What is the purpose of a business?
Most people say it is to earn a profit. Nope.
Others would say: create value for shareholders. Nada
Dr. Ted Levitt from Harvard said it best:
The purpose of a business is to get and keep customers.
It is that simple and that complex.
Profits are (or can) be a metric that demonstrates a company is succeding in their purpose
Key Takeway: The modern day approach to getting and keeping customers is to start by understanding the job-to-be-done. Let me explain.
To get and keep customers, a company has to solve a problem.
You have a chance at getting me as a customer if you provide me a complete solution that solves a problem better than how I am solving it today.
Your solution has to be so much better that it overcomes my loss from switching. I like to stay with the status quo. There are real and perceived practical plus emotional costs to switching solutions. Just thinking about switching causes mental anguish….so why bother.
Example: Yes my current notebook has crappy battery life and is slow. But it is such a pain to switch! And, it’s a lot of money that I could use on vacation instead.
In jobs-to-be-done language, the problem is a struggle. I’m running out of disk space on my notebook. It hangs frequently. Sometimes it won’t connect to wifi. I’m concerned it will stop working at a critical time. These all add up to create a struggle to get my computing jobs done.
There is also struggle with buying and switching to a new notebook. I have to spend a lot of money that I could use on other things. I have to spend time copying everthing over. What if I have to buy new licenses for things like Office?
The resulting benefits of switching create progress. Progress in getting my life moving faster because I get my computing jobs done better. I don’t have all the worries about my notebook dying. The new one is shinny, fast and makes me feel good. It is an investment in my future. My mental burden is lifted.
In the end, for a job I want to get done, I have to believe that the progress I make is so much better than living with the struggles I have today. If I believe that, I will switch and you can get me and keep me (read the fine print though…).
Combining all of this together, here is the modern day version of Ted Levitt’s insight.
- The purpose of a business: Get and keep customers.
- Understand the struggle while standing in my shoes. Help me make progress in my life.
- Then, define the job-to-be done (formerly known as the problem). Create a solution that is worth switching to.
I wrote a bit more on what struggle and progress mean in a jobs-to-be-done (JTBD) context here. If you are new to JTBD, start here. These are all the things I’ve written about innovation. Thanks for reading!
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