Competing Against Luck by Clayton M. Christensen, Tadd Hall, Karen Dillon, and David S. Duncan

Synopsis

Is innovation inherently a question of luck? While good luck is never a bad thing, it turns out that innovation is more science than magic.

Jobs Theory is a tool to innovate in a meaningful (and profitable) way. If you take the time to understand the real "job" that your customers hire your product to perform, then competition, innovation, and strategies become clear.

In Competing Against Luck by Clayton M. Christensen, Tadd Hall, Karen Dillon, and David S. Duncan, learn how to emulate the methodology behind everything from baking soda toothpaste to Airbnb into your own business.

Top 20 insights

1. The Theory of Jobs to Be Done, or Jobs Theory explores why customers choose certain products over others. People "hire" products to fill a particular "job" in their lives. For example, the job of a milkshake can be a reward for your child or to make a morning commute more enjoyable.
2. In Jobs Theory, a "job" is defined as the progress of a person in a particular circumstance. In the author's milkshake case study, morning commuters chose the thick dessert because it staved off mid-morning hunger, provided energy, and was easier to consume on the drive than traditional breakfast foods like bagels.
3. If you understand your product's "resume," it can help you understand what job your customers want to fill and what your competitors are. If you know a product's resume, you can change your approach and market your product as the best candidate. V8 doesn't just compete against sugary drinks and other juices but also raw vegetables.
4. Circumstances help dictate the job for a product to fill and, by extension, predict customer behavior. Innovation should not focus solely on functional needs but consider other aspects such as social and emotional ones. A daycare might be conveniently located and affordable, but parents will emphasize trust and safety.
5. Analyze your product's job as if it's a mini-documentary about your customer while they try to make progress in a specific situation. Look at the goal, struggle, and obstacles. Take note of what the person does to "make do" until they reach their goal. What tradeoffs will they purposefully make?
6. Once you understand your customers' "Job to Be Done," you can bring your company's goal into sharp focus. You can reveal opportunities to innovate or make your product more attractive. For example, Intuit created QuickBooks because customers used Quicken to "make do" as they managed their businesses finances.
7. There is no one right way to identify Jobs to be Done. Don't fixate on the tools you use, but rather the information you seek and how you piece observations together. You don't have to throw out data you have already gathered -- look at it all through a new lens.
8. Sometimes Jobs to Be Done defies traditional data predictions. Sony temporarily halted its Walkman cassette player when market research predicted its failure. Sony founder Akio Morita chose to observe how people lived and predicted what they might want instead. Sony sold over 330 million Walkman units and began the age of personal music devices.
9. If you focus too much on the functionality of your product, you can overlook the real reason your customers use it -- or don't. Proctor & Gamble designed a disposable diaper for Chinese consumers. Despite a lack of competition, it wasn't until P&G addressed the emotional component – better sleep and cognitive development for baby – that the product sold well.
10. Consider what your product will replace because customers will want to stick with it even when it doesn't work. Airbnb storyboards different emotional moments for its future hosts and guests to preemptively address concerns that could make them return to old solutions, i.e., stay with friends and family or book a hotel.
11. Nobel prize winners Daniel Kahneman and Amos Tversky proved that loss aversion is twice as powerful psychologically as the allure of gains. It is essential to understand how customers make do with other products so you can overcome those obstacles. Online bank ING Direct reassured customers that it was a "real" business with physical bank cafes.
12. Each product or service sells an experience. Competition with similar functionality will always pale in comparison to the emotional component you offer. American Girl dolls are more expensive than other brands, but they offer an emotional experience that allows young girls and their parents to bond over stories and visits to the store.
13. When brands clearly identify their Job to Be Done and do it well, that product or service becomes synonymous with the job it performs. In England, to vacuum is to "Hoover," and everyone is prone to "Google" a topic on the internet. This phenomenon is a sign of a strong purpose brand.
14. Once you identify a purpose for your brand, don't veer far from it. Volvo declared its primary purpose was to be safe in the 1920s. When Ford purchased the company, it changed course to compete with luxury vehicles and changed Volvo's brand purpose. Volvo became profitable again later once it returned to its original message.
15. Customers may not see your company's processes, but customers can feel them. Focus your team's process around what job your customer hires you for instead of productivity or efficiency. Jobs like "peace of mind," "a way to lower cholesterol," or "safety" will keep your sights trained on innovation.
16. Jobs Theory changes how you measure success; everything from internal financial performance criteria to external customer benefits. Amazon focuses on when orders are delivered as opposed to shipping costs. Review your process from the customer's viewpoint to identify pain points and define solutions clearly.
17. When you review numbers, remember that data is not the phenomena — the primary function of data is to represent the phenomena. It creates a simulation of reality. However, passive data, like all data, is subject to bias and requires active management.
18. There are three fallacies of innovation data: reliance on operational data that describes products and customers but not the jobs they perform; concentration on growth instead of improvement; and preference for data that conforms to preexisting business models. Remain vigilant to make sure you don't fall into these traps.
19. When your company's Job to Be Done is well articulated, it creates meaning in employee duties at every level. Meaningful jobs eliminate the need to micromanage teams because employees are motivated by how their work fits into an overarching process to help customers get their jobs done.
20. Ultimately, all successful solutions to Jobs to Be Done can be considered services — even if you sell a product. Carefully design experiences for your customers that overcome any hesitation they might have to "hire" you and "fire" their existing solution.

Summary

A "Job to be Done" is the task that a consumer needs to fulfill by using a product. When a consumer feels pain, due to a lack of functionality or emotion, then there is a job to be done. Products fulfill the jobs that consumers have. For example, V8 tomato juice is the solution to the consumer's job of wanting to eat daily vegetables.

Questions and answers

What is the relevance of the 'Job to be Done' theory in the context of consumer needs and product development?

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The 'Job to be Done' theory is highly relevant in the context of consumer needs and product development. It provides a framework for understanding what drives consumers to use a product. The theory suggests that consumers essentially 'hire' products to get a job done. By understanding the job that consumers need to get done, businesses can design and develop products that effectively meet those needs. This approach can lead to innovative solutions that deliver real value to consumers.

How can the concept of 'Job to be Done' be applied to improve product functionality in a business?

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The 'Job to be Done' concept can be applied to improve product functionality by first understanding the specific task that a consumer needs to fulfill using a product. This involves identifying the 'pain points' or problems that consumers are facing, which the product can solve. Once these 'jobs' are identified, the product can be designed or modified to better fulfill these tasks, thereby improving its functionality. This could involve adding new features, improving existing ones, or even removing unnecessary ones. The key is to focus on the consumer's needs and how the product can best meet them.

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Jobs Theory doesn't care about who did something and when. It doesn't drop transactions into categories like "new or existing customer," "male or female," or "between of the ages of X and X." Understanding the job you want to fill is about clustering insights into one big picture rather than a lot of small ones.

Questions and answers

Can you elaborate on the concept of 'clustering insights into one big picture' as explained in 'Competing Against Luck'?

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The concept of 'clustering insights into one big picture' refers to the process of gathering and analyzing various pieces of information or insights and combining them to form a comprehensive understanding or 'big picture'. In the context of 'Competing Against Luck', this concept is used in the Jobs Theory, which emphasizes understanding the job you want to fill. Instead of categorizing customers based on demographics or transaction history, the focus is on understanding the customer's needs and wants. By clustering insights, you can gain a holistic view of what the customer wants, which can guide innovation and product development.

How can a small business use the Jobs Theory to grow?

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A small business can use the Jobs Theory to grow by focusing on the 'job' that their customers need to get done. This means understanding the problem that their product or service solves for the customer. Instead of categorizing customers by demographics or transaction history, they should cluster insights into a comprehensive understanding of the customer's needs. By doing so, they can innovate and create products or services that effectively meet these needs, leading to business growth.

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A product's "resume" is an imaginary document that describes all the qualities, skills, and capabilities of the jobs that said product fulfills. It also describes the way in which users of that product use it in real life, as opposed to how it was designed or meant to be used. For example, toothpicks are not only used to clean your teeth but are also used to solve a myriad of other jobs. The same applies to a milkshake, a milkshake's resume should list all the skills and capabilities it has to solve the jobs it faces, which in turn generate consumer experiences.

Questions and answers

What insights can be drawn from the toothpick and milkshake examples given in the book 'Competing Against Luck'?

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The toothpick and milkshake examples in the book 'Competing Against Luck' illustrate the concept of a product's 'resume'. This is a metaphorical document that lists all the jobs a product can fulfill, not just the ones it was designed for. Toothpicks, for instance, are not only used for cleaning teeth but can serve various other purposes. Similarly, a milkshake can fulfill different jobs, creating diverse consumer experiences. These examples highlight the importance of understanding the full range of a product's potential uses and the experiences it can provide to consumers.

How does the concept of a product's 'resume' relate to consumer experiences?

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The concept of a product's 'resume' is a metaphorical way of describing all the qualities, skills, and capabilities of a product in fulfilling various 'jobs' or needs of the consumers. It's not just about how the product was designed or intended to be used, but also about how consumers actually use it in real life. This concept is directly related to consumer experiences as it encompasses all the different ways a product can be used, which in turn shapes the experiences consumers have with the product. For instance, a toothpick might be designed for cleaning teeth, but consumers might use it for other purposes like crafting or checking the doneness of a cake. These varied uses contribute to the overall consumer experience.

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Solving the mystery

Jobs theory is a "whydunnit," not a "whodunnit."

Your ultimate goal in using Jobs Theory is to understand the "why" so you can supply the "what." As with any theory, anomalies can and will make themselves known along the way. You must be open to uncovering them and use them as an opportunity to strengthen your product's Job to Be Done.

Not all products or services will apply to this theory. For example, commodities traders don't rely on emotional or social circumstances. A computer can make rational decisions to get the job done.

Jobs to Be Done can help you better understand and meet or exceed your customers' expectations for everything else.

Give your product a job interview

"Tell me about yourself."

Before you have your "ah-ha" moment with Jobs Theory, you'll need to sit your product down for a serious interview. What are its qualifications, skills, and willingness to do the job at hand? What was it designed to do versus how people use it?

Another method to uncover your product's resume is to imagine that you are a film director making a documentary about it. Instead of detailing how the product idea came about and how great it is, your film crews follow and interview customers to learn their stories.

Ask questions like:

• What are the experiences customers seek to make progress toward their goal?
• What obstacles can you remove?
• What are the social, emotional, and functional dimensions of this situation?

By the end of this process, you should have a better idea of your products' value regarding what job(s) it can perform. You may also be surprised to find that customers use your product for something you didn't intend for it to do. Customers often opt to use an inferior product to make do.

Be specific

Above all, you must clearly define what job customers hire your product or service to do. Organizations that lack clarity in this regard risk using a one-size-fits-all solution that satisfies no one at the end of the day. When you deeply understand your products' jobs, new avenues for growth and innovation come into focus.

Questions and answers

What are some of the most innovative ideas presented in 'Competing Against Luck' about understanding your products' jobs?

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The book 'Competing Against Luck' presents several innovative ideas about understanding your products' jobs. One of the key ideas is the concept of 'Jobs to be Done' theory. This theory suggests that customers hire products or services to do a specific job. By understanding this job, organizations can tailor their products or services to better meet the needs of the customer. Another idea is the risk of using a one-size-fits-all solution. The book argues that such solutions often fail to satisfy customers because they do not adequately address the specific job the customer needs done. Instead, organizations should strive to deeply understand their products' jobs to uncover new opportunities for growth and innovation.

How can a small business use the concept of defining the job of a product or service for growth as covered in 'Competing Against Luck'?

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A small business can use the concept of defining the job of a product or service for growth by first understanding what customers hire their product or service to do. This involves identifying the specific needs or problems that the product or service solves for the customer. Once this is clear, the business can then focus on improving these specific aspects, thereby enhancing the value of their offering and driving growth. Additionally, this understanding can open up new opportunities for innovation and expansion.

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You will begin to see "jobs-based" segments, including "nonconsumers" who do not buy your product. Understanding why they passed you by can create lucrative opportunities.

Mission statements are often phrased in a generic way that employees find hard to use as a guide for action and making decisions, much less innovation. Just like any goal, you need to be more specific. It's not enough to say, "I want to lose weight," or "I want to get more customers." You need to be more specific.

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How does the theory of being more specific in mission statements challenge existing practices in business strategy?

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The theory of being more specific in mission statements challenges existing practices in business strategy by pushing organizations to define their goals and objectives more clearly. Traditional mission statements are often generic and vague, making them difficult to use as a guide for decision-making and innovation. By being more specific, companies can provide a clearer direction for their employees, which can lead to more effective strategies and innovative solutions. This approach challenges the status quo by emphasizing the importance of clarity and precision in strategic planning.

Can you analyze the case studies used in 'Competing Against Luck' and discuss their broader implications?

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The case studies in 'Competing Against Luck' are not provided in the content, hence a detailed analysis cannot be provided. However, the broader implications of the case studies in the book generally revolve around the concept of 'Jobs to Be Done' theory. This theory suggests that customers hire products or services to do a job for them. Understanding this job can lead to successful innovation. For instance, a case study might discuss how a company like Airbnb understood the job that customers wanted done - finding affordable, comfortable, and unique accommodations - and innovated to meet that need.

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Instead, create a sense of purpose that drives action: "We solve problems this way because we know what matters and why."

Be wary of jobs described in adjectives and adverbs, such as "convenience." That might be an experience necessary for the job to be done, but it is not the job itself. Use verbs and nouns, such as "I need to write books verbally, removing the need to type or edit by hand."

Jobs to Be Done are not technical specifications. "I need insulation that is tough and impervious to moisture" is not a job, but "I want my family to feel comfortable when it's hot or cold out while lowering the cost of energy" is.

Example: the dining room table dilemma

A midsize Detroit-area building company in the mid-2000s was trying to sell new homes and condominiums. They targeted "downsizers" – those who were retiring, divorced, etc. The company priced the units to meet its target consumer, and they had over 80 customization options to make each unit their own. However, all the bells and whistles weren't making a difference, especially in a declining market.

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What broader implications does Bob Moesta's case study have for understanding customer behavior and decision-making?

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Bob Moesta's case study provides valuable insights into understanding customer behavior and decision-making. It emphasizes the importance of understanding the emotional aspects of customer decisions. In this case, the decision to purchase a unit was not based on the features or amenities offered, but on an emotional attachment to a dining room table. This highlights that customers' decisions are often driven by personal factors and emotions, not just practical considerations. Therefore, businesses need to delve deeper into the emotional and personal aspects of their customers' lives to truly understand their needs and preferences. This can lead to more effective marketing strategies and product designs that resonate with customers on a deeper level.

How can small businesses apply the lessons from Bob Moesta's experience to their own sales strategies?

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Small businesses can apply the lessons from Bob Moesta's experience by focusing on understanding their customers' needs and emotions. This can be achieved by conducting interviews or surveys to gain insights into what their customers value most. It's not always about the features of a product or service, but rather the emotional connection or value it brings to the customer. For instance, in the case of Bob Moesta, he discovered that the biggest obstacle for downsizers was finding a place for their dining room tables, an emotional decision. Therefore, businesses should strive to understand these emotional factors and incorporate them into their sales strategies.

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A man named Bob Moesta tried everything to sell these units, from focus groups to granite countertops to newspaper ads. It wasn't until he interviewed people who purchased one of the company's units that he began to understand the hesitation. It all came down to the dining room table. Downsizers were agonizing over which items to leave and which to take to their new homes. The biggest obstacle was finding a place for their dining room tables. It was an emotional decision. It turns out they didn't care about all the features they could customize.

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Customers kept saying things like, "As soon as I could figure out what to do with my dining room table, I was free to move." The tables represented family memories and not being able to fit them into a new home was a stumbling block to signing on the dotted line.

The job to be done was not to "help people get into a smaller home," but rather "moving people's lives." So, they changed their focus. The architect reduced the size of the spare bedroom and extended the dining room so a standard dining table would fit. The company gave customers a choice of three variations for finished units to help ease the burden of making choices. They provided moving services, two years of storage and a sorting room on-site to help comb through belongings without the pressure of a looming move date.

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When Detroit's housing market was already struggling, the company raised profitability that covered the extra costs of moving and storage. They grew the business by 25%.

5 ways to uncover jobs to be done

Five key methods to uncover what jobs need to be done:

1. If you want something done, do it yourself.

Understand the unfulfilled jobs needed in your own life. Sheila Marcelo started Care.com, the online matchmaking service for childcare, pet care, senior care, etc., after struggling with her own childcare needs.

2. Why not?

Even a mature market can find ways to innovate by exploring why consumers DON'T buy. Kimberly-Clark, manufacturers of incontinence products like Depends, realized that only a tiny percentage of people that suffer from incontinence would use their product because of the stigma. This discovery led to the development of Silhouettes, natural products that look and feel like regular underwear. Kimberly-Clark was able to expand its own business without cannibalizing its market share. [text] [text] 3. Watch the do-it-yourselfers.

Questions and answers

How can a startup use the key topics from "Competing Against Luck" to enhance their business model and growth?

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A startup can use the key topics from "Competing Against Luck" to enhance their business model and growth by understanding and applying the 'Jobs to be Done' theory. This theory suggests that customers hire products or services to get a job done. By understanding the job that customers are trying to get done, a startup can innovate and create products or services that do the job better. This can lead to a more customer-centric business model and drive growth. For example, the OpenTable app understood the job customers were trying to get done (making a restaurant reservation without hassle) and created a service that does this job effectively.

What are some real-world scenarios where the ideas from "Competing Against Luck" can be implemented?

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The ideas from "Competing Against Luck" can be implemented in various real-world scenarios. For instance, in the business world, companies can use the "Jobs to be Done" theory to innovate and create products or services that truly meet the needs of their customers. This could be a restaurant using an app like OpenTable to simplify the reservation process, or a company like Airbnb redefining the hospitality industry by understanding the real job that customers hire a hotel for. In education, schools could redesign their curriculum based on the jobs that students need to get done, rather than sticking to traditional methods. In healthcare, providers could focus on the jobs that patients need to get done to improve patient satisfaction and outcomes.

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People are creative in the way they avoid products or processes that don't give them value. Trying to organize a group of people for a restaurant reservation can be a massive hassle if you call the restaurant, then your friends, then the restaurant again. Instead, they might make a reservation and see who shows up. The OpenTable app allows groups to make reservations in real-time, avoiding this hassle altogether.

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4. Look for what people don't want to do.

Often, "negative jobs" can become the best innovation opportunities. Harvard business school alum Rick Krieger and some partners started QuickMedx, the forerunner of CVS Minute-Clinics, after several frustrating hours waiting for his son to get a strep-throat test at the doctor. In this case, the customer didn't want to see a doctor. The customer needed a quick fix. Minute-Clinics are now available in more than 1,000 CVS locations, so you don't have to.

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5. Look for unusual uses.

You might be surprised to find that people use your product for other jobs you didn't intend or imagine. Customers used NyQuil as a sleep aid, so ZzzQuil was developed. In the late 1960s, Church & Dwight found that customers used its baking soda for multiple uses besides cooking. This observation led to new products such as the first phosphate-free laundry detergent, cat litter, carpet cleaner, air fresheners, deodorant, etc. Arm and Hammer uses baking soda in multiple products — in everything from toothpaste to hand cream.

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Define a job with specificity to ensure that it is functional. As the author explains: ""If products can only meet the architecture of the system or product within the same product class, the concept of the Job to Be Done does not apply."

For example, if you determine that the job you want your product to fill is, ""I need have to a chocolate milkshake that is in a 12oz. disposable container,"" customers need not stray from the milkshake category to achieve this. But that's not their goal. Customers want to ""hire"" a milkshake for a multitude of reasons that compete with other products. ""I want a cold, refreshing snack that I can eat while I'm driving because my car's A/C is out"" is a much different reason. Now you're competing with an ice cream bar, a Slurpee, a cold piece of fruit, etc.

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Data: not seeing the forest for the trees

In an ever-changing world, data is king. or is it? think of data as a piece of a puzzle. it has distinct characteristics such as whether the customer is new or returning, age range, how they paid, etc. jobs to be done is like viewing the entire puzzle put together. data by itself isn't made redundant — but you can combine your knowledge to see the big picture instead of focusing on the pieces.

Questions and answers

How are the themes of 'Competing Against Luck' relevant to contemporary issues and debates in the business world?

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The themes of 'Competing Against Luck' are highly relevant to contemporary issues and debates in the business world. The book emphasizes the importance of understanding the 'job' that customers are 'hiring' a product or service to do, which is a critical aspect of customer-centric innovation. This concept is particularly relevant in today's business environment where customer needs and preferences are rapidly evolving. The book also challenges the notion that innovation is a matter of luck, arguing instead that it can be a predictable and manageable process. This perspective is crucial in ongoing debates about the role of innovation in business growth and competitiveness.

In what ways has the resource "Competing Against Luck" influenced corporate strategies or business models?

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The resource "Competing Against Luck" has influenced corporate strategies and business models by introducing the concept of "Jobs to be Done" theory. This theory suggests that customers hire products or services to get a job done. Understanding this job can lead to successful innovation. For instance, in the case of OnStar, they realized that customers hired their service for peace of mind, not just as a luxury. This understanding could lead to a shift in business strategy, focusing more on the job to be done rather than the product itself.

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For this reason, you might go with your instinct because data doesn't always reflect customers' real needs and wants. American Girl founder Pleasant Rowland was unable to find dolls that would help her connect with her nieces. A focus group – the only one she would sit through at the behest of her team – insisted that pre-teen girls would not be interested in dolls, much less learn about history. They were wrong.

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OnStar earned an estimated $2.5 billion in revenue and $500 million in net profit for GM annually despite negative net assets. GM initially designed the service for its luxury customers. The company was surprised to find that cost-conscious Chevy drivers were just as likely to purchase OnStar as Cadillac owners. It turned out users "hired" OnStar for peace of mind, not "nice to have" services.

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Are there other companies that have successfully implemented practices similar to OnStar's response to the 2005 Gulf Coast hurricanes?

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Yes, there are other companies that have implemented similar practices in response to crises. For instance, Airbnb has a disaster response program that provides free temporary housing to people displaced by natural disasters. Similarly, Uber has been known to waive fees and coordinate rides for people in areas affected by emergencies. These companies, like OnStar, leverage their existing resources and capabilities to provide aid in times of crisis.

What potential real-world scenarios could benefit from the implementation of OnStar's approach during the 2005 Gulf Coast hurricanes?

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Potential real-world scenarios that could benefit from the implementation of OnStar's approach during the 2005 Gulf Coast hurricanes include any large-scale natural disasters or emergencies where communication and navigation are critical. This could include earthquakes, wildfires, floods, or even man-made disasters such as large-scale power outages or terrorist attacks. In these situations, having access to real-time directions and assistance, regardless of whether they have a plan or not, could be life-saving for individuals caught in these situations.

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You don't sell a product; you sell an experience.

OnStar had barely hit the market when Hurricanes Katrina and Rita battered the Gulf Coast in 2005. The company found itself inundated with calls from panicked drivers that needed help but did not buy a plan that included real-time directions. The company decided that anyone calling from the affected areas could receive all On-Star features without paying for an upgrade. It was a tricky maneuver that the founding CEO, Chet Huber, described as "cobbling together with duct tape and Velcro" to make it work. This new mission created more work for OnStar employees, but they were energized by the sense of purpose – offering peace of mind.

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Three fallacies of innovation data:

Utilize data, but be wary of these common traps when doing so:

• Active Data vs. Passive data: Growing companies often begin to generate operations-related data (operational data) instead of Jobs to be Done, which doesn't offer the whole picture.
• Surface growth: Companies focus energies on driving growth by selling more products to existing customers instead of focusing on how to solve the core job of the product better.
• Conforming data: managers focus on generating data that conforms to their preexisting business models. Conforming restricts data from showing what you need to see and instead shows what is comforting to believe.

In conclusion

Why do some innovative ideas that sound great at the time never take off, while others that seemed unlikely to succeed to disrupt an entire industry? Because when you understand why your customer hires your product or service, you can do the job they hired you for better. That is innovation.

If you know how innovation works, you don't have to rely on luck – although it never hurts.