Competing Against Luck: The Story of Innovation and Customer Choice

by Clayton M. Christensen

When competitors successfully enter markets that seem closed and commoditized, they do it by aligning with an important job that none of the established players has prioritized.

Purpose brands provide remarkable clarity. They become synonymous with the job. A well-developed purpose brand will stop a consumer from even considering looking for another option. They want that product. The price premium that a purpose brand commands is the wage that customers are willing to pay the brand for providing this guidance.

By the same token, brands that fail to integrate around a job risk becoming category placeholders—forced to compete on price, slugging it out with look-alike competitors.

But it can be all too easy for an organization to lose its understanding of the power of a purpose brand when it falls into the bad habits of adding new benefits and features in the interest of creating marketplace “news” or justifying a price increase.

Chapter Takeaways After you’ve fully understood a customer’s job, the next step is to develop a solution that perfectly solves it. And because a job has a richness and complexity to it, your solution must, too. The specific details of the job, and the corresponding details of your solution, are critically important to ensure a successful innovation. You can capture the relevant details of the job in a job spec, which includes the functional, emotional, and social dimensions that define the desired progress; the tradeoffs the customer is willing to make; the full set of competing solutions that must be beaten; and the obstacles and anxieties that must be overcome. The job spec becomes the blueprint that translates all the richness and complexity of the job into an actionable guide for innovation. Complete solutions to jobs must include not only your core product or service, but also carefully designed experiences of purchase and use that overcome any obstacles a customer might face in hiring your solution and firing another. This means that ultimately all successful solutions to jobs can be thought of as services, even for product companies. If you can successfully nail the job, over time you can transform your company’s brand into a purpose brand, one that customers automatically associate with the successful resolution of their most important jobs. A purpose brand provides a clear guide to the outside world as to what your company represents and a clear guide to your empl...

The real challenge is how do you get this herd of energy—your team—lining up on a future road map, some of which you can’t yet see. Jobs Theory helps you do that. It’s crazy powerful, if you get that right.

The Big Idea Organizations typically structure themselves around function or business unit or geography—but successful growth companies optimize around the job. Competitive advantage is conferred through an organization’s unique processes: the ways it integrates across functions to perform the customer’s job.

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. What information do we need to have in order to decide what to do next? Who is responsible for each step? What do we prioritize over other things?

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.”

It’s no surprise, really. 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.1 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.

it systematically removes the complexity and frustrations from the prospective

This is what processes aligned with customer jobs do: they shift complexity and nuisances from the customer to the vendor, leaving positive customer experiences and valuable progress in their place.

Organizing around the Job

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.

It’s only through predictable, repeatable processes that organizations can fully integrate around a customer’s Job to Be Done.

What Gets Measured Gets Done 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.

Keeping what matters in focus is challenging for any organization, especially with the forces at play as a company grows. “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.

If Intuit wanted to accurately measure how well the company was responding to customers’ Jobs to Be Done, it needed to find new ways to think about it. How much time did we save this customer? Did we allow them to not spend time doing something they didn’t want to do? Did we improve their cash flow? Are our processes supporting the things customers are hiring us to do?

But measuring the success in achieving these goals is not easy, Cook admits. “This is hard stuff in our business. The metrics don’t fall out of our systems. There is no way to continuously and automatically measure the labor hours avoided by accountants. We have to interpolate survey and server data,” Cook says. “Because without it we just don’t know how we’re doing on the job the customer wants done.” Having the right measurements in place helps institutionalize a process. It’s how your employees know they’re doing the right thing, making the right choices. As the old saying goes, “What gets measured, gets done.”

Process acts as a sort of the subconscious of an organization—it subtly pushes companies toward or away from a Jobs to Be Done–aligned strategy by governing thousands of decentralized events, decisions, and interactions each day. “We’re much more focused on processes than organization,” says Piacentini. “It’s one of the reasons we can move fast. We have the same technology, the same platform, the same guiding principles across all of our companies.” 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.”

The “but” is that optimization should also incorporate a factor for job alignment—otherwise you’re focusing on getting better and better at the wrong things. There is a second very important lesson in the Amazon story: there is a degree of ambidextrousness that enables processes to be both highly efficient and flexible. 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.

Ford’s core mistake—of focusing on the product spec rather than the job spec—gets repeated all the time. In fact, the misstep is so common in the high-tech world, that Anshu Sharma of Storm Ventures has earned justifiable recognition for calling attention to the problem, which he has dubbed “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.”

Processes are powerful. By their very nature, processes are set so that employees perform tasks in a consistent way, time after time. They are meant not to change. When processes are organized around the customer’s Job to Be Done—optimized to facilitate the progress and deliver the experiences that customers seek—processes are the source of competitive advantage.

“Jobs gives you a very clear innovation trajectory,” Whitman says. “I can see how we need to improve for the next ten years. It’s less product oriented now than process oriented.”

The converse is equally true: when processes are not aligned with a compelling customer job, optimizing the process means getting better and better at doing the wrong thing.

Chapter Takeaways As we’ve said in the last chapter, the key to successful innovation is to create and deliver the set of experiences corresponding to your customer’s job spec. To do this consistently, a company needs to develop and integrate the right set of processes that deliver these experiences. Doing so can yield a powerful source of competitive advantage that is very difficult for others to copy. Despite the value of developing a set of processes integrated around the customer’s job, it does not come naturally to most companies. Processes abound in all companies, of course, but in most cases they are aimed at improving efficiency or achieving a narrow outcome within a specific function. Delivering a complete set of experiences to nail the job usually requires that new processes be deliberately defined, and new mechanisms put in place to coordinate functions that are usually siloed. A powerful lever to drive job-centric process development and integration is to measure and manage to new metrics aligned with nailing the customer’s job. Managers should ask what elements of the experience are the most critical to the customer, and define metrics that track performance against them. Most organizations do not have one person who is the “steward” ensuring the company consistently delivers against the customer’s job. Traditional organizational structures and siloes do have value and are likely to endure, and large-scale reorgs are not usually practical. Therefore, the best ...

The Big Idea 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. In our research and experience, that happens because companies fall into believing three fallacies about the data they generate about their products: The Fallacy of Active Versus Passive Data, The Fallacy of Surface Growth, and The Fallacy of Conforming Data.

the customer rarely buys what the company thinks it sells him.

Even in some of the best companies, the Job to Be Done that brought them success in the first place can somehow get lost in the shuffle of running and growing the business. They define themselves in terms of products, not jobs. And that makes a very big difference.

Competing against apple juice is tough. Competing against celery is like going downhill on ball bearings. And V8 became a perfect purpose brand.

The Three Fallacies of Innovation Data

The Fallacy of Active Versus Passive Data The Fallacy of Surface Growth The Fallacy of Conforming Data Let me explain: 1. The Fallacy of Active Versus Passive Data When a company—or product—is first launched, it is usually steeped in the context of the job it discovers. And having uncovered a job with no good solution, it’s often competing with no one. Entrepreneurial energy, focus, and resources can be devoted to understanding and solving customers’ jobs. But after the company or product has been launched into the world, its energy, focus, and resources turn in a different direction.

In other words, the railroads fell into the trap of letting the product define the market they were in, rather than the job customers were hiring them to do.

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. In discovering an unfilled or poorly done job, managers are surrounded by nonconsumption and workarounds. They are immersed in the passive data of context. 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. Here’s how the trouble starts: managers by their very nature respond to information—and negativ...

This data, as it turns out, is very loud. 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. But what feels like progress can prove to be poison if it leads managers to mistake the model of reality that active data offers for the real world.5 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. As data about operations broadcasts itself loudly and clearly, it’s all too easy—especially as the filtering layers of an organization increase—for managers to start managing the numbers instead of the job.

2. The 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.” Companies see products all around them made by other companies and decide to copy or acquire them. 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. The same incentives and logic apply to investments in production capabilities, intellectual property, and talent. Once these costs are sunk, the pressure to “sweat the assets” is ever present and, especially with “what have you done for me lately” shareholders, relentless.

But with each additional job that the Times solves, it finds itself up against a competitor who focuses only on that job—and does it very well.

3. The Fallacy of Conforming Data The Fallacy of Conforming Data is the third fallacy that causes companies to lose their focus on the customers’ Job to Be Done.

Psychologists have explained that when we hold 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. As data comes in, it’s not that we lose objectivity—we never had it to begin with. I can’t help but think of every parent-teacher conference I ever attended—my wife and I would always leave the room with totally different perspectives on what we just heard. I heard, I’m sure, the things that confirmed my expectations. My wife, I suspect, heard something closer to what the teacher actually said. We make the data and the messages conform to what we believe. So often, companies are blindsided by a competitor’s innovation or what turns out to be a missed opportunity. “Why didn’t we see that coming??” The truth is, you had no chance of seeing it because you weren’t looking for it. In the words of Sherlock Holmes, “There is nothing more deceptive than the obvious fact.”

“Decisions don’t get made. They happen,”

“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.”

Innovations get skewed to do the jobs that executives want them to do—which is to confirm that the customers want to buy the products that the managers want to sell them. The Source of Data Creates the Problem

The healthiest mindset for innovation is that nearly all data—whether presented in the form of a large quantitative data set on one extreme, or an ethnographic description of behavior on the other—is built upon human bias and judgment.

For all the time that senior leaders spend analyzing data, they should be making equal investments to determine what data should be created in the first place.

Chapter Takeaways The origin story of most companies typically involves an entrepreneur identifying an important job that does not have an existing satisfactory solution, and developing a creative way to solve it. As a company grows up, however, it’s very common for it to lose focus on the job that sparked its existence in the first place. Despite the best intentions and a century of marketing wisdom, companies start to act as if their business is defined by the products and services they sell (“quarter-inch drills”) instead of the jobs that they solve (“quarter-inch holes”). While there are many drivers of this drift away from the true north of the customer’s job, foremost among them is the tendency of managers to fall prey to the Three Fallacies of Innovation Data: The Fallacy of Active Data Versus Passive Data: Instead of staying cognizant of and focused on the type of data that characterizes the rich complexity of the job (passive data), growing companies start to generate operations-related data (active data), which can seduce managers with its apparent objectivity and rigor but which tends to organize itself around products and customer characteristics, rather than Jobs to Be Done. The Fallacy of Surface Growth: As companies make big investments in customer relationships, they focus their energies on driving growth through selling additional products to those customers or solving a broader set of their jobs, what we call surface growth—as opposed to staying focused o...

The Big Idea Many companies have lofty mission statements with a variety of intentions from motivating workers to informing strategies to attracting investors, but almost as many companies struggle to translate these mission statements into everyday behaviors. However, when the job has a voice in an organization, individual work streams have meaning and employees understand why their work matters. A well-articulated job provides a kind of “commander’s intent,” obviating the need for micromanagement because employees at all levels understand and are motivated by how the work they do fits into a larger process to help customers get their jobs done.

suggests, we don’t yet have all the answers to these questions, but we do know that leaders interviewed for this book have told us that Jobs Theory turns out to be a powerful tool for focusing and leading the organization as a whole. In Intuit’s case, Cook says, the organization is so focused on customers’ jobs that it allows itself to operate like a “network of start-ups” in which small teams launch new product pilots with minimal senior-level approval because they are so clearly aligned with jobs. When everyone on the team understands that the goal is “taxes are done,” they’re all pulling in the same direction.

Having a jobs-focused organization, the CEOs we interviewed for this book tell us, leads to four categories of clear benefit: 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. Align resources against what matters most—and free resources from what does not. Inspire people and unify your culture in service of what they care about most. Measure what matters most—customer progress, employee contributions, and incentives.