Is this the access to profitable revenues, loyal customers and enduring success? (Part II)

In this post I continue the conversation which I began with the last post.

Warning: don’t collapse ‘job to be done’ with customer needs

How did the philosopher Heidegger put it? Yes, he pointed out that you/I always approach that which shows up in our lives with an already existing horizon of understanding.  Put simply, that means that our default way of being is such that we use our existing ‘frame of reference’ to make sense of the new.  Which means that we will distort the new to fit into the old and thus squeeze all value out of the new.  And I have noticed that some of you have collapsed ‘job to be done’ with ‘customer needs’.  No, no, no.  They are distinct even if they are related – think about the two sides of a coin.  If you don’t get that now, you will by the end of his post provided you keep an open mind.  Let’s listen to Clayton Christensen.

Milkshake: Cheaper? Chunkier? Chocolatier? 

In his book How Will You Measure Your Life?  Clayton Christensen writes that that a big restaurant chain wanted to increase sales of their milkshakes. So the company spent months studying this issue.  It bought in customers who fit the profile of the milkshake consumer and asked them all sorts of questions.  Questions like:

  • Can you tell us what we need to do to improve our milkshakes so you would buy more of our milkshakes?
  • Do you want them chocolatier? Cheaper? Chunkier?

Using this customer feedback the company worked and worked on making the milkshake better.  The impact on sales?  No impact on sales or profits whatsoever.  I say you might want to really hear this and make a note of it before your rush out, gather feedback and get busy making changes.

One of Clayton Christensen’s colleagues looked at the situation and brought a completely difference perspective to the matter at hand.  He asked the following question:

“I wonder what job arises in people’s lives that causes them to come to this restaurant to ‘hire’ a milkshake?”

This question opened up a new domain of enquiry.  Clayton’s colleagues stood in a restaurant hours on end observing – paying careful attention to what was happening: “What time did people buy these milkshakes? What were they wearing?  Were they alone? Did they buy other food with it? Did they eat it in the restaurant or drive off with it?”

What did they find?  They found that nearly 50% of the milkshakes were bought in the early morning. And they were bought by adults who were almost always on their own. It was almost the only product they bought and almost all of them got in a car and drove off with their milkshake.

On another morning, as customer left with milkshake in hand, Clayton’s colleagues asked them questions designed to elicit the job that these customers were hiring the milkshake to do.  What did they find?  They found that these customers had a long boring ride to work. “They needed something to keep the commute interesting. They weren’t really hungry yet, but they knew that in a couple of hours, they’d face a midmorning stomach rumbling.”  

What else did Clayton’s colleagues learn?  They learnt that customers had hired bananas, doughnuts, bagels, candy bars. And the milkshake was the best product for the job. Why? “It took a long time to finish a thick milkshake with that thin straw.  And it was substantial enough to ward off the looming midmorning hunger attack”.

Was this the end of the breakthrough insights? No. Clayton and his colleagues discovered that the same product – milkshake – was hired for a fundamentally different job.  “Instead of commuters, the people who were coming in to buy milkshakes in the afternoon were typically fathers.…… I recognised that I had been one of those dads…. and I had the same job to do when in that situation.  I’d been looking for something innocuous to which I could say “yes”, to make me feel like a kind and loving father.”

Who well did the milkshake do the job that the fathers hired it to do?  Not well at all.  Observations showed the children would take a long time to finish the thick milkshake through the thin straw. And after a while the fathers would become impatient to leave and so half the milkshake would be get thrown away.

What is the profound learning here?

I cannot do better than Clayton Christensen so let me share his words with you:

“If our fast food chain asked me, “So Clay…. how can we improve the milkshake so that you’ll buy more of them?      Thicker? Sweeter? Bigger?” I wouldn’t know what to say, because I hire it for two fundamentally different jobs…. when they averaged up the responses ……demographic segment that has highest proclivity to buy milkshakes….. to develop a one-size-fits-none product that doesn’t do either job well. 

On the other hand, if you understand that there are two different jobs that the milkshake is being hired to do, it becomes obvious how to improve the milkshake.  The morning job needs a more viscous milkshake, which takes even longer to suck up. You might add in chunks of fruit – but not to make it healthy, because that’s not the reason it’s being hired…..And, finally, you’d wheel the dispensing machine out from behind the counter to the front, install a prepaid swipe-card so that commuters could run in, gas up and go……

The afternoon make-me-feel-good-about-being-a-parent job is fundamentally different. Maybe the afternoon milkshake could come in half sizes; be less thick……” 

Words of wisdom

I wholeheartedly agree with Clayton Christensen’s words of wisdom:

“There is no one right answer for all circumstances.  You have to start by understanding the job the customer is trying to have done.” 

Is this the access to profitable revenues, loyal customers and enduring success? (Part I)

Being a physics graduate I value an insightful theory that opens up new domains of enquiry and provides access to breakthroughs in performance.  Now and then I come across a business author who nails it, who provide such a theory.  It occurs to me that Clayton Christensen nails the essence of the customer-centric approach to doing business. And it just happens to be at the core of my consulting work.  Let’s start.

Do you have a deep understanding of what problems customers are trying to solve?

Let’s start with a truth that is so neglected. When I say neglected, I am not saying that you have not heard this truth.  I am clear that many of you will have heard of it – most likely it is a platitude.  And that is the very reason that this truth is not taken to heart, not lived, not given life in the world of business.  What truth?  This is what Clayton Christensen says in his marvellous book How Will You Measure Your Life?(bolding is my work):

“Many products fail because companies develop them from the wrong perspective.  Companies focus too much on what they want to sell their customers, rather than what those customers really need. What’s missing is empathy: a deep understanding of what problems customers are trying to solve.  The same is true of our relationships: we go into them thinking about what we want rather than what is important to the other person.  Changing your perspective is a powerful way to deepen your relationships.”

Why does this passage speak to me? It is my experience. Time after time in my consulting work I am struck by the truth of this understanding.  A lack of empathy and understanding for the customer as a human being who becomes a customer of the organisation in order to ‘hire’ that organisation – through its people and ‘products’ – to get a job that matters, done.

What can we learn from IKEA?

IKEA is an incredibly successful discount furniture retailer.  It has been in business for over 40 years, it has global revenues in excess of 25 billion euros and Ingvar Kamprad (the owner) is one of the richest men in the world.  The success of IKEA is not based on secret formulas, intellectual property, nor barriers to entry. So why is it that nobody has successfully copied IKEA?  This is what Clayton Christensen says (bolding is my work):

IKEA’s entire business model – the shopping experience, the layout of the store, the design of the products and the way they are packaged – is very different from the standard furniture store.  Most retailers are organised around a customer segment, or a type of product….

IKEA has taken a totally different approach. Rather than organising themselves around the characterisation of particular customers or products, IKEA is structured around a job that customers periodically need to get done.

The “job to be done” as a source of innovation, growth and competitive success?

Let’s continue listening to the wisdom of Clayton Christensen:

Through my research on innovation ….. my colleagues and I have developed a theory about this approach to marketing and product development, which we call the “job to be done”. The insight behind this way of thinking is that what causes us to buy a product or service is that we actually hire products to do jobs for us.

We don’t go through life conforming to particular demographic segments: nobody buys a product because he is an eighteen to thirty five year old white male getting a college degree. That may be correlated with a decision to buy this product instead of that one, but it doesn’t cause us to buy anything. Instead, periodically we find that some job has arisen in our lives that we need to do, and we then find some way to get it done.  If a company has developed a product or service to do the job well, we buy, or “hire” it, to do the job.

The mechanism that causes us to buy a product is “I have a job I need to get done, and this is going to help me do it.

So if you are going to segment your customers then segment them by the jobs that they “hire” you for. Here, I want to point out that you can use this “jobs to be done” approach for all customer touchpoints.  For example, what jobs do your customers hire your call-centre for?  What jobs do they hire your website for?  What do they hire your facebook page for?

Back to what we can learn from IKEA? 

Having set out his theory, Clayton Christensen returns to IKEA and explains the cause of its success as follows:

IKEA doesn’t focus on selling a particular type of furniture to any particular demographically defined group of consumers. Rather, it focuses on a job that many consumers confront quite often as they establish themselves and their families in new surroundings: I’ve got to get this place furnished tomorrow, because the next day I have to show up at work. Competitors can copy IKEA’s products. Competitors can even copy IKEA’s layout. But what nobody has done is copy the way IKEA has integrated its products and its layout.

This thoughtful combination allows shoppers to quickly get everything done at once….. In fact, because IKEA does the job so well, many of its customers have developed an intense loyalty to its products.

What is the lesson according to Clayton Christensen?

He sums it up well and find me in total agreement:

When a company understands the jobs that arise in people’s lives, and then develops products and the accompanying experiences required in purchasing and using the product to do the job perfectly, it causes customers to instinctively “pull” the product into their lives whenever the job arises. But when a company simply makes a product that other companies also can make – and is a product that can do lots of jobs but none of them well – it will find that customers are rarely loyal to one product versus another. They will switch in a heartbeat when an alternative goes on sale. 

I will continue the conversation around the ‘jobs to be done’ approach of doing business and creating superior value – for the customers and your business – in the next post in this series.

Generating revenue: are these the 14 questions to ask your customers?

I say that the customer experience movement is, or should be, about  creating superior value for customers and making customers feel valued.  Why?  So that they stick around longer, buy more and get people in their networks to do business with your organisation.  Put differently, the focus on customer experience must at some point show up in revenues and profits.  Else, it is not sustainable.

How does one go about generating more revenue and improving profits? How about asking the following questions of your customers:

I wish to give credit where credit is due: I have taken the work of Kristin Zhivago as shared in Roadmap to Revenue and added/modified it so that it fits with my experience and my style.   If Kristin’s book interests you (in my view it should) then you can read my review here.