The History of Jobs-to-be-Done and Outcome-Driven Innovation
Executives know that their company’s ability to innovate is the key to ongoing success. To address this challenge, companies have spent on R&D, created programs for open innovation, invested in innovation centers and big data, created customer advisory boards, and more — yet these investments alone haven’t helped to make success at innovation significantly more predictable.
For most companies, innovation remains a flawed business process, yielding failure rates that are consistently over 80 percent. The question is, why? What is the root cause? With 25 years experience studying this problem, I can offer an explanation: While executives, managers and entrepreneurs agree that the goal of innovation is to create products and services that address unmet customer needs, companies struggle to predictably create winning products because they fail to define their customers’ needs with the rigor, precision, and discipline that is required to discover, prioritize and capitalize on opportunities for growth.
Here is what I’ve learned since founding Strategyn in 1991: In most companies, managers do not agree on what a “need” even is. As a result, when it comes to innovation, marketing and development managers struggle to reach agreement on (i) what the customer’s needs are, (ii) which of those needs are unmet, and (iii) to what degree. They also struggle to discover segments of customers with unique sets of unmet needs.
Despite the fact that companies have access to more customer data than ever before, they don’t have access to data against which they can effectively evaluate their ideas for new products. In other words, companies struggle to innovate because they have yet to develop the skills needed to define, prioritize and use the inputs that lead to predictable innovation.
Without a system for evaluating which ideas are best, companies are forced to guess at which solutions will win in the marketplace, and they often guess wrong. Companies have coped by adopting techniques for pivoting and failing fast, which do little to help them get it right in the first place. The problem with innovation is clear: without knowing precisely what target you are trying to hit, the chances of hitting it are unlikely. This problem is universal.
In 1991, I first proposed a solution to this problem: to gain deep insight into the customer’s needs, companies should stop focusing on the product and the customer and instead should understand the “underlying process” (or job) the customer is trying to execute when they are using a product or service.
The theory holds that to create a product or service that customers will want to buy, you must first understand what fundamental measures of performance those customers use to measure success when getting the job done. To obtain this understanding, my team and I suggest that companies break down the customer’s underlying “job-to-be-done” into discrete process steps and ascertain from them what must be measured and controlled to ensure the job is executed with the speed, predictability, and effectiveness they desire. We call these uniquely constructed performance metrics the customers’ desired outcomes. They possess distinctive characteristics (measurable, controllable, stable over time, devoid of solutions, multi-use) that make them the perfect input into in the innovation process.
With insight into which of the customer’s 100 or more desired outcomes are underserved, companies are able to focus their ideation efforts on specific targets and then evaluate their ideas against those same performance metrics to determine if their ideas for new products will help the customer get the job done better. Knowing whether or not a new product concept/idea will help the customer get the job done significantly better, in advance of product development, is what makes the innovation process predictable.
Strategyn’s first application of this methodology was completed in a 1992 engagement with the medical device company Cordis Corporation. The company was trying to reinvent its line of angioplasty balloon products. I led the effort to interview interventional cardiologists to break down and analyze the underlying process they went through to “restore blood flow in a blocked artery.” The customer’s desired outcomes were revealed, prioritized and addressed. By mid-1993, Cordis launched 19 new products, all of which became number 1 or 2 in the market. Cordis’ market share increased from 1 percent to more than 20 percent, and its stock price more than quadrupled.
Cordis is only one of hundreds of successes that companies have achieved in the years since using this innovation process, which we call Outcome-Driven Innovation® (ODI). Six of these successes are described in detail in a new book I released called, JOBS TO BE DONE: Theory to Practice (October 2016). My original book on the subject, What Customers Want, written in 2005, offers foundational insights into the ODI process and additional case studies.
I introduced ODI to Harvard Business School professor Clayton Christensen in 1999 (see the video). Christensen later popularized the theory in his book, The Innovator’s Solution (2003), labeling it “jobs-to-be-done theory” and citing me and Strategyn’s practices. Today, I also refer to this theory as “jobs-to-be-done theory” and describe ODI as the process that puts Jobs-to-be-Done Theory into practice.
What makes Outcome-Driven Innovation unique is that my team and I have been applying it in Fortune 500 companies for 25 years and it has a proven track record. How good is it? An independent study conducted with Strategyn’s clients who used it to introduce new products put their success rate at 86 percent. That is a five-fold improvement in the chances for success. Put another way, the study showed that ODI makes innovation 5-times more predictable.
The ODI process intuitively makes sense: if a company knows what target to hit, the chances of hitting it increase dramatically. As I like to point out: there is less than a 1 percent chance that a company will randomly conceptualize a solution that addresses 15 unmet needs in a segment of the market if the company is unaware that the segment exists and of the 15 unmet needs. But once the target is known, a winning product can be conceptualized — and often quickly. We’ve seen companies take as little as 3 hours to conceptualize a winning product concept once presented with the target and the data.
Strategyn and I have designed ODI from the start to transform innovation from an art to a science. The process is comprised of these 6 steps:
- Define the market around the job-to-be-done.
- Uncover the customer’s needs (desired outcomes).
- Quantify the degree to which each need is under- or overserved.
- Discover hidden segments of opportunity.
- Align existing product with market opportunities (market strategy).
- Conceptualize new products to address unmet customer outcomes (product strategy).
The ODI process incorporates unconventional qualitative and quantitative market research techniques that yield predictive data and a sophisticated market segmentation methodology that helps companies discover and prioritize hidden market opportunities.
The ODI process is valuable because it informs companies how to create products and services that customers will want to buy — and predicts which new products will succeed. You can learn more at strategyn.com.