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Jobs-Based-Positioning
 

Jobs-Based-Positioning

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In December 2012, Clay Christensen and I published "Surviving Disruption" in the Harvard Business Review. (http://bit.ly/Z7DMvY) ...

In December 2012, Clay Christensen and I published "Surviving Disruption" in the Harvard Business Review. (http://bit.ly/Z7DMvY)

This slide deck, old but good, is the first presentation I offered Clay on the subject when proposing that we author an article on the topic.

The presentation offers a framework fro corporate strategists, who are trying to determine where their core businesses can move in the future based on the theory of disruption.

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    Jobs-Based-Positioning Jobs-Based-Positioning Presentation Transcript

    • Jobs-to-be-Done based PositioningLeveraging disruptive theory to predict the futureJuly 8, 2011
    • So what… Using this framework, you can predict the best focus for product innovation the forum for growth and innovation 1
    • Executive summaryJobs-to-be-Done theory allows us to discern performance characteristics of businesses • Product proliferation can be explained by people’s differing preferences when it comes to how jobs are fulfilled – This serves to reconcile categorical “needs-based” marketing with a jobs-based theory, as demographic needs based assumptions serve to approximate how certain M.E.S. groups will desire jobs to be fulfilledIf we are able to distil jobs to performance characteristics, we can then makeassumptions about future performance leveraging disruptive theory • Theory will explain the functional value of products moving forward; which is only one aspect of predicting what consumers will want to buy • Zeitgeist, scarcity (perceived and real), and the law of diminishing marginal returns (Products over-serving customers) will impact affect the remainder of the product’s or company’s market potential Reconciling JTBD and disruptive theory can provide a prescriptive theory of product development / marketing the forum for growth and innovation 2
    • The Jobs-to-be-Done Matrix the forum for growth and innovation 3
    • The Jobs-to-be-Done matrix To be used when evaluating your product’s position in the market Relative Industry Functional Willingness to Performance Pay1 Significance of present position Where characteristics can be understood Job Characteristic 1 Hi + Your products excel relative to your competitive set on functional performance in areas that customers appreciate and in which customers Job Characteristic 2 Hi + are willing to pay a premium through laddering Your products excel relative to your competitive Job Characteristic 3 Hi - set, customers may appreciate your performance, but will not pay a premium Your products do not excel relative to your Job Characteristic 4 Mid / Lo + competitive set, but if they were to do so, you could charge a premium Your products do not excel relative to your Job Characteristic 5 Mid / Lo - competitive set, but if they did consumers would still not pay for these characteristics Rational Emotional Brain / Logos Brain / Pathos1. Where willingness to pay is a function of scarcity (perceived or real) and average relative importance the forum for growth and innovation 4
    • Breaking down the the JTBD MatrixJob characteristics: Ex; Ford’s gasoline engine cars Job Characteristics To fulfill a given job-to-be-done various Relative Industry characteristics can increase user utility Functional Willingness to Assumptions • Products can fulfill multiple jobs-to-be-done Performance Pay1 Companies can compete and attempt to differentiate Speed / Power High + from one another along different characteristics of performance Implications • Individual consumers value each of these characteristics differently – justifying SKU variety Capacity High + While the basic job-to-be-done of a car is to facilitate Comfort Mid + transportation, there are many characteristics that fulfill that JTBD • Speed Efficiency Mid - • Motorcylces, busses, and trains also perform here Example • Efficiency (mileage, ease of usage, etc.) • Motorcycles, hybrids, EVs, busses and Convenience High + trains also perform here • Capacity (how much can I transport) Rational Emotional • Here vans, SUVs and trucks excel Brain / Logos Brain / Pathos • Comfort • Here luxury vehicles surpass others the forum for growth and innovation 5
    • Breaking down the JTBD MatrixRelative Functional Performance: Ex; Ford’s gasoline engine cars Relative Functional Performance In each category of performance we can both Relative Industry compare our relative position and competitive Functional Willingness to Assumptions improvements follow the Disruptive and Sustaining Performance Pay1 innovation curves We can not only understand where we are today Speed / Power High  High + among our relevant competitive set, but also predict whether any systemic changes will influence our Implications position in the future • Because disruption is facilitated by fundamental Capacity High  High + technological advantage in a given characteristic, we can predict changes with some accuracy Disruption in the automotive industry today is being Comfort Mid  Mid + facilitated by electric engines. Currently they are not good enough for traditional uses of automobiles, but they are disrupting the new “around town” market Efficiency Mid  Low - • While they fail on speed and capacity because of technical limitations, they are fundamentally advantaged in efficiency Examples • Traditional non-electric vehicles are Convenience High  Mid + positioned to lose in efficiency • While EV’s are currently positioned poorly in convenience, we know as they improve Rational Emotional along the disruptive curve, that will Brain / Logos Brain / Pathos change the forum for growth and innovation 6
    • Breaking down the JTBD MatrixWillingness to Pay: Ex; Ford’s gasoline engine cars Willingness to Pay Not all of consumer buying behavior can be explained Relative Industry by functional product characteristics Functional Willingness to Assumptions • Affected by not only products being good enough, Performance Pay1 scarcity, but also brand and zeitgeist Despite our abilities to predict functional performance Speed / Power High ++ changes using the low-end disruptive curve, we need to incorporate some piece of art in this analysis Implications • Cultural trends  Zeitgeist Capacity High ++ • Economic, regulatory trends  Scarcity • Interdependent, modular trends  Good enough Currently, the zeitgeist is affecting WtP for efficiency Comfort Mid ++ and capacity and scarcity is affecting convenience in the automotive industry • Efficiency is becoming a more central issue Efficiency Mid -+ • If cultural changes continue to develop environmental awareness, (average) people will start paying premiums for Examples efficiency in their automobiles. Convenience High +- • Currently, the sale is focused on lifetime reduced costs • People will pay less for convenience when it is Rational Emotional abundent for gas vehicles and EV’s Brain / Logos Brain / Pathos • Economic and regulatory incentives suggest this will develop over time the forum for growth and innovation 7
    • The predictive power of the model Ford’s gas automobile business today Ford’s gas automobile business in 5-years Relative Industry Relative Industry Functional Willingness to Functional Willingness to Performance Pay1 Performance Pay1 Speed / Power High + Speed / Power High + Capacity High + Capacity High + Comfort Mid + Comfort Mid + Efficiency Mid - Efficiency Low + Convenience High + Convenience Mid - Rational Emotional Rational Emotional Brain / Logos Brain / Pathos Brain / Logos Brain / Pathos …however, in the near future Ford will only succeed marketing gas cars for those segments that value power andFord can successfully market a line of gas cars outside of the capacity far more than efficiency and comfort (i.e, Industrial) luxury segment because they perform well in each relevant job characteristic that is valued except comfort… To avoid significant disruption they should be investing in electric engines the forum for growth and innovation 8
    • Other industry examples the forum for growth and innovation 9
    • Suggests business development prioritization Example: Stop & Shop grocery Bricks n’ Mortar facing disruption from Online Grocers Stop & Shop’s grocery business today Stop & Shop’s grocery business in 5-years Relative Industry Relative Industryin theRetail industry (not segment specific) Functional Willingness to Functional Willingness to Job Characteristics based on laddering Performance Pay1 Performance Pay1 Inventory Mid - Inventory Mid - Price Low + Price Low + Convenience High + Convenience Low + Experience High - Experience High - Distribution Distribution High + High + / Trust / Trust Rational Emotional Rational Emotional Brain / Logos Brain / Pathos Brain / Logos Brain / Pathos As online convenience improves, those products (dry goods) Currently, retail grocers such as Stop & Shop can maintain where experience is less valuable will likely shift to that channel, profitability because they offer convenience and bundle which maintains inventory and price advantages. However, distribution and experience (i.e., Customers can experience their people will still value the uniqueness of produce which suggests products and cannot trust that online equivalents will distribute grocers will not be displaced. They must instead concentrate on equally fresh goods). Customers will pay a price premium and selling those categories where people value distribution and sacrifice on inventory selection for these job-characteristics experience (ie, Fruit, Vegetables, Meat, Prepared Food). the forum for growth and innovation 10
    • Example: Best Buy Retail (in 2005) Suggests business model innovation need Bricks n’ Mortar facing disruption from Online Consumer Electronics Retailers Best Buy’s business in 2006 Best Buy’s business in 2011 Relative Industry Relative Industryin theRetail industry (not segment specific) Functional Willingness to Functional Willingness to Job Characteristics based on laddering Performance Pay1 Performance Pay1 Inventory High - Inventory Mid - Price Mid + Price Low + Convenience High + Convenience Low + Experience High - Experience High - ? Distribution Distribution High - Mid - / Trust / Trust Rational Emotional Rational Emotional Brain / Logos Brain / Pathos Brain / Logos Brain / Pathos Best Buy built its business in the 90’s and early 00’s based on Based on the disruptive innovation curve, we could assume that convenient reliable stores carrying everything. While online online competitors would be able to surpass BB in those areas shopping was an option in 2006, shipping issues, return policies, where they are fundamentally advantaged – Convenience, Price, and the like were not well understood resulting in high relative and Inventory. Because Distribution of branded products is convenience. Best Buy was able to charge higher prices for the relatively unimportant, this leaves Best Buy needing to change products in their stores because people were not price comparing business models to monetize experience or shutter with online players lacking large fixed cost bases the forum for growth and innovation 11
    • Suggests major problems Example: Tower Records(in 1999) Bricks n’ Mortar facing disruption from Online Music Retailers Tower Record’s business in 1999 Tower’s business in 2004 Relative Industry Relative Industryin theRetail industry (not segment specific) Functional Willingness to Functional Willingness to Job Characteristics based on laddering Performance Pay1 Performance Pay1 Inventory High - Inventory Low - Price Low + Price Low + Convenience High + Convenience Low + Experience Low - Experience Low - Distribution / Trust High + Distribution / Trust Mid + ? Rational Emotional Rational Emotional Brain / Logos Brain / Pathos Brain / Logos Brain / Pathos However, in 1999, it would be possible to leverage disruptive In the late 90’s Tower provided almost everything better than it’s theory to predict that improvements in online retailing would lead competitors. Their were more SKUs, more exclusive distribution to losses in relative performance where the new technology was agreements, and stores were conveniently located. fundamentally advantaged; Inventory, Price, and Convenience. For this reason they were able to chanre The only area Tower could have protected was exclusive distribution which became impossible as Apple gained scale the forum for growth and innovation 12
    • Experiment: Fill out your own Pick an industry in disruption or that has been “ ” in “ ” “ ” in “ ” Relative Industry Relative Industry Functional Willingness to Functional Willingness to Performance Pay1 Performance Pay1____________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ____________________ Rational Emotional Rational Emotional Brain / Logos Brain / Pathos Brain / Logos Brain / Pathos … … the forum for growth and innovation 13
    • Supporting the JTBD Matrix Assumptions the forum for growth and innovation 14
    • Supporting the JTBD matrix requires referenceto well-documented past theory 1 Support JTBD components 2 Present predictive theories relative functional performance 3 Present predictive theories for willingness to pay the forum for growth and innovation 15
    • 1Products perform based on multiple JTBDsThough Jobs-to-be-done theory provides companies with a wonderful tool to remindthemselves of the right use cases and substitutes for their products, it is an oversimplification to believe that a product should only have one job • Products, in fact, are hired by users to do multiple jobs – i.g., My Watch – I hire my watch, an A.B.Art watch to perform two jobs – Make me more appealing visually (by accessorizing my outfits) – Express that I am different (by being a non-mainstream brand) – Another person might hire the same watch to perform two jobs as well, though it is quite possible those jobs are not the same – Make that person more appealing visually (by accessorizing his outfits) – Provide a sense of nostalgia (by requiring a manual wind)Because products are hired by different people to perform different roles, companiesoptimize product performance by understanding the complete set of job-characteristicsfor all jobs to be done, and prioritizing how much to invest in each so that a product canbe manufactured at M.E.S. and best complete a set of jobs-to-be-done the forum for growth and innovation 16
    • Job characteristics are the primary drivers ofproduct or service “hiring” Certain assumptions drive this …which yields individuals choosing economic theory… among imperfect bundles People have varying tastes and needs that for air conditioners cannot be measured and predicted Preference tree (randomness in preferences) Products cannot be manufactured efficiently to complete the needs of all individuals People seek to optimize utility subject to We prioritize and judge various bundles of resource constraints options that allow us to fulfill the distinct tasks we “hire” products to do …Among others • But the job of the corporation is maximize value by optimizing job characteristics to drive profitability Daniel McFadden was awarded the Nobel prize for his work in discrete choice theory in 2000 the forum for growth and innovation 17
    • Understanding the drivers: Functionalperformance Drivers of Relative Functional Performance Relative functional performance represents the Relative Industry Functional Willingness to technological capabilities of a product, as it relates to a job Performance Pay1 to be done or job characteristic Speed / Power High  High + • We tend to require at least a minimal level of performance along these axes, but companies must excel in one or more to differentiate from a competitive set Capacity High  High + – i.e., Apple is known for product design Comfort Mid  Mid + – i.e., Bang & Olufsen is known for sound quality Efficiency Mid  Low - Though some sustaining innovations can influence this side of the matrix, the only predictable pattern of change Convenience High  Mid + will occur through disruption • We know that disruptive products outperform sustaining Rational Emotional products in at least one job-to-be-done or job Brain / Logos Brain / Pathos characteristic • When a low end disruptor is noticed, it is reasonable to believe it will outperform the incumbent based on its differentiated characteristic in the near term the forum for growth and innovation 18
    • 2The disruptive curve provides someinsight into JTBD future Disruptive theory tells us how …however, a product’s performance is products performance will improve.. actually its ability to fulfill JTBDs A product’s performance must be thought of as the weighted PsJ1 average value of performance PsP P on the jobs to be done Ps = ∫(wJ1+wJ2) PsJ2 PD PD T T The average performance on all JTBDs will increase over time, but not necessarily at the same rate the forum for growth and innovation 19
    • 2Often the disruptor is fundamentally advantagedon one or more JTBD axes Disruptors fundamentally outperform incumbents on one or more JTBD… …Which can be explained Disruptive innovations all have one thing in Ps = ∫(wJ1+wJ2+wJ3+…+wJn) PsJ1 common – a scaleable, systemic, advantage inP Ps one or more job characteristic PDJ1 • Most often these are technical advantages PsJ2 – i.e., Cloud access, Electronic storage • Sometimes, true business model advantages can create legitimate disruptive PD opportunities – i.e., Incubators vs. Consulting in entrepreneurial settings PDJ2 The performance increase in low end disruption can be attributed to the ability to PD = ∫(wJ1D+wJ2D+wJ3D+…+wJnD) improve against other job characteristics T the forum for growth and innovation 20
    • 3Understanding the drivers: Willingness to pay Drivers of willingness to pay Scarcity, perceived or real, is the primary driver of Relative Industry Functional Willingness to willingness to pay for a job-to-be-done Performance Pay1 Speed / Power High ++ Scarcity can be influenced through two primary methods • Perceived scarcity can be influenced through traditional Capacity High ++ marketing and advertising – Examples include Apple’s premium for design Comfort Mid ++ driven by its ability to influence shoppers to accept no substitute for products despite a range of Efficiency Mid -+ alternatives • Real scarcity is influenced through the laws of supply Convenience High +- and demand – Various regulation and economic trends influence Rational Emotional this driver of WtP Brain / Logos Brain / Pathos – In perfect competition (no brands, no IP, etc.) all pricing should be driven to marginal profit = 0 – This creates a pricing problem where marginal cost = 0 the forum for growth and innovation 21
    • 3Traditional marketing changes WtP by increasingmarginal utility and increasing perceived scarcity LDMR changes influence how much of And branding changes can make a product the customer demands substitutes seem inadequate U P Traditional LDMR is implicitly acknowledged in the disruptive curve’s customer demand Q Q If we perform conjoint analysis, willingness to pay for future Traditional economic theory suggests that two identical product improvements can be predicted – this is real scarcity, products should be in the same supply demand plane do people consider the market to host an abundance of products that are good enough… However, often through relative positioning companies are able to convince consumers that substitutes possible – this However, this can be influenced by convincing customers creates augmented supply curves (eliminating some that they need more in the future suppliers) the forum for growth and innovation 22