REPRINT R1609D PUBLISHED IN HBR SEPTEMBER 2016 ARTICLE SPOTLIGHT ON CONSUMER INSIGHT Know Your Customers’ “Jobs to Be Done” Is innovation inherently a hit-or-miss endeavor? Not if you understand why customers make the choices they do. by Clayton M. Christensen, Taddy Hall, Karen Dillon, and David S. Duncan This article is made available to you with compliments of Innosight, LLC for your personal use. Further posting, copying or distribution is not permitted. SPOTLIGHT ON CONSUMER INSIGHT SPOTLIGHT Know Your Customers’ “Jobs to Be Done” Is innovation inherently a hit-or-miss endeavor? Not if you understand why customers make the choices they do. BY CLAYTON M. CHRISTENSEN, TADDY HALL, KAREN DILLON, AND DAVID S. DUNCAN 2 Harvard Business Review September 2016 This article is made available to you with compliments of Innosight, LLC for your personal use. Further posting, copying or distribution is not permitted. FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG ARTWORK Marijah Bac Cam, Blue Landscape Charcoal, ink, marker, and pencil on paper or as long as we can remember, innovation has been a top priority—and a top F frustration—for leaders. In a recent McKinsey poll, 84% of global executives reported that innovation was extremely important to their growth strategies, but a staggering 94% were dissatisfied with their organizations’ innovation September 2016 Harvard Business Review 3 This article is made available to you with compliments of Innosight, LLC for your personal use. Further posting, copying or distribution is not permitted. SPOTLIGHT ON CONSUMER INSIGHT performance. Most people would agree that the vast Madness time. Marketers who collect demographic majority of innovations fall far short of ambitions. or psychographic information about him—and look On paper, this makes no sense. Never have busi- for correlations with other buyer segments—are not nesses known more about their customers. Thanks going to capture those reasons. to the big data revolution, companies now can col- After decades of watching great companies fail, lect an enormous variety and volume of customer we’ve come to the conclusion that the focus on cor- information, at unprecedented speed, and perform relation—and on knowing more and more about cus- sophisticated analyses of it. Many firms have estab- tomers—is taking firms in the wrong direction. What lished structured, disciplined innovation processes they really need to home in on is the progress that the and brought in highly skilled talent to run them. Most customer is trying to make in a given circumstance— firms carefully calculate and mitigate innovations’ what the customer hopes to accomplish. This is what risks. From the outside, it looks as if companies have we’ve come to call the job to be done. mastered a precise, scientific process. But for most of We all have many jobs to be done in our lives. them, innovation is still painfully hit-or-miss. Some are little (pass the time while waiting in line); What has gone so wrong? some are big (find a more fulfilling career). Some The fundamental problem is, most of the masses surface unpredictably (dress for an out-of-town busi- of customer data companies create is structured to ness meeting after the airline lost my suitcase); some show correlations: This customer looks like that one, regularly (pack a healthful lunch for my daughter to or 68% of customers say they prefer version A to ver- take to school). When we buy a product, we essen- sion B. While it’s exciting to find patterns in the num- tially “hire” it to help us do a job. If it does the job bers, they don’t mean that one thing actually caused well, the next time we’re confronted with the same another. And though it’s no surprise that correlation job, we tend to hire that product again. And if it does isn’t causality, we suspect that most managers have a crummy job, we “fire” it and look for an alternative. grown comfortable basing decisions on correlations. (We’re using the word “product” here as shorthand Why is this misguided? Consider the case of one of for any solution that companies can sell; of course, this article’s coauthors, Clayton Christensen. He’s 64 the full set of “candidates” we consider hiring can years old. He’s six feet eight inches tall. His shoe size often go well beyond just offerings from companies.) is 16. He and his wife have sent all their children off to This insight emerged over the past two decades in college. He drives a Honda minivan to work. He has a course taught by Clay at Harvard Business School. a lot of characteristics, but none of them has caused (See “Marketing Malpractice,” HBR, December him to go out and buy the New York Times. His rea- 2005.) The theory of jobs to be done was developed sons for buying the paper are much more specific. He in part as a complement to the theory of disruptive might buy it because he needs something to read on innovation—which at its core is about competitive a plane or because he’s a basketball fan and it’s March responses to innovation: It explains and predicts the behavior of companies in danger of being disrupted and helps them understand which new entrants pose the greatest threats. The focus on But disruption theory doesn’t tell you how to create products and services that customers want to buy. Jobs-to-be-done theory does. It transforms knowing more our understanding of customer choice in a way that no amount of data ever could, because it gets at the and more about causal driver behind a purchase. customers has The Business of Moving Lives A decade ago, Bob Moesta, an innovation consultant and a friend of ours, was charged with helping bolster taken firms in the sales of new condominiums for a Detroit-area build- ing company. The company had targeted downsizers— wrong direction. retirees looking to move out of the family home and 4 Harvard Business Review September 2016 COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. This article is made available to you with compliments of Innosight, LLC for your personal use. Further posting, copying or distribution is not permitted. FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG Idea in Brief WHAT’S WRONG WHAT’S NEEDED WHAT’S EFFECTIVE Innovation success rates are Marketers and product developers Successful innovators identify shockingly low worldwide, and focus too much on customer profiles poorly performed “jobs” in have been for decades. and on correlations unearthed customers’ lives—and then in data, and not enough on what design products, experiences, customers are trying to achieve and processes around those jobs. in a particular circumstance. divorced single parents. Its units were priced to living room, a large second bedroom for visitors, and appeal to that segment—$120,000 to $200,000— a breakfast bar to make entertaining easy and casual; with high-end touches to give a sense of luxury. on the other hand, they didn’t need a formal dining “Squeakless” floors. Triple-waterproof basements. room. And yet, in Moesta’s conversations with ac- Granite counters and stainless steel appliances. A tual buyers, the dining room table came up repeat- well-staffed sales team was available six days a week edly. “People kept saying, ‘As soon as I figured out for any prospective buyer who walked in the door. A what to do with my dining room table, then I was generous marketing campaign splashed ads across free to move,’” reports Moesta. He and his colleagues the relevant Sunday real estate sections. couldn’t understand why the dining room table was The units got lots of traffic, but few visits ended such a big deal. In most cases people were referring up converting to sales. Maybe bay windows would to well-used, out-of-date furniture that might best be be better? Focus group participants thought that given to charity—or relegated to the local dump. sounded good. So the architect scrambled to add But as Moesta sat at his own dining room table bay windows (and any other details that the focus with his family over Christmas, he suddenly under- group suggested) to a few showcase units. Still sales stood. Every birthday was spent around that table. did not improve. Every holiday. Homework was spread out on it. The Although the company had done a cost-benefit table represented family. analysis of all the details in each unit, it actually What was stopping buyers from making the de- had very little idea what made the difference be- cision to move, he hypothesized, was not a feature tween a tire kicker and a serious buyer. It was easy to that the construction company had failed to offer speculate about reasons for poor sales: bad weather, but rather the anxiety that came with giving up underperforming salespeople, the looming reces- something that had profound meaning. The decision sion, holiday slowdowns, the condos’ location. But to buy a six-figure condo, it turned out, often hinged instead of examining those factors, Moesta took an on a family member’s willingness to take custody of unusual approach: He set out to learn from the peo- a clunky piece of used furniture. ple who had bought units what job they were hiring That realization helped Moesta and his team the condominiums to do. “I asked people to draw a begin to grasp the struggle potential home buyers timeline of how they got here,” he recalls.