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Book Notes: "Competing Against Luck” by Clayton Christensen

Summary

Competing Against Luck by Clayton Christensen (co-written with Karen Dillon, Taddy Hall, and David Duncan, 2016) is an in-depth exploration of the author's theory of "Jobs to Be Done" (aka "Jobs Theory"). The theory explains why consumers might select one product or service over another. Guided by the insights of Jobs Theory, businesses can develop and execute superior innovation to gain a competitive advantage over their competitors and, in many instances, charge a premium to boot.

The core idea behind Jobs Theory is that a customer isn't interested in purchasing a product, a customer is interested in a solution to their problem. This problem, often very specific and highly contextual, is what Christensen defines as a "job." Jobs are pervasive in our everyday lives.

Take breakfast, for instance. We might have a job each morning that requires us to eat something before heading into work. If we are in a rush, we might be in need of something that is easy to prepare, can be quickly consumed, is nutritious, satisfying, and perhaps even portable, so we can eat it while commuting. This is a very specific job with a particular set of needs. There are a variety of products that might vie to satisfy that need: toast, a granola bar, a banana, a smoothie, or a breakfast sandwich. On the weekend, however, we might have a very different job in mind for our morning meal. Instead of a quick bite on-the-go, we might want a leisurely sit-down meal where we don’t have to cook anything and can enjoy the company of friends or family. This particular job might be satisfied by a long weekend brunch at a nice restaurant with a table for a large party. Both jobs involve breakfast, but each is solved in different ways owing to their different needs and circumstances.

When a consumer selects a product to satisfy a need, Christensen likens this act to "hiring" that solution to help them make progress in that specific context or circumstance. The consumer who purchases a quarter-inch drill isn't interested in the drill per se. What the consumer is really interested is making quarter-inch holes. The former (the drill) is merely a means to an end (the holes). Many organizations confuse or conflate means and ends. The result is a suboptimal strategy. In the case of the drill example, it might mean the company adds unnecessary bells and whistles to their drill under the wrongheaded assumption that adding more functionality will further enhance the customer experience. Meanwhile, the customer, who just wants a quarter-inch hole might become frustrated if the added complexity of the devices presents an obstacle to that objective.

Consider the case of an automobile company. We might purchase or "hire" a car to perform the job of getting us to work safely, and reliably each morning. However, if we wanted to commute to work without having to worry firsthand about the traffic we could hire an Uber to drive us, ride a bicycle, or take public transit. A traditional automaker might view itself rigidly as a company focused on a product—the design and manufacture of superior vehicles. But a jobs-focused organization will see itself differently: as a company in the business of mobility solutions. Jobs Theory offers a broader lens for understanding where and how to innovate and for intelligently reassessing your role in a rapidly changing and complex market.

Netflix CEO Reed Hastings understood this point intuitively when he stated that Netflix is competing against far more than other streaming video services: “"Really we compete with everything you do to relax. We compete with video games. We compete with drinking a bottle of wine…We compete with other video networks. Playing board games."

Understanding the particulars of a "Job to Be Done" helps organizations better service their customers. It highlights avenues for innovation and where to focus one's efforts. The theory posits that it's not enough to study a customer, one must study and understand the customer problem. And these problems frequently run deeper than their functional dimensions, they often include social and emotional characteristics as well.

Christensen is best known for an earlier book, The Innovator's Dilemma, which laid out his theory of disruptive innovation. This theory explains how companies react to new market entrants who provide simpler and less expensive solutions. Jobs to Be Done complements disruption theory by providing a framework for identifying innovation opportunities and a means for effectively pursuing them.

Unlike disruption theory which always struck me as a kind of post hoc analytical framework, Jobs to Be Done is a far more pragmatic, predictive problem-solving tool. Christensen explains the theoretical framework clearly in the early chapters and, for the remainder of the book, presents numerous detailed case studies to hammer home the ins and outs of Jobs Theory. The result is a book that feels repetitive in later chapters. The trade-off for this seeming tediousness is that readers will grain a thorough understanding of Christensen’s ideas. And despite any criticisms about the idea’s presentation, Jobs Theory is a business framework and thinking tool well worth knowing.

Pros: Jobs Theory is a pragmatic lens for thinking about problems. The author provides no shortage of interesting examples and case studies to learn from.

Cons: The book gets repetitive after the first three chapters.

Verdict: 7/10


Highlights

Section 1: An Introduction to Jobs Theory
Introduction: Why You Should Hire This Book

  • Successful businesses help people make progress:

    • People face daily struggles, challenges, and tasks to overcome.
    • We seek solutions to help us accomplish these tasks.
    • Innovative businesses provide solutions for these struggles.
  • Innovation can be more predictable (i.e., better than luck) if we think about it in the correct way (via the lens of "Jobs to Be Done").

  • The fundamental problem: the data most companies use to make product decisions cannot predict which ideas will succeed.

    • Psychographic and demographic data cannot explain why consumers make the choices they do.
    • Much of the data companies collect provides a correlation, not a causation.
    • Nate Silver: "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."
  • Christensen believes the critical question that innovation must answer is: "What job did you hire that product to do?"

    • "When we buy a product, we essentially 'hire' something to get a job done. If it does the job well, when we are confronted with the same job, we hire that same product again. And if the product does a crummy job, we 'fire' it and look around for something else we might hire to solve the problem."

    • Examples of jobs:

      • I want to pass time while waiting in line.
      • I want to find a more fulfilling career.
      • I need to dress for an out-of-town business meeting after the airline lost my suitcase.
      • I need to pack a healthy lunch for my daughter to take to school.
    • The most successful companies understand how their solutions will help consumers make progress towards their goals.

  • Jobs to Be Done is a theory focused on understanding your customers and their struggle for progress to arrive at a solution that solves their problem.

Chapter 1: The Milk Shake Dilemma

  • Disruptive innovation: Christensen's earlier theory.

    • Explains how innovations transform existing markets.
    • Can occur when incumbent solutions become complicated and expensive.
    • An upstart introduces an alternative solution that offers simplicity, convenience, accessibility, and affordability.
    • The disruptor causes a seismic shift in the competitive landscape and redefines the industry.
    • The theory explains the reaction and response of incumbents to innovation.
    • The theory does not explain how to find innovative opportunities.
  • Case study: The milkshake study.

    • A fast food chain wanted to sell more milk shakes.

    • Christensen provided consulting. He had the company ask: "What job arises in people's lives that causes them to come to this restaurant to 'hire' a milk shake?"

      • Christensen discovered that the "job" was context-dependent.

      • Many people purchased milkshakes alone in the morning. Their job: They had a long commute and wanted something that was substantial but took a long time to finish.

        • Competition in this context included bananas, bagels, donuts, breakfast bars, etc.
        • Could or should the restaurant consider new solutions to help people solve this job?
      • Naturally, there are other possible "jobs" the milkshake is fulfilling besides the morning commute one.

        • Important: However, trying to find an "average" or "aggregate" across multiple context might result in a solution that solves nobody's problem.
        • The morning commute "job" is very specific and would require a very specific set of responses or strategies from the restaurant to provide an optimal solution.
  • "Jobs Theory provides a powerful way of understanding the causal mechanism of customer behavior, and understanding that, in turn, is the most fundamental driver of innovation success."

    • The value of the theory is that it can help predict future successes.
    • The theory requires specific and precise solutions for the highly context-dependent jobs discovered.
    • Identifying the Job to Be Done is a starting point. A company uses this insight to develop a comprehensive strategy to deliver products and services based on this insight.

Chapter 2: Progress, Not Products

  • Case study: Toyota

    • Japanese auto manufacturers improved their manufacturing quality in the 1970s and 1980s.

    • Two key influences:

      • W. Edwards Deming: Engineer and management consultant. Considered the father of modern quality control.
      • Joseph M. Juran: Engineer and management consultant. Author of The Quality Control Handbook (1951)
    • The carmaker developed processes to design defects out of 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…Defects turned out to have very specific causes and, once identified and understood, these causes could be corrected and the process altered or removed."

  • Core ideas of Jobs Theory:

    • "Customers don't buy products or services; they pull them into their lives to make progress."

    • Job: The progress that a person is trying to make in a specific context or circumstance.

    • Progress: Movement toward a goal or aspiration.

    • Circumstance: The specific context in which a job arises. The circumstance strongly influences the job.

      • The circumstance is more important than product attributes and customer characteristics.
      • Examples of circumstances: Where am I? When is it? While doing what? What will I be doing next? Life-stage: nearing retirement, just out of college. Family status: newly divorced, children at home. Financial status: in debt, high net worth.
    • Jobs are complex: in addition to functional requirements they also have social and emotional needs.

      • Example: Childcare

        • Functional: Someone to provide essential services to a minor.
        • Emotional: Can I trust this childcare solution?
    • Jobs have specificity and are different from needs.

      • A need: "I need to eat."
      • A job: "I need something high in protein after my workout to build muscle that I can eat on the run."
  • "Jobs Theory doesn't care whether a customer is between the ages of forty and forty-five and what flavor choice they made that day. 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."

  • Example job: Adolescent communication without parental intervention.

    • Past solutions: passing notes in the hallway at school, pulling the telephone cord into their room and shutting the door.
    • Current solution: The Snapchat smartphone app that discards messages.
  • Jobs Theory uses a more expansive view of the competitive landscape:

    • Reed Hastings on Netflix: "Really we compete with everything you do to relax. We compete with video games. We compete with drinking a bottle of wine…We compete with other video networks. Playing board games."

Chapter 3: Jobs in the Wild

  • Case Study: SHNU (Southern New Hampshire University)

    • SHNU wanted to expand enrollment and its online education program.

    • SHNU students were nontraditional and hiring the school for different reasons than a traditional school:

      • These students were older on average (30 years old).
      • Many were juggling work and family.
      • They wanted convenience, customer service, a credential, and fast course completion.
    • SHNU changed its operations to accommodate these students:

      • Online applicants received a phone call within 10 minutes of an inquiry.
      • Instead of the online program being secondary to the school's mission, it became the focus and was given significant personnel and resources.
      • The school changed its advertising campaign to emphasize life-long learning.
      • The school built support services to ensure course completion.
  • "Organizations that lack clarity on what the real jobs their customers hire them to do can fall into the trap of providing one-size-fits-all solutions that ultimately satisfy no one."

  • Uncovering your customer's job opens up new avenues for growth and innovation.

Section 2: The Hard Work—and Payoff—of Applying Jobs Theory
Chapter 4: Job Hunting

  • Case Study: Bob Moesta and the condominium development targeting retirees.

    • Moesta discovered that prospective buyers were unable to complete the purchase transaction. Many were concerned about what to do with their dining room table.

    • Moesta realized that the dining room table was a symbol of family memories. Buyers were hesitant to give up on the past to downsize their homes.

    • Moesta: "I went in thinking we were in the business of new home construction. But I realized we were instead in the business of moving lives."

    • Moesta adjusted the home sale strategy accordingly:

      • They redesigned the units to have larger, classic dining room tables.
      • His company provided moving services, two years of storage, and a sorting room (to decide what to keep and what to discard). These moves reduced the anxiety of losing their past belongings.
      • "Everything was designed to signal to buyers: we get you. We understand the progress you're trying to make and the struggle to get there."
  • "Jobs Theory is an integration tool—a way to make sense of the complex amalgam of needs that are driving consumer choices in particular circumstances."

  • Five ways to uncover jobs:

    1. Look for unresolved jobs in your life or those close to you.
    2. Look for situations where people have no solution and opt to do nothing instead.
    3. Look for situations where people use hacks, workarounds, and compensating behaviors.
    4. Look for things that people don't want to do (the stuff they hate doing).
    5. Look for situations where people are using products in unusual or unintended ways.
  • Lastly: pay attention to the social and emotional dimension of a job. Most companies pay far more attention on the functional dimensions of a product.

Chapter 5: How to Hear What Your Customers Don't Say

  • Consumers are bad at articulating what they want. Often a state preference does not confirm to the actual, revealed preference or desire.

  • Business data only tracks one part of the hiring process:

    • The Big Hire: This is the moment a consumer purchases a product.

      • Barriers: What gets in the way of making this purchase decision?
    • The Little Hire: This is the subsequent moment a consumer actually uses or consumes that product.

      • Barriers: What gets in the way of actually using the product? Does it solve the problem?
    • Example: If you purchase a dress, that's the big hire (companies track this). If you cut off the tags and actually wear the dress, that's the little hire (companies often fail to track this).

  • A customer story is a way to create a detailed narrative about a job or a struggle. The findings from developing the story can be used to define a superior product or service.

  • Two important forces that compel a consumer to a new solution:

    • The push of the unsatisfied job.
    • The pull of a new solution.
  • Two important forces that prevent consumer adoption:

    • Inertia caused by current habits.
    • Anxiety of acquiring and implementing something new.

Chapter 6: Building Your Résumé

  • "New products succeed not because of the features and functionality they offer but because of the experiences they enable."

  • Case study: American Girl Dolls

    • As of publication, the company had sold over 30M dolls and was earning $500M in annual sales.

    • American Girl Dolls warrants a premium price because it sells more than a doll, it sells an experience.

      • Dolls come with popular historical books.
      • Stores are special outings for families.
      • Stores have restaurants, doll hospitals, beauty parlors, movies, and even a live theater.
    • "Preteen girls hire the dolls to help articulate their feelings and validate who they are—their identities, their sense of self, and their cultural and racial background—and offer them hope that they can surmount the challenges in their lives."

    • Mothers hire the dolls to connect with their daughters in a cross-generational conversation.

  • The job spec: A blueprint for the innovator.

    • Answers key questions: "What do I need to design, develop, and deliver in order to solve the customer's job?"
    • Captures functional, emotional and social aspects of the product or service.
    • Expresses the desired progress, tradeoffs, and competing solutions.
    • Highlights the obstacles that need to be overcome.
  • Organizations create competitive advantages in the level of detail and effort they are willing to expend on satisfying the customer's job.

  • Case study: IKEA

    • "IKEA's entire business model—the shopping experience, the layout of the store, the design of products and they way they are packaged—is very different from the standard furniture store."

      • Most competitors focus on a customer segment or a product category.

        • Example: Retailers who sell to wealthy clients, business clients, low-income clients. Retailers who sell modern furniture, furniture for business, etc.
      • IKEA's Job to Be Done: "I've got to get this place furnished tomorrow because the next day I have to show up at work."

      • IKEA has created an integrated solution and experience:

        • Designated child-care areas.
        • In-house restaurant, café, and ice cream.
        • Huge warehouses with ample inventory so that customers can make immediate purchases.
        • Flat-packed cartons that can be transported in standard passenger vehicles.
        • Products that require minimal tooling and can be assembled by anyone.
      • Competitors to IKEA:

        • Traditional stores will take days or weeks to deliver a product.
        • Craigslist requires tremendous effort by the purchaser.
        • Unfinished furniture requires effort from the purchaser.
  • Case study: Uber

    • A superior solution to the problem of on-demand mobility.

    • Mediating ride hailing through an easy-to-use app eliminates many obstacles to requesting rides:

      • Riders need not compete on the corner to hail a cab.
      • Riders know, via the app, who will be picking them up and how many minutes they will need to wait.
      • Riders don't have to fuss about payment since payment and tip is handled via the app.
  • Purpose brands: Brands so powerful that they become synonymous with the job they perform:

    • Examples: Uber, TurboTax, Disney, Mayo Clinic, Harvard, Match.com, OpenTable, LinkedIn, FedEx, Starbucks, Google.

    • A purpose brand can succeed in closed or commoditized markets by prioritizing the specific Job to Be Done better than the competition:

      • Pixar: Made movie goers care about the studio producing films.
      • Apple: Made technology elegant and easy to use.
    • "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."

    • Alternatively, brands that fail to nail the job are often commoditized and interchangeable. They must compete on price.

      • Examples: Airlines, hotel chains, rental-car companies, PC-clone makers.

Section 3: The Jobs to Be Done Organization
Chapter 7: Integrating around a Job

  • A process is a systematic sequencing of actions to complete a task reliably.

    • Processes include interactions, coordination, communications, and decision-making.

    • Resources are fungible. Products can be copied. Well-crafted processes can create a competitive advantage and, for a variety of reasons, are often difficult to see and therefore mimic in totality.

      • Example: Toyota famously allows competitors to view its manufacturing facilities.
      • Toyota had complex proprietary and often tacit processes that drove the overall manufacturing process.
      • "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."
      • "Processes are intangible; they belong to the company. They emerge from hundreds of small decisions about how to solve a problem."
    • A process aligned with a customer Job to Be Done shifts the onus of solving the problem from the customer and places it on the vendor.

  • Job-centric processes must measure the proper metrics to ensure ongoing alignment with solving the customer's job.

    • Remember to collect and analyze data that is most critical to the customer.
    • Define metrics and track performance against these customer-centric metrics (rather than industry standard ones, easily gathered ones, or product-centric ones).
    • "When processes are not aligned with a compelling customer job, optimizing the process means getting better and better at doing the wrong thing."

Chapter 8: Keeping Your Eye on the Job

  • "People don't want to buy a quarter-inch drill, they want a quarter-inch hole."

    • We frequently confuse or conflate the means (the drill) for the goal (the hole).
    • Customers don't want products, they want solutions to their problems.
    • Companies need to take great care to define themselves by their solutions (aka the Job to Be Done) rather than the product.
  • Case study: V8 brand vegetable juice

    • V8 was sold alongside other beverages: juices, soda, water, etc.
    • However, V8's true job was not quenching one's thirst. The real job was that people need to eat their vegetables daily. For some, this is challenging. V8 provides an easy way to get your vegetables. Its competition is real vegetables that you might need to wash, peel, prep and cook.
    • "Competing against apple juice is tough. Competing against celery is like going downhill on ball bearings."
    • Unfortunately, V8 later lost track of this Job, and started competing alongside other beverages again with a bloated and confused product lineup. Sales dropped accordingly as V8's value proposition lost clarity.
  • Three fallacies of innovation data:

    1. The Fallacy of Active vs. Passive Data

      • Active data is operational data which we view as rigorous and objective.
    • Companies tend to optimize around the active data.
    • Active data can result in optimizing for the wrong thing and lead us away from Customer Job (passive data).
    1. The Fallacy of Surface Growth

      • Companies frequently increase top-line growth by servicing a broader range of use cases and customer needs.
      • This approach can result in the core job being neglected and mismanaged.
    2. The Fallacy of Conforming Data

      • Data-based conclusions may reinforce our existing biases or narratives (aka we see what we want to see).
  • We overvalue quantitative data over qualitative data.

    • However, precision is not the same as accurate. In other words, blindly accept the veracity of data because of its specificity.
    • All data is built upon human bias and judgment.
    • Numerical and verbal data are abstractions of reality.
    • Data is not the phenomena (aka "The Map is Not the Territory").
    • Greater emphasis should be placed on what data to collect (as much as the act of collecting and later analyzing it).

Chapter 9: The Jobs-Focused Organization

  • The Jobs to Be Done framework provides companies with a strategic compass.

  • Case study: Intuit's TurboTax

    • Intuit got caught up in "feature chase" where customers request new features and a company, lacking a coherent long-term strategy, adds new features to their offering indiscriminately.

    • The customer Job was: Complete my annual tax filing quickly and painlessly.

    • Maintaining focus on the Job allowed Intuit to make product decisions that were better aligned with their customers.

      • Example: Intuit added a long and complex online "interview" to capture customer data. However, recognizing that this was cumbersome to the end-user ("make my filing quick and painless"), Intuit prioritize auto-populating as much data as possible based on prior filings and other importable tax documentation.
    • "Staying relentlessly focused on the job enables—and even compels—employees to new and better ways of working." Understanding the Job to Be Done helps achieve a high level of focus and prioritization.

  • Benefits of a jobs-focused organization:

    1. Enables distributed decision-making with a high level of clarity and accuracy to the corporate mission.
    2. Aligns resources against what matters most.
    3. Unites the organization around its more important objective.
    4. Makes it easy to identify what needs to be measured to maintain ongoing success.
  • "Jobs to Be Done provides not just a one-off improvement idea, but an enduring innovation North Star."

Chapter 10: Final Observations about the Theory of Jobs

  • Christensen discusses how he came up with the idea.

  • "Jobs as we've defined them here, take work to uncover and understand properly, this dubbing something a job shouldn't roll off the tongue with minimal thought."

    • A Job to Be Done cannot be described only with adjectives and adverbs. (e.g., "I want to eat faster" or "I want something convenient."). These are imprecise or vague jobs.

    • A Job needs to be described at the right level of abstraction to be useful.

      • "If the architecture of the system or product can only be met by products within the same product class, the concept of the Job to Be Done does not apply. If only products in the same class can solve the problem, you're not uncovering a job"

      • Milkshake example:

        • Not a job: "I need to have a chocolate milk shake that is in a twelve-ounce disposable container."
        • Valid job: "I need something that will keep me occupied with what's happening on the road while I drive. And also, I'd like this to fill me up so that I'm not hunger later."
      • Weatherproofing a building example:

        • Not a job: "I need a thin sheet of material that we can wrap around a house."
        • Job: "We're building a new house here in Boston, where the cold, damp air of winter and the hot, humid air of summer both easily penetrate walls."
      • Remember: A job is not a technical specification or requirement.



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