Competing Against Luck: The Story of Innovation and Customer Choice

by Clayton M. Christensen

In a recent McKinsey poll, 84 percent of global executives acknowledged that innovation is extremely important to their growth strategies, yet a staggering 94 percent were unsatisfied with their own innovation performance.

organizations have been trying to find the Moneyball equivalent of customer data that will lead to innovation success. Yet few have.

“68 percent of customers say they prefer version A over version B.” None of that data, however, actually tells you why customers make the choices that they do.

As Nate Silver, author of The Signal and the Noise: Why So Many Predictions Fail—But Some Don’t, points out, “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.”

What job did you hire that product to do?

They were conceived, developed, and launched into the market with a clear understanding of how these products would help consumers make the progress they were struggling to achieve.

Jobs Theory provides a powerful way of understanding the causal mechanism of customer behavior, an understanding that, in turn, is the most fundamental driver of innovation success.

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.

Pressures of return on net assets (RONA), well-intended efficiency drives, and decisions made every day on the front lines of business can have a profound effect on the successful (or unsuccessful) delivery of a great solution to a job (as we’ll discuss in chapter 8). There are so many ways to stumble on the journey. But the payoff for getting it right is enormous.

every single defect is seen as an opportunity to make the process better.

A job is the progress that an individual seeks in a given circumstance. Successful innovations enable a customer’s desired progress, resolve struggles, and fulfill unmet aspirations. They perform jobs that formerly had only inadequate or nonexistent solutions. 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 customer characteristics, product attributes, new technology, or trends. Jobs to Be Done are ongoing and recurring. They’re seldom discrete “events.”

Jobs take into account a far more complex picture. The circumstances in which I need to eat, and the other set of needs that might be critical to me at that moment, can vary wildly. Think back to our milk shake example. I may opt to hire a milk shake to resolve a job that arises in my own life. What will cause me to choose the milk shake are the bundle of needs that are in play in those particular circumstances. That bundle includes not only needs that are purely functional or practical (“I’m hungry and I need something for breakfast”), but also social and emotional (“I’m alone on a long, boring commute and want to entertain myself, but I’d be embarrassed if one of my colleagues caught me with a milk shake in my hand so early in the morning”). In those circumstances, some of my needs have a higher priority than others. I might, for example, opt to swing into the drive-through (where I won’t be seen) of the fast-food chain for a milk shake for that morning commute. But under different circumstances—I have my son with me, it’s dinnertime, and I want to feel like a good dad—the relative importance of each of my needs may cause me to hire the milk shake for an entirely different set of reasons. Or to turn to another solution to my job altogether.

Jobs Theory is not primarily focused on “who” did something, or “what” they did—but on “why.” Understanding jobs is about clustering insights into a coherent picture, rather than segmenting down to finer and finer slices.

Airbnb isn’t just competing with hotels, it’s competing with staying with friends. Or not making the trip at all.

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

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,”

Jobs Theory is not useful if there is no real struggle for a consumer or the existing solutions are good enough.

Jobs Theory answers this question by asserting that customers purchase and use (or “hire” in our jobs metaphor) products and services to satisfy jobs that arise in their lives. A job is defined as the progress that a customer desires to make in a particular circumstance.

But with the lens of Jobs to Be Done, LeBlanc and his team saw that the job these nontraditional students were hiring SNHU to do had almost nothing in common with the job coming-of-age undergraduates were hiring it for, and that it was framed by a very different circumstance. The average online student is thirty years old and juggling work and family while trying to squeeze in an education. Many of them have some college credits, but stopped their education along the way for a myriad of reasons. Often they were still carrying debt from that unfinished experience. But life has told them it’s time to go back to school; they realize they need further academic credentials to improve their career prospects and thus to improve their family’s lives. They’ve already had all the coming-of-age experiences they can handle. They need higher education to provide just four things: convenience, customer service, credentials, and speedy completion times. This, LeBlanc’s team realized, was an enormous opportunity.

SNHU’s online program wasn’t in competition with the same set of local competitors at all. It was competing with other national online programs, including both traditional colleges and some of the for-profit specialty programs, such as Kaplan, University of Phoenix, ITT Technical Institute, and more—created and designed to provide students with training and credentials that might help them get a better job. But even more significantly, SNHU was also competing with nothing: nonconsumption. People choosing to do nothing to further their education at that stage of life. With that perspective, the size of the market suddenly went from seeming finite and hardly worth fighting for, to one with enormous untapped potential. Who wouldn’t want to be competing with nothing?

When growth has been that rapid, SNHU has dialed back its recruiting efforts until it can reinforce its internal support and systems.

Moreover, this content can be formulated into courses, bite-size learning modules, single-point lessons a leader might utilize to start a staff meeting, etc., and can be utilized across a range of delivery modalities. That way, the chief learning officer has access to whatever tools he or she needs in whatever circumstances arise. “Here’s the whole library! How can we help you resolve whatever jobs arise in your life this year?”

Would be cool to do for tactical agile

You can’t do design requirements in a conference room. You have to get out in the wild and live it.”

Most companies focus disproportionately on the functional dimensions of their customers’ jobs; but you should pay equally close attention to uncovering the emotional and social dimensions, as addressing all three dimensions is critical to your solution nailing the job.

What is the role that the mattress plays in his life? Why is it important or is it? When is the mattress important and why? Who else is involved in purchase and use of a mattress? What are the barriers and points of friction in buying a new mattress? Depending on the individual’s present struggles and desired progress, what alternatives exist to buying a new mattress? Are there occasions in which the individual does not use the mattress when we might expect him to? Conversely, are there moments in life when he uses the mattress in unusual ways?

Seemingly objective data about customer behavior is often misleading, as it focuses exclusively on the Big Hire (when the customer actually buys a product) and neglects the Little Hire (when the customer actually uses it). The Big Hire might suggest that a product has solved a customer’s job, but only a consistent series of Little Hires can confirm it.

Boom this is huge