Book Summary — Competing Against Luck

The Story of Innovation and Customer Choice

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1 paragraph summary:

An absolute must read for anyone solving a customer problem. Eye-opening in its simplicity and impact.

What job did you hire the product to do?

Intro

This is a book about progress. Yes, it’s a book about innovation — and how to get better at it. But at its core, this book is about the struggles we all face to make progress in our lives.

But that doesn’t have to be the case, not when you truly understand what causes consumers to make the choices they do. Innovation can be far more predictable — and far more profitable — but only if you think about it differently. It’s about progress, not products.

Correlation is not Causation

“Ice cream sales and forest fires are correlated because both occur more often in the summer heat. But there is no causation; you don’t light a patch of the Montana brush on fire when you buy a pint of Häagen-Dazs.”

But correlation does not reveal the one thing that matters most in innovation — the causality behind why I might purchase a particular solution. Yet few innovators frame their primary challenge around the discovery of a cause. Instead, they focus on how they can make their products better, more profitable, or differentiated from the competition.

One Question

If you do not know how to ask the right question, you discover nothing.” After decades of watching great companies fail over and over again, I’ve come to the conclusion that there is, indeed, a better question to ask:

What job did you hire that product to do?

When we buy a product, we essentially “hire” something to get a job done.

If it does the job well, when we are confronted with the same job, we hire that same product again.

And if the product does a crummy job, we “fire” it and look around for something else we might hire to solve the problem.

We all have jobs we need to do that arise in our day-to-day lives and when we do, we hire products or services to get these jobs done.

When you have a job to be done and there isn’t a good solution, “cheaper and crappier” is better than nothing.

The Job of the Milkshake

I wonder what job arises in people’s lives that causes them to come to this restaurant to “hire” a milk shake?

It soon became clear that the early-morning customers all had the same job to do: they had a long and boring ride to work. They needed something to keep the commute interesting. They weren’t really hungry yet, but they knew that in a couple of hours, they’d face a midmorning stomach rumbling.

Turns out that plenty of milk shakes are purchased in the afternoon and evening, outside of the context of a commute. In those circumstances, the same customers could hire a milk shake for a completely different job. Parents have had to say “no” to their children about any number of things all week long. “No new toy. No, you can’t stay up late. No, you can’t have a dog!”

“Of course, Spence, you can have a milk shake.” In that moment, the milk shake isn’t competing against a banana or a Snickers bar or a doughnut, like the morning milk shake is. It’s competing against stopping at the toy store or my finding time for a game of catch later on.

In the afternoon, I’m the same person, but in very different circumstances. The afternoon, placate-your-children-and-feel-like-a-good-dad job is very different. Maybe the afternoon milk shake should come in half sizes so it can be finished more quickly and not induce so much guilt in Dad. If this fast-food company had only focused on how to make its product “better” in a general way—thicker, sweeter, bigger—it would have been focusing on the wrong unit of analysis. You have to understand the job the customer is trying to do in a specific circumstance.

A Job to Be Done

A lot of innovation effort is ultimately assumed to be a consequence of good luck anyway. How often do you hear a success dismissed as simply the right product at the right time? We can do better than that.

Shifting our understanding from educated guesses and correlation to an underlying causal mechanism is profound. Truly uncovering a causal mechanism changes everything about the way we solve problems — and, perhaps more important, prevents them.

What causes a customer to purchase and use a particular product or service?

Creating the right experiences and then integrating around them to solve a job, is critical for competitive advantage. That’s because while it may be easy for competitors to copy products, it’s difficult for them to copy experiences that are well integrated into your company’s processes.

A “job” is the progress that a person is trying to make in a particular circumstance.

The choice of the word “progress” is deliberate. It represents movement toward a goal or aspiration.

A job is always a process to make progress, it’s rarely a discrete event. A job is not necessarily just a “problem” that arises, though one form the progress can take is the resolution of a specific problem and the struggle it entails. Finally, a job has an inherent complexity to it: it not only has functional dimensions, but it has social and emotional dimensions.

“I need to eat” is a statement that is almost always true. “I need to feel healthy. “I need to save for retirement.” Those needs are important to consumers, but their generality provides only the vaguest of direction to innovators as to how to satisfy them. Needs are analogous to trends — directionally useful, but totally insufficient for defining exactly what will cause a customer to choose one product or service over another.

On the other end of the spectrum from needs are what I’ll call the guiding principles of my life — overarching themes in my life that are ever present, just as needs are. I want to be a good husband, I want to be a valued member of my church, I want to inspire my students, and so on. These are critically important guiding principles to the choices I make in my life, but they’re not my Jobs to Be Done.

It’s important to emphasize that a well-defined job is multilayered and complex. And that is actually a good thing. Why? Because it means that perfectly satisfying someone’s job likely requires not just creating a product, but engineering and delivering a whole set of experiences that address the many dimensions of the job and then integrating those experiences into the company’s processes (as we’ll discuss in-depth later in the book). When you’ve done that well, it’s almost impossible for competitors to copy.

It’s important to note that we don’t “create” jobs, we discover them. Jobs themselves are enduring and persistent, but the way we solve them can change dramatically over time.

A clear view of customers’ jobs means an organization should never overshoot what those customers are actually willing to pay for. On the contrary, we believe that when customers find the right product to respond to their Job to Be Done, they’re often willing to pay more.

When you are solving a customer’s job, your products essentially become services.

What matters is not the bundle of product attributes you rope together, but the experiences you enable to help your customers make the progress they want to make.

Discovering a Job to Be Done

Rarely, though, can customers articulate their requirements accurately or completely — their motivations are more complex and their pathways to purchase more elaborate than they can describe. But you can get to the bottom of it. What they hire — and equally important, what they fire — tells a story. That story is about the functional, emotional, and social dimensions of their desire for progress — and what prevents them from getting there. The challenge is in becoming part sleuth and part documentary filmmaker — piecing together clues and observations — to reveal the jobs customers are trying to get done.

Consumers can’t always articulate what they want. And even when they do, their actions may tell a different story. If I asked you if you care about being environmentally friendly, most of us would say yes. We’d talk about how we recycle or walk instead of driving whenever possible. But if I opened your cupboards, would they tell the same story? How many new parents do you know who say they care about climate change, but gratefully stock disposable diapers instead of cloth? Do you happily pop a plastic K-cup into your coffee machine? On the other hand, research has consistently shown that a significant portion of customers are willing to pay more for foods that are labeled “organic,” a word that is so generically used that it’s almost meaningless.

• “Where are you?”
• “When is it?”
• “Who are you with?”
• “While doing what?”
• “What were you doing half an hour ago?”
• “What will you be doing next?”
• “What social or cultural or political pressures exert influence?”
• What obstacles are getting in the way of the person making that progress
• Are consumers making do with imperfect solutions through some kind of compensating behavior?
• How would they define what “quality” means for a better solution, and what tradeoffs are they willing to make?
• What are they really trying to accomplish and why isn’t what they’re doing now working?
• What is causing their desire for something new?

One simple way to think about these questions is through storyboarding. Talk to consumers as if you’re capturing their struggle in order to storyboard it later.

Once upon a time . . . Every day . . . One day . . . Because of that, we did this . . . Because of this, we did that . . . Finally, I did . . .

You’re building their story, because through that you can begin to understand how the competing forces and context of the job play out for them.

Moments of struggle, nagging tradeoffs, imperfect experiences, and frustrations in peoples’ lives — those are the what you’re looking for. You’re looking for recurring episodes in which consumers seek progress but are thwarted by the limitations of available solutions. You’re looking for surprises, unexpected behaviors, compensating habits, and unusual product uses. The how — and this is a place where many marketers trip up — are ground-level, granular, extended narratives with a sample size of one. Remember, the insights that lead to successful new products look more like a story than a statistic. They’re rich and complex.

Ultimately, you want to cluster together stories to see if there are similar patterns, rather than break down individual interviews into categories.

Uncovering a job in all its rich complexity is only the beginning. You’re a long way from getting hired. But truly understanding a Job to Be Done provides a sort of decoder to that complexity — a language that enables clear specifications for solving Jobs to Be Done.

New products succeed not because of the features and functionality they offer but because of the experiences they enable.

If you or a colleague describes a Job to Be Done in adjectives and adverbs, it is not a valid job. It might describe an experience that a customer needs to have in order to do the job, but it is not a job, as we have defined it here. For example, “convenience” is not a Job to Be Done. It might be an experience that might cause a customer to choose your product rather than a competitor’s product, but it is not a job.

A well-defined Job to Be Done is expressed in verbs and nouns — such as, “I need to ‘write’ books verbally, obviating the need to type or edit by hand.” In contrast, the sentence “We should aspire to be more honest” is a noble goal, but it’s not a job.

Defining a job at the right level of abstraction is critical to ensuring that the theory is useful. This can be more art than science, but there is a good rule of thumb: if the architecture of the system or product can only be met by products within the same product class, the concept of the Job to Be Done does not apply. If only products in the same class can solve the problem, you’re not uncovering a job.

A couple of examples: “I need to have a chocolate milk shake that is in a twelve-ounce disposable container” is not a job. The possible candidates that I could hire to do this are all in the milk shake product category. I could call this a need or a preference — but it isn’t a job. We need to go up another level of abstraction in order to discover the job. “I need something that will keep me occupied with what’s happening on the road while I drive. And also, I’d like this to fill me up so that I’m not hungry during a 10:00 a.m. meeting. I could hire a banana, doughnuts, bagels, Snickers, or a coffee to do this job.”

Big vs Small Hire

The most commonly tracked is what we call the “Big Hire” — the moment you buy the product. But there’s an equally important moment that doesn’t show up in most sales data: when you actually “consume” it — the “Small Hire”.

The moment a consumer brings a purchase into his or her home or business, that product is still waiting to be hired again — we call this the “Little Hire.” If a product really solves the job, there will be many moments of consumption. It will be hired again and again. But too often the data companies gather reflects only the Big Hire, not whether it meets customers’ Jobs to Be Done in reality. My wife may buy a new dress, but she doesn’t really consume it until she’s actually cut the tag off and worn it. It’s less important to know that she chose blue over green than it is to understand why she made the decision to finally wear it over all other options.

The forces compelling change to a new solution:

1. First of all, the push of the situation — the frustration or problem that a customer is trying to solve — has to be substantial enough to cause her to want to take action.
2. Secondly, the pull of an enticing new product or service to solve that problem has to be pretty strong, too. The new solution to her Job to Be Done has to help customers make progress that will make their lives better.

The forces stopping us from a new solution:

1. First, “habits of the present” weigh heavily on consumers. “I’m used to doing it this way.”
2. “anxiety of choosing something new.” “What if it’s not better?”

Branding

Achieving a purpose brand is the cherry on the top of the jobs cake. Purpose brand, when done well, provides the ultimate competitive advantage.

• Look no further.
• Don’t even bother shopping for anything else.
• Just hire me and your job will be done.

Importance of Process

When you think of the word “process” you might instantly conjure images of a manufacturing assembly line or a bureaucratic standard.

But processes touch everything about the way an organization transforms its resources into value: the patterns of interaction, coordination, communication, and decision making through which they accomplish these transformations are processes. Product development, procurement, market research, budgeting, employee development and compensation, and resource allocation are all accomplished through processes.

Helping customers have a delightful experience using your product is made up of processes.

Resources, generally speaking, are fungible. They can be bought and sold. Products can, often, be easily copied.

But it is through integrating processes to get the job done that companies can create the ideal experiences and confer competitive advantage.

Processes are invisible from a customer’s standpoint — but the results of those processes are not.

Processes can profoundly affect whether a customer chooses your product or service in the long run. And they may be a company’s best bet to ensure that the customer’s job, and not efficiency or productivity, remains the focal point for innovation in the long run. Absence of a process, as is the case with most traditional hospitals, is actually still a process. Things are getting done, however chaotically. But that’s not a good sign. W. Edwards Deming, father of the quality movement, may have put it best: “If you can’t describe what you are doing as a process, then you don’t know what you are doing.”

Toyota Example

For years, Toyota freely opened its doors to competitors. Twice a month, the Japanese auto manufacturer allowed rival auto executives and engineers into its manufacturing complex to observe how Toyota makes cars.

Not only were the executives allowed to see every aspect of the famous Toyota Production System, the tours also included a robust question and answer session. Nothing was off-limits. To an outsider, Toyota’s openness might seem shocking. After all, the American rivals were clearly trying to learn Toyota’s secrets in order to emulate or even improve upon them.

Why would Toyota so willingly give competitors a hand? Toyota wasn’t really worried that it would give away its “secret sauce.”

Toyota’s competitive advantage rested firmly in its proprietary, complex, and often unspoken processes.

Processes are often hard to see — they’re a combination of both formal, defined, and documented steps and expectations and informal, habitual routines or ways of working that have evolved over time. But they matter profoundly. As MIT’s Edgar Schein has explored and discussed, processes are a critical part of the unspoken culture of an organization. They enforce “this is what matters most to us.”

Processes are intangible; they belong to the company. They emerge from hundreds and hundreds of small decisions about how to solve a problem. They’re critical to strategy, but they also can’t easily be copied. Pixar Animation Studios, too, has openly shared its creative process with the world. Pixar’s longtime president Ed Catmull has literally written the book on how the digital film company fosters collective creativity — there are fixed processes about how a movie idea is generated, critiqued, improved, and perfected. Yet Pixar’s competitors have yet to equal Pixar’s successes.

Org Structure

Through a jobs lens, what matters more than who reports to whom is how different parts of the organization interact to systematically deliver the offering that perfectly performs customers’ Jobs to Be Done. When managers are focused on the customer’s Job to Be Done, they not only have a very clear compass heading for their innovation efforts but they also have a vital organizing principle for their internal structure.

In charge of every major function or set of activities. We have executives in charge of product lines. But in most cases, nobody is in charge of understanding — and ensuring that the company is delivering on — the job of a customer.

Jobs Theory changes not only what you optimize your processes to do, but also how you measure their success. It shifts the critical performance criteria from internal financial-performance metrics to externally relevant customer-benefit metrics.

• SNHU (uni) tracks how many minutes it takes to respond to an inquiry, for example, because it realizes that time is critical to the process of its online prospects.
• Amazon focuses on when orders are delivered not when they are shipped.

Metrics to Focus On

“Now that we’re a much larger company, it’s been a challenge to keep the various parts of the company focused on the customer benefit,” says Intuit founder Scott Cook. “It’s so tempting for parts of the organization to start looking at other things. In our kind of business, you get all this data about ‘conversions’ and ‘retention,’ and so on. We got seduced by that.” It is, to be sure, easier to focus on efficiency rather than effectiveness. Most businesses are very, very good at that. Creating the right metrics is hard. But so important.

Amazon Example

New innovations at Amazon famously start with a mock “press release” that is presented to the team that will consider and work on that innovation. The press release contains the guiding principles for that innovation — all experiences and processes are derived from the clarity of what job customers will hire this product or service to do, as outlined in the press release at the innovation kickoff meeting. In that room are not just marketing people, but engineers, analysts, and so on — everyone whose work will play a role in fulfilling that Job to Be Done. “It all starts with that press release,” Piacentini says. “No matter who owns the pieces of the product, you’re part of that process.”

Jobs are not flexible — they have existed for years and years, even centuries. But how we solve for jobs varies over time. The important thing is to be attached to the job, but not the way we solve it today. Processes must flex over time when a better understanding of customer jobs calls for a revised orientation. Otherwise, you’ll risk changing the concept of the job to fit the process, rather than the other way around.

Subroutines

The idea is that repeated functions — say basic arithmetic and trigonometry, for example — can be coded as subroutines and then essentially copied and pasted wherever that operation is called for in a different process. In programming, this is a very big deal. The right use of subroutines will decrease the cost of developing and maintaining a program, while simultaneously improving its quality and reliability.

Amazon has imported what are essentially subroutines into its operating processes, too, and their power and efficiency are very apparent. This is a huge advance over the traditional practice of “sharing best practices” across regions. Instead, the use of subroutines poses the question of “Are we likely to need to repeat this process (or subroutine) in other activities?” This creates a very dynamic view of an organization as a collection of processes wherein each process is a string of subroutines — some custom and some modular imports — that align perfectly with a customer’s Job to Be Done.

Stack Fallacy

Stack fallacy highlights the tendency of engineers to overweight the value of their own technology and underweight the downstream applications of that technology to solve customer problems and enable desired progress. “Stack fallacy is the mistaken belief that it is trivial to build the layers above yours,” Sharma says. It’s the reason that companies fail so often when they try to move up the stack. “They don’t have first-hand empathy for what customers of the product one level above theirs in the stack actually want. They’re disconnected from the context in which their product will actually be used.”

ie vegetables you like—and all you have to do is to learn how to grow them and use them in your own cooking. On the other hand, your understanding of growing and using herbs does not prepare you to open and run a restaurant. In fact, eight out of ten restaurants fail within five years. Knowledge of production, Sharma says, is not the same thing as knowing what customers are looking for.

The Danger of Data

The day a product becomes real and hits the market, everything changes for managers. There’s so much pressure to grow that it’s possible to lose sight of why customers hired you in the first place. Even great companies can veer off course in nailing the job for their customers — and focus on nailing a job for themselves.

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.

Customers don’t want products, they want solutions to their problems.

1. Fallacy of Active Versus Passive Data

In a sense, he began both as the CEO and a target customer — there was no separation between the innovator and his customer’s job. Much of the information needed to make decisions about solving for a job is found in the context of the struggle. We call that “passive data” because it has no voice or clear structure or champion or agenda. Passive data, by itself, doesn’t tell us what is going on in the world because the Job to Be Done doesn’t change much. Passive data is just unfiltered context. It’s always present, but it isn’t loud.

Familiar marketplace markers such as product sales, quality standards, and competitive benchmarks are all missing. Instead, signposts of innovation opportunity take the form of individual customers’ frustrations and undesirable tradeoffs and experiences. Making meaning out of the jumble of real-life experiences is not about tabulating data but about assembling the narrative that reveals the Job to Be Done.

Innovators have to immerse themselves in the messy context of real life to figure out what potentially successful new products might offer to customers. In the early stage, managers are puzzle solvers, not number crunchers. Passive data does not broadcast itself loudly. You have to seek it out, put clues together, relentlessly ask why? But it’s critically important because it is the way to identify innovation opportunities.

Managers by their very nature respond to information — and negative information, in particular, causes them to respond quickly.

Job to Be Done becomes a commercial product, the context-rich view of the job begins to recede as the active data of operations replaces and displaces the passive data of innovation.

Once products are launched, a faucet is opened and data is created, data that didn’t exist until sales had been made and customers created.

Managers feel an understandable sense of reassurance when they shift their attention from the hazy contours of a story of struggle to the crisp precision of a spreadsheet.

It shouts at you to focus on it and prioritize it and improve it. It’s easy to track and measure and is usually seen as a proxy for how well the manager is doing his job. This is a subtle but transformational shift in perspective, and it feels good to migrate from the unstructured messiness of passive data to the reassuringly concrete active data.

Data is always an abstraction of reality based on underlying assumptions as to how to categorize the unstructured phenomena of the real world.

Too often, managers conveniently set this knowledge aside: data is man-made.

2. Fallacy of Surface Growth

When a company makes big investments in developing relationships with customers, natural incentives arise to find ways to sell more products to existing customers. The marginal cost of selling more products to existing customers is very small — and the profit is oh so alluring. We call this “surface growth.”

But in doing so, companies often end up trying to create many products for many customers — and lose focus on the job that brought them success in the first place.7 Worse, trying to do many jobs for many customers can confuse customers so they hire the wrong products for the wrong jobs and end up firing them in frustration instead. This makes companies vulnerable to disrupters who focus on a single job — and do it well.

3. Fallacy of Conforming Data

Data has an annoying way of conforming itself to support whatever point of view we want it to support.

Conflicting ideas or beliefs in our minds, this “dissonance” produces reactions of stress and anxiety that we naturally seek to minimize and avoid. Uncomfortable truths are just that — uncomfortable.

“There is nothing more deceptive than the obvious fact.”

We pick and choose the data that suits us. “Decisions don’t get made. They happen,” observes neuromarketing expert, Gerald Zaltman, a longtime colleague at Harvard Business School who has spent years studying how managers represent their ideas and apply their ideas and knowledge. Among the common mistakes he’s identified? “The tendency to treat facts as insights and leap directly from data to action,” Zaltman recently wrote in the Journal of Advertising Research. “It is common when research is used to prove points rather than as fuel for imaginative insight.”

Numerical and verbal data alike are abstractions from a much more complex reality, out of which a researcher attempts to pull the most salient variables or patterns for examination. Whereas the subjectivity of data from field-based, ethnographic research is glaringly apparent, the subjective bias of numerical data hides behind its superficial precision.

If the customer job is not given a voice and a champion it will drown. Passive data needs active management.

Outro

A deep understanding of customers’ Jobs to Be Done should trigger a cascade of questions about how the company is organized, what’s measured and rewarded, what priorities run throughout the company, and how people work together to solve problems.

Having a jobs-focused organization, the CEOs we interviewed for this book tell us, leads to four categories of clear benefit:

1. Enable distributed decision making with clarity of purpose — employees throughout the organization are empowered to make good jobs-focused decisions and to be autonomous and innovative.
2. Align resources against what matters most — and free resources from what does not.
3. Inspire people and unify your culture in service of what they care about most.
4. Measure what matters most — customer progress, employee contributions, and incentives.

Jobs Theory provides you with the right set of lenses to make everyday choices that connect to the jobs you are solving in customers’ lives. Jobs Theory provides a language of integration, whereby marketers, engineers, salespeople, and customer service employees can communicate with each other, rather than talk past one another.

Things change over time: growth requires additional layers of management and increased communication. Clear individual responsibilities and defined processes are a simple necessity as an antidote to chaos. The informal, often unconscious way that early-stage entities organically organize around the Job to Be Done — because that’s how value is created and revenue is generated — becomes untenable and unmanageable as companies grow. Inexorably, the organizing unit moves to a far more intense focus on customers and products and competitors and investors — but a less and less intense focus on the job.

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