Competing Against Luck: The Story of Innovation and Customer Choice

by Clayton M. Christensen

Of course, it’s no surprise that correlation isn’t the same as causality. But although most organizations know that, I don’t think they act as if there is a difference. They’re comfortable with correlation. It allows managers to sleep at night.

For me, this is a neat idea. When we buy a product, we essentially “hire” something to get a job done.

When you have a job to be done and there isn’t a good solution, “cheaper and crappier” is better than nothing. Imagine the potential of something truly great.

If we believe that innovation is messy and imperfect and unknowable, we build processes that operationalize those beliefs. And that’s what many companies have done: unwittingly designed innovation processes that perfectly churn out mediocrity. They spend time and money compiling data-rich models that make them masters of description but failures at prediction.

What job did you hire that product to do? The good news is that if you build your foundation on the pursuit of understanding your customers’ jobs, your strategy will no longer need to rely on luck. In fact, you’ll be competing against luck when others are still counting on it. You’ll see the world with new eyes.

There’s no such thing as “average” in the real world. And innovating toward “average” is doomed to fail.

Why is innovation so hard to predict—and sustain? Because we haven’t been asking the right questions. Despite the success and enduring utility of disruption as a model of competitive response, it does not tell you where to look for new opportunities. It doesn’t provide a road map for where or how a company should innovate to undermine established leaders or create new markets. But the Theory of Jobs to Be Done does.

And I witnessed firsthand how a lot of smart people were unable to fix the problems of once-great companies.

Whenever you read explanations about why it was so successful, inevitably its success was attributed to the brilliance of the company’s management team. Then about 1988 Digital Equipment fell off the cliff and began to unravel very quickly. When you then read explanations about why it had stumbled so badly, it was always attributed to the ineptitude of the management team, the same folks running the company who had earned unfettered praise for so long.

But the “stupid manager” hypothesis really didn’t hold up when you considered that almost every minicomputer company in the world collapsed in unison.

That work led to my theory of disruptive innovation,1 which explains the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost have become the status quo—eventually completely redefining the industry.

But the theory of disruptive innovation does not tell you where to look for new opportunities. It doesn’t predict or explain how, specifically, a company should innovate to undermine the established leaders or where to create new markets. It doesn’t tell you how to avoid the frustration of hit-and-miss innovation—leaving your fate to luck. It doesn’t tell you how to create products and services that customers will want to buy—and predict which new products will succeed. But the Theory of Jobs to Be Done does.

For years, I’d been focused on understanding why great companies fail, but I realized I had never really thought about the reverse problem: How do successful companies know how to grow?

The chain tried many things in response to the customer feedback, innovations specifically intended to satisfy the highest number of potential milk shake buyers. Within months, something notable happened: Nothing.

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. If the company simply tried to average all the responses of the dads and the commuters, it would come up with a one-size-fits-none product that doesn’t do either of the jobs well.

Alas, the conversation did not go well. Perhaps we didn’t have the right language at the time to explain our thinking, but the Unilever executives in the room were not moved by what we were trying to say. I actually called an early break and suggested we just move on to a new topic. We didn’t revisit the subject of Jobs to Be Done. I have no doubt that the Unilever executives in the room that day were seasoned, sophisticated leaders. But their tepid response made me wonder how many companies are operating within such fixed assumptions about how to think about innovation that it’s difficult to step back and assess whether they’re even asking the right questions.

As an academic, I fear we must take some of the blame. In business schools we teach myriad forms of analytics—regression, factor analysis, principal components analysis, and conjoint analysis. There are courses on marketing at the bottom of the pyramid and on marketing for not-for-profit organizations. For years, a popular course at HBS was one in which PET brain scanners showed how different advertising images affected the flow of blood in the brain. But we haven’t given students in our classrooms and managers on the front lines of innovation the right tools, forcing them to borrow and adapt tools intended for other purposes. And in spite of all this, 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.

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.

The answer was found in theory. The Japanese experimented relentlessly to learn the cause of manufacturing defects. If they could only identify the root cause of each and every problem, they believed, then they could design a process to prevent that error from recurring. In this way, manufacturing errors were rarely repeated, quality improved continuously, and costs declined precipitously. In short, what the Japanese proved is that in spite of inherent complexity, it is possible to reliably and efficiently produce quality cars, when you focus on improving the manufacturing process.

When the Japanese encountered a defect, they treated it the way a scientist would treat an anomaly: an opportunity to understand what caused it; in this case to improve the manufacturing process. Defects turned out to have very specific causes and, once identified and understood, these causes could be corrected and the process altered or removed.

For Toyota, the theory was embodied in the set of processes they developed to lead to defect-free manufacturing. Each activity can be seen as an individual if-then statement: “If we do this, then that will be the result.” Through this theory of manufacturing, the quality movement was born.

Innovation, in a very real sense, exists in a “pre–quality revolution” state.1 Managers accept flaws, missteps, and failure as an inevitable part of the process of innovation.

How to Think, not What to Think

We define a “job” as 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.

Jobs are never simply about the functional—they have important social and emotional dimensions, which can be even more powerful than functional ones.

Because jobs occur in the flow of daily life, the circumstance is central to their definition and becomes the essential unit of innovation work—not

“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.

Many wonderful inventions have been, unwittingly, built only around satisfying a very general “need.” Take, for example, the Segway, a two-wheeled, self-balancing electric vehicle invented by Dean Kamen. In spite of the media frenzy around the release of Kamen’s “top secret” invention that was supposed to change transportation forever, the Segway was, by most measures, a flop. It had been conceived around the need of more efficient personal transportation. But whose need? When? Why? In what circumstances? What else matters in the moment when somebody might be trying to get someplace more efficiently? The Segway was a cool invention, but it didn’t solve a Job to Be Done that a lot of people shared.

In practice, seeing a job clearly and fully characterizing it can be tricky. Jobs insights are fragile—they’re more like stories than statistics.

When I share Jobs Theory with people, they often find it to be both intuitive and revelatory. It just makes sense. They can easily think of jobs in their own lives and their misdirected efforts to satisfy them. But I also know that understanding it well enough to implement in practice can take some effort. It goes against the habits that so many managers have honed over years of practice.

Are consumers making do with imperfect solutions through some kind of compensating behavior? Are they buying and using a product that imperfectly performs the job? Are they cobbling together a workaround solution involving multiple products? Are they doing nothing to solve their dilemma at all?

Just because Airbnb didn’t stack up well compared with hotels or motels by traditional measures didn’t mean there wasn’t a very real struggle for progress for which Airbnb was a better option. The circumstances in which consumers would hire Airbnb are very different from those in which they’d hire a hotel.2 Airbnb isn’t just competing with hotels, it’s competing with staying with friends. Or not making the trip at all.

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.

For innovators, understanding the job is to understand what consumers care most about in that moment of trying to make progress.

He’s hiring cigarettes for the emotional benefit of calming him down, relaxing him. And if he works in a typical office building, he’s forced to go outside to a designated smoking area. But that choice is social, too—he can take a break from work and hang around with his buddies. From this perspective, people hire Facebook for many of the same reasons. They log onto Facebook during the middle of the workday to take a break from work, relax for a few minutes while thinking about other things, and convene around a virtual water cooler with far-flung friends. In some ways, Facebook is actually competing with cigarettes to be hired for the same Job to Be Done.

Netflix CEO Reed Hastings made this clear when recently asked by legendary venture capitalist John Doerr if Netflix was competing with Amazon. “Really we compete with everything you do to relax,” he told Doerr.

The university’s ads for the online program were completely reoriented so that they focused on how it could fulfill the job for later-life learners.

What Cook and his team identified was the difference between a task (enter a debit in the ledger) and a genuine struggle—in specific circumstances.

It became clear that Intuit’s competitors for this Job to Be Done were not the other sophisticated accounting software products already on the market, but rather the decision whether to hire another person just to do the books, spending extra hours at the office just to get the paperwork done, figuring out how to construct and use one of the generic spreadsheet software products available, or even a shoebox where all the receipts went with no hope of ever actually being properly reconciled.

To outside eyes, QuickBooks might have seemed an unlikely success. After all, the product offered half the functionality of more sophisticated accounting software at twice the price. But QuickBooks quickly became—and has remained—the global leader in online accounting software. Competitors were focused on making the best accounting software possible. Cook and his team focused on the job customers were trying to do.

“I went in thinking we were in the business of new home construction,” recalls Moesta. “But I realized we were instead in the business of moving lives.”

Understanding the job enabled the company to get to the causal mechanism of why its customers might pull this solution into their lives.

Jobs Theory is effective because it focuses you on the right complexity, breaking it down into elements you need to understand for successful innovation. It’s the difference between having a full, comprehensive narrative versus a few scattered frames of the movie, randomly selected as highlights. Jobs to Be Done tell the whole story.

As Amazon founder Jeff Bezos is fond of quoting, “Perspective is worth 80 I.Q. points.” Some of the most significant advances in science come on the heels of bright minds observing all the same things, with all the same tools, for years and years before someone with fresh eyes comes with a breakthrough.

Sony founder Akio Morita actually advised against market research, urging instead to “carefully watch how people live, get an intuitive sense as to what they might want and then go with it.” Sony’s breakthrough Walkman cassette player was temporarily put on hold when market research indicated that consumers would never buy a tape player that didn’t have the capacity to record and that customers would be irritated by the use of earphones. But Morita ignored his marketing department’s warning, trusting his own gut instead. The Walkman went on to sell over 330 million units and created a worldwide culture of personal music devices.

We call this “nonconsumption,” when consumers can’t find any solution that actually satisfies their job and they opt to do nothing instead.

I think I have as many jobs of not wanting to do something as ones that I want positively to do. I call them “negative jobs.” In my experience, negative jobs are often the best innovation opportunities.

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. How many apps do you have on your phone that seemed like a good idea to download, but you’ve more or less never used them again? If the app vendor simply tracks downloads, it’ll have no idea whether its app is doing a good job solving your desire for progress or not.