look
Marketers seeking to understand the jobs-based structure of individual customer markets must act like investigative reporters who have a set of tools at their disposal that includes surveys, interviews, observations, participation and experimentation.
Interviews and surveys.
When the job is knowable, researchers actually can use relatively conventional market-research tools such as customer interviews and surveys. Although skillful use of these tools is important, even more crucial is defining the unit of analysis to which the tools should be applied. The objective is always to understand the situation, not the customer. This is a critical distinction. Some marketers with whom we’ve discussed this concept have asked, “How does your notion differ from ‘needs-based’ segmentation?” The difference is the unit of analysis. The problem with focusing on customer needs is that a customer finds herself needing different things at different times. In contrast, the situation, or the job, is a simpler, more stable point of focus because it exists independently — disembodied, as it were — from the customer. Although there may be a correlation between customers with particular characteristics and the propensity to purchase particular products, it is the job that causes the purchase to occur.
Another reason it is so important to understand the situation that precipitated purchase is that this yields insight not just into the functional dimensions of the job to be done but into the emotional factors as well: fear, fatigue or frustration; anxiety or anger; panic, pride or pain; and so on. Products don’t engender emotions. Situations do. Hence, to provide the set of functional, emotional and social experiences in purchase and use that are required to do the job completely, it is the situation rather than the customer that must be the fundamental unit of marketing analysis.
Observation.
In the middle of the spectrum between “knowable” and “ill-defined” are instances in which customers know what jobs they need done, but there is no product or service designed to do it yet. In such instances, customers engage in compensating behaviors to “make do” with what’s available. Marketers can sometimes identify these compensating behaviors simply by observing the consumer in context. Such observation is particularly critical when a new technology is developed, often for a purpose in another industry, and marketers are searching for opportunities to import it into other jobs. Sony Corp.’s legendary cofounder Akio Morita was in such a situation. The transistor had been developed by Bell Laboratories — an innovator in telecommunications equipment, based in Murray Hill, New Jersey — for telecommunications. Where else could it be used? Morita had a policy of never relying on quantitative market data to guide new-product development as he led the company between 1950 and 1980, because data doesn’t exist for new applications of a technology. Instead, he and his associates just watched what people were trying to do and tried to imagine how applying the company’s electronics miniaturization technology could make it easier and more affordable for more customers to do those jobs. Morita’s success rate for new products was much higher than the 25% success rate for products whose launch is guided by more quantitatively sophisticated market-research methods.7
Empathic observation of compensating behaviors.
When the situation is particularly murky, marketers will need to participate in the particular context themselves in order to peel away the compensating behaviors and work-arounds that mask the underlying job needing to be done. Hill-Rom used the technique ofempathic discovery8 to understand how the work of individual nurses affected hospital economics as its market researchers worked as hospital orderlies. This method also enabled The Procter & Gamble Co.’s marketers to see that using a dustpan was compensating behavior, leading to the development of its Swiffer floor-cleaning system.
Sometimes compensating behaviors with a job lurking beneath them quite literally knock on the door, enshrouded within an idea for a new product or service. As an example, an inventor approached the Big Idea Group of Manchester, New Hampshire, a developer of new products, with a card game he had created. The chief executive officer of BIG, Mike Collins, sensed from his experience that the game wouldn’t sell. Instead of sending the inventor away, however, he asked, “What caused you to develop this game?” The inventor had a ready answer: “I have three young children and a demanding job. By the time I get home from work and we finish dinner, it’s 8 o’clock and the kids need to go to bed — but I want to have a fun experience with them. What am I going to do? Set up Monopoly or Risk? I need some fun games that we can set up, play and put away in 15 minutes. There just isn’t a game designed to do this.”
Bingo. Though his solution to the job was mediocre, the valuable insight was the job itself — something that arises in the lives of millions of busy parents every evening. It was then a straightforward job for a team of experienced game developers to work with this man to create a very successful line of “12 Minute Games” that are now sold nationwide. Marketers who frame their role as searching for good product ideas generally are not nearly as productive as those who are searching for jobs.
The intuition that comes from living with the problem is a key reason why many of the most successful software products are developed by people who had been on the “user end,” living with or working around the inadequacies of prior products. It is the organizing concept behind MIT professor Eric von Hippel’s highly successfullead user methodology.9
Coevolution.
In some situations, marketers and engineers have a sense that a new technology has the potential to unleash new applications, but potential customers cannot even articulate what jobs they might want done if technology were to make it possible. In these situations, the company and its customers must discover the product and the job together. This requires that the company get into the market quickly with a very flexible product and discover, along with customers, value-adding ways to use it. For example, in the late 1990s, the emerging technology oftelematics presented a number of intriguing potential applications: It conceivably could give drivers maps to their destinations, inform them about shops in the area that sold products they might want to buy, help police find vehicles in case of theft or accident, enable hands-free telephone calling, collect and interpret data on engine wear and on and on. Though many automakers were paralyzed by their inability to know exactly what applications and features consumers would want, General Motors Corp. got into the market quickly with OnStar, an in-vehicle safety and security system that is a flexible, configurable product platform with a minimal fixed cost. OnStar’s marketers then paid careful attention to the circumstances their customers were in when they signed up for the service and those they were in when they used the service. After a couple of years of coevolution, a major job had become clear: “I want peace of mind that if something unfortunate happens, my loved ones and I will be taken care of.” By focusing on doing that job, OnStar has become a highly profitable, rapidly growing differentiated service that GM provides to millions of its customers.
(Reprint #:48301)
Acknowledgments
We thank Bob Leahey of InfoTrends Research Group Inc., Armando Luna of Blue Cross and Blue Shield of Florida Inc., Emily Sawtell of The McGraw Hill Cos. and Steven Wunker of Innosight LLC for their comments on drafts of this paper. We also thank Rick Pedi and Bob Moesta of Pedi, Moesta & Associates Inc. for allowing us to use disguised insights and examples from their work with these ideas.
REFERENCES
1. The descriptions of the product and company in this example have been disguised.
2. There are other job segments in the auto industry. The key reason why DaimlerChrysler AG’s early minivans were such a hit with customers was, we believe, that they were positioned on a job that arose in the lives of families — to interact easily and safely with each other while traveling together from here to there. Creating a job-focused product does not guarantee a perpetual monopoly, of course, and other automakers ultimately introduced their own minivans. It is noteworthy, however, that it took competitors years to introduce performance-competitive minivans. Because they were organized by product category rather than job, the minivans just didn’t fit with the way they were structured or thought about in the market. As a result, Chrysler’s market-share leadership persisted for over a decade. Another job that people hire a car to do is to express care and love for a spouse or a child. No car has the features and associated services bundled with it to do this job well.
3. See T. Levitt, “Marketing Success Through Differentiation – of Anything,” Harvard Business Review 58 (January–February 1980): 2–9 for a classic description of the augmented product concept. Harvard Business School professor Youngme Moon has written and taught extensively about the concepts in this section, and we thank her for “augmenting” our own understanding of this phenomenon through her articles, cases and teaching notes.
4. IKEA founder Ingvar Kamprad had a partial, intuitive sense of what some fraction of furniture buyers needed to do when they walked into a store. As he and his associates started the company and tried to help their customers, understanding of the job coalesced piece by piece. IKEA executives probably do not articulate their strategy as being focused on this job — most likely this insight resides in a tacit, cultural understanding. Our hope is that by articulating this model of jobs-to-be-done segmentation and illustrating it with companies like IKEA, whose strategies de facto mirror this model, we might help students and managers who weren’t blessed with the intuition (and luck) of Kamprad to deliberately find opportunities such as these.
5. P.F. Drucker, “Managing For Results” (New York: Harper & Row, 1964), 94.
6. These methods are recounted in C.M. Christensen, “Hospital Equipment Corporation,” Harvard Business School case no. 9-697-086 (Boston: Harvard Business School Publishing, 1997).
7. This information was provided by Michael Schulhof, former Sony board member and CEO of Sony Corp. of America for 20 years, during an interview in New York City in 2001.
8. Leonard, William J. Abernathy Professor of Business Administration Emerita at Harvard Business School, called this method empathic design. See D. Leonard and J. Rayport, “Spark Innovation Through Empathic Design,” Harvard Business Review 75 (November–December 1997): 102–113.
9. See E. von Hippel, “Democratizing Innovation” (Cambridge, Massachusetts: The MIT Press, 2006). This is the latest in a stream of insightful work from von Hippel.
10. The customer case-research method is described in detail in two articles by G. Berstell and D. Nitterhouse: “Looking ‘Outside the Box:’ Customer Cases Help Researchers Predict the Unpredictable,” Marketing Research 9, no. 2 (summer 1997): 5–13, describes the research process; and “Asking All the Right Questions: Exploring Customer Purchase Stories Can Yield Surprising Insights,” Marketing Research 13, no. 3 (fall 2001): 14–20, lays out the questions and interviewing approaches that customer case researchers use to develop case studies.
11. A. Bhide, “The Origin and Evolution of New Businesses” (New York: Oxford University Press, 2000).
12. For one such estimate, see D. Leonard-Barton, “Wellsprings of Knowledge” (Boston: Harvard Business School Press, 1995).
13. In many ways, this is a key message of high-tech marketing consultant Geoffrey A. Moore’s books. He contends that instead of selling a “product” at the outset, emerging companies need to find a customer who will pay a lot of money to the company to solve a critical problem for him. Then, and only then, does it have the privilege of “crossing the chasm.” In addition to his landmark book, “Crossing the Chasm: Selling High-Tech Products to Mainstream Customers” (New York: HarperBusiness, 1999), Moore’s other book that describes this most clearly is “Living On the Fault Line: Managing For Shareholder Value in Any Economy” (New York: CollinsBusiness, 2000).
14. This branding dimension of the jobs-do-be-done theory is described more fully in C.M. Christensen, S. Cook and T. Hall, “Marketing Malpractice: The Cause and the Cure,” Harvard Business Review 83 (December 2005): 74–83.
15. Unfortunately, subsequent to the educational experiences that in 1999 to 2000 enabled Kodak’s management team to take the digital business in this direction, Antonio Perez was brought in as the new chief executive officer after the retirement of CEO Dan Carp. With a more conventional mindset and no understanding of the problem of disruption, Perez combined Kodak’s film and consumer digital businesses into a single business unit. By 2006, the company’s share had dropped to an unprofitable 12%.
16. T. Levitt, “Marketing Myopia,” Harvard Business Review 53 (September–October 1975): 26–180.
17. We thank our friend Armando Luna, vice president of corporate marketing for Blue Cross and Blue Shield of Florida, for teaching us about the origins of market-segmentation theory, which we summarize here in our own language: The theory of market segmentation has its roots in economic theory relating to monopolistic competition; see W. Alderson, “Marketing Behavior and Executive Action” (Homewood, Illinois: Irwin, 1957); and H.J. Claycamp and W.F. Massy, “A Theory of Market Segmentation,” Journal of Marketing Research 5, no. 4 (November 1968): 388–394. The concepts of product differentiation and differential advantage emerged from this background and underpinned early market-segmentation theory. Because most economists’ analytical tools consist of techniques for analyzing large data sets, market researchers with this training spent their careers trying to show relationships between the attributes of customers and their buying behaviors. They would conclude that the variables or characteristics in the regression equations whose coefficients were statistically significant comprised the salient boundaries for dividing consumers into groups. The availability of data and the tools of analysis, in other words, shaped the insights to be sought. In the process, many marketers have forgotten what the theory of market segmentation was based upon from the beginning: that different people have varying needs that change from time to time.
