Why do customers choose to buy one product or service rather than another? Clayton Christensen, the Harvard Business School professor who coined the phrase “disruptive innovation”, believes companies fail because they have neglected this critical question.
In his new book – Competing Against Luck – Christensen argues that in order to innovate effectively, companies must recognise that customers buy a particular product “to get a job done”. The key insight is that customers are not looking for a product – they have a job that needs to be seen to.
For example, if a fast-food restaurant wants to sell more milk shakes, the owner must first understand the nature of the job that has led customers to “hire” that brand of milk shake. Having studied the “job to be done” in the milk shake case, Christensen’s team discovered that customers hired the beverage to perform a specific task depending on the time of day. In the morning, the job was to provide a treat for customers during their morning commute. So to sell more milk shakes in the morning, the restaurant should offer a thicker, more viscous drink that takes longer to consume, to keep customers occupied during a long dull commute, Christensen’s team concluded.
Identifying the “job to be done” matters not just for milk shake providers, but for any corporate concerned with innovation. This month’s issue of GCV focuses on the consumer sector, which is getting to grips with major disruptions in the type of “jobs” customers want done. Investment professionals who spoke to GCV noted that for today’s consumers of packaged goods, the job to be done is more multi-faceted – “reflect my values as well as taste good and improve my health”, for instance.
Or as Ben Lee, managing director of funds at CircleUp, a US-based investment platform that connects early-stage consumer brands with investors, put it: “Even the act of selecting a household cleaner is now a form of self-expression.” (See interview). The failure to recognise the shift in jobs customers want done in the consumer sector might help to explain why incumbents in the consumer packaged goods sector are losing market share.
One way to import innovation could be by investing in emerging enterprises, and according to data from GCV Analytics, consumer CVCs appear to be among the laggards when compared with other sectors, such as services and industrials. The chart on the previous page shows the number of corporate-backed fundraising rounds in 2016 and 2015, separated by sector. Consumer CVCs were involved in the third-lowest number of rounds after energy and transport when compared with other sectors – 137 in 2016, down from 149 in 2015.
GCV contributing editor Tom Whitehouse’s feature on the flying cars versus autonomous ground vehicles debate offers another way of thinking about Christensen’s “jobs to be done” theory (see New technologies). We might be used to thinking of France-based Airbus as an aerospace company, but if we think in terms of the job to be done – “move me from point A to B quickly and efficiently” – it becomes clear why Thomas d’Halluin, CEO of the US office of Airbus Ventures, describes the ecosystem that Airbus’s CVC unit is operating in as “urban air mobility” (see interview). Whitehouse will be moderating a panel debating flying cars versus autonomous vehicles at the GCV Symposium in London on May 23.
In the meantime, join GCV at the Canadian Corporate Innovation Summit, to be held April 11-13 at the Fairmont Royal York in Downtown Toronto. This year’s summit will consider questions such as how corporations can identify relevant innovation strategies and incorporate them into their operations for greater agility and profitability. Use the code GCVBDC2017 when registering at www.ccisummit.ca to get a 20% GCV reader discount.
With this issue, my time as features editor of GCV magazine has come to a close. Thanks to the GCV team, our guest columnists and our loyal readers, without whom this magazine would not be possible. It has been a privilege and a pleasure serving as features editor, and I hope you will all enjoy this issue as much as I have.
For more insights on innovation, see GCV’s interview with Tomasz Rudolf, founder of the Heart, a Warsaw-based European centre for corporate-startup collaboration, and our Spotlight on UK -Innovation.
