All successful companies have a clear strategic direction of where to play (their target market) and how to win (their unique value proposition). Often times their competitive strategy is based on providing a better product and service solution than existing competitors.
The “better product” strategy in many situations turns out to be an excellent choice. Many companies have and still will win with this strategy. But overtime, a product orientation leads to specmanship and creating functions and features that the customers don’t value and won’t pay for.
In the heat of the battle, companies lose sight of the true important jobs that people hire their products to get done. Instead they base their product strategy on their competitors’, resulting in undifferentiated products that overshoot the market. A waste of development resources by any definition.
At some point in time, the only way to win customers and beat the competition is to start lowering the price. It becomes a race to the bottom. It’s what Kim and Mauborgne call a red-ocean strategy.
But it gets worse!
While competitors are busy competing in their red-ocean, along comes an industry outsider with a better way to get an important job done. At first the red-ocean players ignore the outsider because the upstart’s solutions just simply don’t address what the market wants.
But the upstart isn’t competing for red-ocean customers. It’s competing for non-consumers of the current solutions. This is the what Clayton Christensen defines as disruptive innovation. Using a “good enough” solution to attract non-consumers of existing products. Kim and Mauborgne refer to this as a blue-ocean strategy.
Examples of disruptive strategies include the transistor radio back in late 50’s and early 60’s versus hifi stereos. PC’s versus mini computers. And smart phones & cloud computing technology platforms vs PC’s and client software.
It’s not a question of time, but a question of when a product oriented market strategy will eventually become a red-ocean or disrupted. It’s the nature of a competitive landscape.
So what’s next? Where to compete, how to win?
If you want to escape the red-ocean trap, you need to change your “product” oriented focus to a “problem” oriented focus using the jobs-to-be-done innovation lens.
It begins by understanding that throughout a day, people have important jobs that they must get done. By discovering what customers are struggling with and why they aren’t achieving 100% satisfaction in getting the job done, there’s a good chance a market opportunity exist.
A salient concept of the jobs-to-be-done innovation theory is that core jobs are stable overtime and are solution independent. These jobs are both important and essential to conduct their daily lives and achieve goals.
Core jobs don’t fundamentally change that much. What changes is HOW to get the job done. This is often enabled by technology.
For example, lighting a room is a core job. In the early days, people had to use candles. Then along came oil lamps, then gas lamp, then electric incandescent lamps, and today LED lights. These are all point in time product solutions. They are just means to an end of getting the job of lighting a room done.
Perhaps in the not too distant future, lighting a room will be enhanced by intelligent lights that get the job of lighting a room done perfectly as defined by the desired outcomes people want to achieve.
New technologies will be invented to get the job of lighting rooms done perfectly. Of course we could go one step further and discover that the real core job is to “see in the dark” perfectly.
Maybe there will be better ways to achieve seeing in the dark without lighting? Or there are constraints and circumstances where lighting is not a good option. Like for special forces doing missions at night. Or driving your car at night where it’s impossible to light the whole landscape.
Expanding the playing field based on the Jobs-To-Be-Done opportunity matrix
When a company finds itself competing in a red-ocean, or disrupted by an outside the industry competitor, it will need to seek a new strategic direction and game plan to create it’s next business growth opportunity.
The jobs-to-be-done opportunity matrix (figure 1), provides a visual map of strategic options where a company can define its next growth opportunity.
Figure 1: Jobs-to-be-done Opportunity Matrix
The lower left quadrant labeled “Core,” is where a company competes today. There can be substantial growth left in this quadrant depending on the growth rate of the industry and a firm’s ability to execute sustainable innovation. As discussed earlier, the challenge of this quadrant is that it will eventually turn into a red-ocean as more competitors enter the market and compete with each other.
The upper left quadrant labeled “Adjacent”, is where a company competes for new target of customers. One way to do that is to enter a new market region. This may or may not require modification of existing solutions to fit the local market.
The other way to compete is to create a blue-ocean strategy by identifying what Christensen calls “non-consumers” of existing solutions. And creating a new offering tailored to convert non-consumers into consumers. This is often accomplished by making the offering simpler, more convenient, more accessible and cheaper than the core/mainstream solutions.
The lower right quadrant label “Related,” is to serve existing customers by getting more of their important jobs done better. For example, a related job to lighting a room is to keep the temperature of a room at a comfortable level. And perhaps creating a more delightful experience by minimizing unwanted distractions like phone calls when a person doesn’t want to be disturbed.
The upper right quadrant labeled “Diversification,” is the most bold and potential rewarding quadrant of them all. It is also the most risky of them all because in theory these are new to world/ new to market products. They often evolve from new technology capabilities, and are untested in the market.
Fundamentally, to succeed in the upper right quadrant, the innovation must address an important job that customers ultimately want to get done. As the old saying goes: “no problem, no profit.”
Choosing the right quadrant to build an innovation game plan
As with all things related to complex organizations like a business, the best quadrant to choose to build a new innovation game plan around depends on the companies circumstances and its core capabilities. There is no single answer as we shall see in future articles in this series.
The key takeaway is to understand a new product will only succeed if it gets an important job done for the customer, better than any of the alternative solutions they have to choose from.
Here’s to getting important jobs done perfectly!
Kevin