In many ways, coevolution is as much an “innovation process” as it is a research method. It creates its own data. When it is undertaken, interviews, observation and empathic participation all can be used to figure out the job.
Synthesizing Insights
At this point, the written and electronic records from the customer interactions described above — be they interviews, surveys, observation, participation or coevolution — need to be distilled into a “situation case” that describes the situation the customer found herself in when the product was hired or used.10 A situation case begins with a description of the chronological trail of events, experiences and thought processes that led to the purchase decision. Good situation case researchers work like investigative reporters or detectives tracking down the whole story behind the specific events of purchase and use. They build their cases through a combination of the methods summarized above, often discovering the unexpected.
Generally, about 25 situation cases constitute critical mass. These cases then can be grouped by the similarity of the situations described. The result often is that most of the cases fall into a glaringly large group that represents a significant job that lots of people have. There usually are a few smaller groups of cases and a few “outliers.” For each group, a summary then can be distilled describing the job the customers in those cases were trying to get done when they hired the product and how frequently the job seems to arise in the lives of those customers.
Once defined, this helps the researchers to understand what other “job candidates” were considered as potential hires. This defines the real competition in the customer’s mind. They can then describe the “hiring criteria” that were used when comparing the candidates. These are the experiences, features and functions that constituted the basis for hiring one product over another. This analysis can be included in the summary and is often best constructed as a table, with the job candidates listed in the left column and the required experiences in purchase and use arrayed across the top. Each box of the resulting grid will contain descriptions of how well each competing product provides each experience.
From these can be gleaned the next element of the summary: an assessment of the deficiencies and constraints that future product and service innovations need to alleviate in order to grow the market — a collection of “help wanted” signs posted by customers, as it were. This not only provides the agenda for future new-product development projects but also gives a sense for whether competitors can more readily eliminate those constraints. Glaring “help wanted” signs signal significant opportunity. If there aren’t significant “help wanted” signs, it’s a signal that the products of one or more competitors already are doing that job well.
Purchased databases and customer questionnaires can be used to segment markets by product and customer characteristics and to define new products with better attributes than existing ones. But they cannot yield differentiating insights about the job-based structure of a market. This understanding can only emerge from techniques like those described above.
Configuring the Marketing Mix and Business Plan
Entrepreneurship researcher Amar Bhide once surveyed about 400 entrepreneurs,11 about half of whose ventures had failed. Of those who had succeeded, 93% reported that the strategy that led to their success was largely different from what they originally had planned. Indeed, most successful new ventures iterate toward or converge upon a viable strategy. It is rare to get it all right at the outset. In a similar vein, about 75% of all new products and services that established companies introduce into their markets fail to reach viable, profitable scale and are withdrawn.12 In many of these instances, the managers killed underachieving products without ever understanding what their real job potential was. Situation case studies enable managers to see that a product in crisis may be a product that is valued in ways other than originally foreseen and may signal different opportunities for success.
Though our research on this issue is still in process, it appears that the precipitating event that allows the winning strategy of an emerging company to coalesce is the clarification of a job that customers need to get done for which its product is being hired. It is only when the job is well-understood that the business model and the products and services required to do it perfectly become clear. Then, and only then, can the company “take off.”13
Once a job is clarified, the business-planning process should delineate the functional, emotional and social experiences that the customer will require in purchase, use and after-sale follow-through. The “Four Ps” of marketing — Promotion, Product, Price and Place — offer a useful way to structure the business plan to ensure success. Forensic analyses of new-product failures often reveal that marketers have cobbled these four factors together in inconsistent ways. As the examples below illustrate, understanding the product’s job and its real competitors makes it much easier to get the Four Ps right.
Promotion: Communicating to Those Who Need to Do the Job
When a product does a job well, it unlocks the potential for marketers to create apurpose brand. A purpose brand links customers’ realization that they need to do a job with a product that was designed to do it. During the early years after a product’s launch, when volumes are small, word-of-mouth advertising is far more cost-effective than media advertising. Positive word-of-mouth advertising only can be achieved after customers have used a product that did the job well. A very long list of powerful brands, including FedEx, Starbucks, Google, BlackBerry, craigslist.org, QuickBooks, TurboTax and OnStar, were built in just this way with minimal advertising at the outset. Because each is associated with a clear purpose, these brands pop into customers’ minds when they need to do the jobs that these products and services were optimized to do. Our ongoing research into the history of today’s valuable brands suggests that almost all of them took root as a purpose brand.14
A clear purpose brand acts as a two-sided compass. On one side, it guides customers to the right products. The other side guides the company’s product designers, marketers and advertisers, giving them a sense of “true north” as they develop and market new and improved versions of their products. A good purpose brand clarifies which features and functions are relevant to the job and which “improvements” will prove irrelevant. The price premium that the brand commands is the wage that customers are willing to pay the brand for providing this guidance on both sides of the compass.
Without a specific purpose for their product, marketing executives must attempt brand building through expensive advertising. The high fixed cost of building new brands through advertising deters many companies from attempts to build new brands at all, so they acquire and consolidate brands instead. Managers ensnare themselves in this trap because of the way they have been taught to segment markets.
Positioning products to do specific jobs also helps companies target their advertising more efficiently. When a chain of scuba-diving shops marketed its diving classes and products to a “demographic” — primarily people who subscribed to scubadiving magazines and who lived in ZIP codes near their stores — it struggled to succeed. When the company decided to find out what situations its customers had found themselves in when they decided to “hire” its scuba classes, it realized that many of them were engaged couples planning wedding trips to tropical climes, suggesting that the company should be buying mailing lists fromBrides instead ofDive magazine.
Products That Do the Job Perfectly
When marketers segment by product or customer characteristics, they frequently find themselves offering features or improving on dimensions of performance that are irrelevant to the job. For example, as digital photography threatened Eastman Kodak Co. with disruption in the early 1990s, Kodak’s executives — having framed their market around photography — began to prepare the company for this transition by investing billions of dollars in a megapixel and megazoom digital imaging race that it was not well-positioned to win. In about the year 2000, however, Kodak executives realized that while some customers hired their cameras for the job of preserving high-quality images for posterity, a much larger group sought simply to entertain themselves, to share fun moments with family and friends. The result was the Kodak EASYSHARE camera, an affordable product with a great purpose brand. Understanding the job for which the product was meant to be hired allowed Kodak to eschew the expensive improvements that didn’t matter in favor of relatively simple ones that did. By making it simple to attach images to e-mail, Kodak’s product easily proved itself to be better than enclosures in first-class mail, phone calls with no images and cumbersome up- and downloading procedures. Kodak’s share of the U.S. digital camera market grew from 8% to 28%.15
Is the Price Right?
Unless marketers understand what other job candidates they’re competing against from the customer’s perspective, they cannot ensure that the price — the third element of the marketing mix — is right. They cannot know whether their offering is over- or underpriced. For example, to carry out its mission of educating people about the city’s rich architectural heritage, the nonprofit Chicago Architecture Foundation started conducting boat tours that passed by the architectural masterpieces lining the Chicago River. Their initial target customers were “affluent people with high education levels and a strong interest in architecture,” and they advertised in media serving that demographic. After the boat tour’s lackluster first season, a researcher joined a cruise the next spring and asked passengers why they were taking the cruise. A surprising number were doing it to entertain visitors from out of town. Architecture, as it turns out, was a minor part of the cruise’s appeal to this audience. CAF found that its cruise was actually less expensive than many alternative ways one could entertain visitors, and it was able to boost prices accordingly.
Placement
When marketers have defined the set of experiences in purchase and use that need to be provided in order to do the job perfectly, the necessary product placement becomes obvious. Recall that to optimally do the job of making the morning commute interesting, the milkshake-dispensing machine had to be placed in front of the counter and equipped with a prepaid swipe-card system. Instant service was an important experience to offer customers hurriedly heading for work. This had not been clear to the managers when they had classified the milkshake as simply another item on the menu.
Consider another illustration. A maker of boxed drinks, whose products were a mixture of 40% fruit juice and 60% flavored sugar water, had placed its products in the boxed drink section of supermarkets, juxtaposed with competing products that were 100% fruit juice. Though the pure juice products were much more expensive, sales of the juice/water drinks were languishing. When interviewed about their purchases, customers, who were mostly parents, revealed that the job they were trying to get done had a functional dimension — to put a healthy drink in their children’s school lunches — and an emotional dimension — to feel like they were taking good care of their children. When pitted against the job candidates that contained 100% juice, the mixture drink simply wasn’t qualified; it rarely got hired. The company then had its drink placed in another location in the supermarket, in snack foods, and sales improved markedly. When compared to the job candidates in the snack aisle, a drink that had 40% real fruit juice solved the emotional component of the “good parent” job much better than the competing candidates.
Sizing Up the Situation
The logic of segmenting markets by job is not new; many marketers will say that they already know many of the concepts. In fact, marketing guru Ted Levitt taught us 30 years ago that customers “don’t want a quarter-inch drill. They want a quarter-inch hole!”16 If that logic seems compelling, then why are product categories and customer categories the default modes of segmentation in nearly all companies? A core reason why marketers in most companies say one thing (that they know markets ought to be segmented by job) and yet do another (they segment by product and customer category) is rooted in the easy availability of the latter sort of data.17
The good news is that when companies understand who they are up against in the mind of the customer, they can piece together the real size of the market in which they compete. Because job candidates are drawn from many product categories, the salient size of most markets is usually much larger than is calculated by summing the sales within a product category, meaning that potential for growth is greater. Indeed, many mature products on the trajectory of sustaining improvement that seem to have been commoditized — products for which improved performance does not result in improved pricing or market share — actually turn out to be immature, not-good-enough products with lots of scope for differentiation and premium pricing once the job and its associated hiring criteria are understood.
In our studies of the factors that make innovation a high-risk, high-expense proposition, we have concluded that working to understand the job to be done is one of the most important ways to limit both risk and expense. Quite possibly, the root reason why innovation is so failure-ridden is not that the outcomes are intrinsically unpredictable but rather that some of the fundamental paradigms of marketing that we follow in segmenting markets, building brands and understanding customers are broken. The odds of getting it right will be much higher when we frame the market’s structure to mirror the ways that customers experience life.
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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.
