Tesla’s Jobs-To-Be-Done Lessons to Build and Grow Your Business
Why is this new entrant selling more cars than incumbents in the USA? Here I share some good practices from a Jobs-To-Be-Done perspective to help us build and grow our businesses.
Tesla’s automotive business is usually described as a disruptor in the automotive industry. In a future article, I’ll explain why it is not according to disruption theory. However, Tesla is doing a great job comparing the sales against historically well-established brands in the high-end market like Mercedes, BMW, Audi, Lexus, or Infinity, in an industry with a very complicated business model.
The theory of disruption suggests that Tesla would have low odds of growing the business because it can be imitated by incumbents and built on top of their actuals business models. If we make a high-level comparison of Tesla with traditional automakers, we can think that they are not as different, apart from the obvious fact that Tesla’s vehicles are 100% electric:
- Tesla is competing for the same customers as incumbents to fulfill a similar functional Job-To-Be-Done: “Help me to safely, comfortably and reliably commute to work or perform other activities requiring driving in cities or regions with roads in good condition and parking”.
- It has a similar base price point for the same kind of vehicles as the incumbent brands, with a little bit smaller total cost of ownership because of the savings in fuel, maintenance, and taxes.
- Tesla car's performance is better than competitors’, except for the lower mileage range they have. Even though, that mileage range is more than the needed by customers to accomplish the functional job.
- It is inconvenient to recharge the batteries. There are few places to recharge the cells, and the user has to wait 20 to 75 minutes to fully charge it with a supercharger (and not always you have one at hand).
- Tesla is building an electric vehicle, but the manufacturing processes are very similar to the traditional automakers. The same occurs with the business model.
- They have some advantage in the R&D for the electric propulsion parts, but somehow easy to copy for traditional automakers after Tesla opened their patents (IP) to the world.
The Q3 2019 update shows that Tesla has still no positive net income after 16 years of life. However, the brand is improving its operative cash flow less CAPEX year over year, and impressively outperforming the sales of the segment competitors with Model 3 in the USA:
So, if Tesla is “hired” to do the same functional Job-To-Be-Done than other automotive brands, why are they outperforming competition being the new player in the market with a non-disruptive strategy?
Fulfilling Jobs-To-Be-Done in the emotional and social dimensions
As we mentioned, thinking in the functional JTBD of Tesla’s EV, they are the same as the established automakers. However, Tesla has a value proposition that accomplishes better than any other automaker the social and emotional Jobs-To-Be-Done, which gives Tesla margin to differentiate from them in the customers with these jobs to do.
After researching with some Tesla customers, I came up to the conclusion than these emotional and social jobs could be:
- Emotional: “Help me to feel that I am on the edge of technology, progress, and change, at the time that contributing positively to the global climate change”. The word used by some interviewees was “cool”, but underlying that word was the edge of technology, progress, and change.
- Social: “Help me to show my family, friends, and society that I love technology, progress, and change.” In this case, it would be based on the emotional dimension but as a social status symbol.
In reality, consumers’ social and emotional needs can far outweigh any functional desires — Competing Against Luck
The first takeaway about this case study, is the critical importance of understanding and solve not only the functional job, but the emotional and social dimensions of it.
Innovations that perform the same job in the functional aspect, could unveil new growth if we focus on improving traditionally underserved emotional and social Jobs-To-Be-Done.
Building the business around the Jobs-To-Be-Done
The growth a product or service can achieve is not only driven by the degree of realization of the job. To create the entire business around the job, define the circumstances of the humans trying to perform that job is equally important to finding growth. In my opinion, this is another thing that Tesla is doing really good, and is a big reason for their performance.
The next framework is an evolution of the JTBD hierarchy of Dr. Clay Christensen. It could be helpful to think about what we need to build products or services around a human with the help of the Jobs-To-Be-Done theory:
- We put the humans in the center. It all starts with empathizing among us.
- Human beings have specific circumstances that they are facing while performing the Job-To-Be-Done we want to solve. Those circumstances should be considered while defining the Job and solving the problem.
- We understand, define, and design a way to solve the Job the humans are trying to perform under the circumstances they are facing.
- We design and build the experiences we need to provide to get the job done perfectly. Here is about the purchasing and use experience of the product or service.
- To provide the experiences desired, we may need to integrate our product or service with other products/services, layers of the business, or 3rd party. What and how do we have to integrate?
- We design and create a purpose brand. That is a brand that customers immediately think when they need a product or service to get the job done.
Customers don’t really buy products or services; they “hire” them to do a “job.” — Clayton Christensen
If we reflect on how Tesla has built the automotive business, we find an interesting case study of this framework, which is another of the big reasons for Tesla’s sales performance: how they are integrated around the social and emotional JTBD, on top of the functional, and how they are building a business to serve this value proposition around these jobs. Let’s take a look at what Tesla is doing in each of the layers:
Experience: A cutting-edge technology experience drives the customer-facing processes. While purchasing, customers can order the vehicles through the web and pick up the car, once delivred, at one of the customer centers or at home. Once the owners have the car, it has plenty of cutting-edge technology features that no other automaker can deliver with the quality of Tesla. Among others:
- Big touch screens to control the functions and see what is happening in real-time.
- Entertainment software.
- Autopilot driving (autonomous vehicle).
- Control of the car from cell-phones and smartwatches.
- Software updates over-the-air (OTA).
Integration: To deliver the experiences, Tesla is perfectly integrated with a wide range of technologies, processes, and channels: web order and delivery tracking process, Tesla on-site service center/customer center, car integration with internet, web, cell-phone technologies, data networks (wifi/LTE), smart-watch technologies, Netflix and Spotify among other examples.
Besides, Tesla builds and integrates its own supercharging stations to improve the charging experience required by a product that is still inconvenient to recharge. This has been reported by interviewees as one of the main hesitation points to buy an EV. But Tesla knows that this integration is key to provide the experience around the job, and they are trying to address it building and integrating the supercharger network.
Purpose Brand: Tesla is the last name of the Serbian-American engineer and physicist Nikola Tesla (1856–1943). He invented the first alternating current (AC) motor and developed AC generation and transmission technology. Not only the name of the brand is related to electric power, but it is associated with the inventor of the AC motor. When somebody thinks to fulfill the three functional, emotional, and social JTBD described with one product, the brand Tesla suddenly comes to our minds.
So what gives Tesla’s brand that edge of technology, progress, and change factor over the other brands? The answer is all. All the layers of the framework are perfectly designed, integrated, and wrapped by a brand, accomplishing better than other automakers the JTBD customers are looking for.
Get jobs done much better to differentiate your value proposition
Tesla is solving the three jobs better than other automakers, changing almost the entire value proposition, which I would bet no other brand will be able to imitate in the long term because of how the value proposition and organization are built and integrated around these jobs.
A reflection on Tesla’s strategic approach leads us to think that it is to win the underserved customers for their focus jobs. Whit Tony Ulwick’s JTBD strategy matrix as a reference(which I think is a great approach to mix the JTBD with the traditional Porter’s generic strategies matrix), we can situate Tesla’s business strategy into the differentiated quadrant.
Above all, it is a fact that Tesla is accomplishing his mission of “accelerate the world’s transition to sustainable energy”, pushing the incumbent automakers to launch EVs as soon as possible. For 2020/21, there are announced at least 15 incumbent automakers like VW, Ford, Porsche, Jaguar, Nissan, Hyundai, BMW, or Mercedes launching 100% electric vehicles, competing with Tesla for the medium and high-end market.
Whatever is your business strategy, designing the value proposition and the business model around the JTBD to help humans progress is a powerful approach to grow businesses. Tesla is showing us the way.
My purpose is to help people with my thoughts while learning with your feedback. If this post has been useful for you, please share the story with people that could benefit from it 💙.
Clayton Christensen, Ridgway Harken, Karen Dillion, David Duncan (2016). Competing Against Luck. Harper Collins Publishers.