In the previous issue, I reviewed an interesting new book by Harvard University professor Bharat Anand, The Content Trap. His short point: great products do not guarantee success. It is the connections between users, between products and between different functions that ensure their success.
Another Harvard professor, Clayton Christensen, has exactly the same proposition to make in his new book, Competing against Luck, namely “rarely is it the product itself that is the source of the long-term competitive advantage.” Christensen comes up with a different reason for enduring competitive advantage: products and services that get the real job done, that consumers are desperate for. Christensen, who made his name 20 years ago, with his theory of disruptive innovation, calls this the ‘Job to Be Done Theory’. He says that people buy products to get a job done. The same product (like a milkshake) can be used for different jobs: to fill up a rider embarking on a long commute or to give joy to a father who has taken his son out. If companies can understand what jobs customers are buying their products for, they can enhance the experience and create a competitive advantage. Without this customer insight, adding product features is meaningless.
Take the case of a mid-size home building company in Detroit which was a tough market to sell new homes and condominiums. The company’s homes were attractively priced, with high-end touches, to give a sense of luxury. Buyers could customise every detail, from the knobs on cabinets to tiles; the company offered a 30-page list of options. A sales team was available six days a week to greet any prospective buyer. A generous ad campaign made the offers widely known. And, yet, sales were weak. Focus group participants asked for more features, which got added. But still no rise in sales. Bob Moesta, a management consultant who has worked with Christensen, set out to learn what job the condominium was meant to do for people who had already bought a unit. He learned that there wasn’t a clear demographic, or even psychographic, profile for one of the company’s new-home buyers. In fact, the many customisable features actually were a problem: they overwhelmed the buyers.
But Moesta clued on to something unusual: the dining room table. Though prospective buyers wanted “a big living room, a large second bedroom for guests and visitors, and a breakfast bar to make entertaining easy and casual, they were stressed about what to do with their existing dining room table. Moesta and his colleagues couldn’t quite understand why the dining room table was such a big deal. In most cases, people were referring to well-used, out-of-date furniture that might best be given to charity, or relegated to the local dump.”
What prevented buyers from completing the purchase was not missing product features “but rather the anxiety that came from giving up something that had profound meaning… Every decision of what she had enough space to keep in the new location was emotional. Old photos. Children’s first-grade art projects. Scrapbooks.” The company understood what homebuyers were really going through. “I went in thinking we were in the business of new home construction,” recalls Moesta. “But I realized we were instead in the business of moving lives.”
With this new understanding of the job to be done, the company made many small, but important, changes. For example, the architect managed to “create space in the units for a classic dining room table by reducing the size of the second bedroom by 20%. It also focused on helping buyers with the anxiety of the move itself, which included providing moving services, two years of storage, and a sorting room space on the premises where new owners could take their time making decisions, about what to keep and what to discard, without the pressure of a looming move. Instead of 30 pages of customized choices, which actually overwhelmed buyers, the company offered three variations of finished units—a move that quickly reduced the ‘cold feet’ contract cancellations from five or six a month to one. And so on.” By 2007, when sales in the industry were down by 49% and the market all around them was plummeting, the developers had actually grown the business 25%.
This book is brimming with many such examples. Take the case of American Girl, which has been so successful in nailing the job to be done, of mothers and daughters. Parents pay more than a hundred dollars for a doll, several times, without counting the money spent on extra clothing and accessories. “By one estimate, the typical American Girl doll purchaser will spend more than six hundred dollars in total,” writes Christensen. To date, the company has sold 29 million dolls and racks up more than $500 million in sales annually. What’s so special about an American Girl doll? Well, it’s not the doll itself… In recent years Toys“R”Us, Walmart, and even Disney have all tried to challenge American Girl’s success with similar dolls, at a fraction of the price but, to date, no one has made a dent. American Girl is able to command a premium price because it’s not really selling dolls. It’s selling an experience.”
According to Christensen, “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. The Job to Be Done for parents, who are actually purchasing the doll, is to help engage both mothers and daughters in a rich conversation about the generations of women that came before them, and their struggles and their strength. Those conversations had disappeared as more and more women entered the workforce in the years after the women’s movement, and mothers and grandmothers were craving an opportunity to bring them back into their lives.”
American Girl founder, Pleasant Rowland, has been quoted as saying, “You’re not trying to just get the product out there, you hope you are creating an experience that will do the job perfectly.” You’re creating experiences that, in effect, make up the product’s résumé: “Here’s why you should hire me.” Rowland’s unsatisfactory experience while shopping for a Christmas present for her nieces triggered the idea. At the time, the most popular options were either hyper-sexualised Barbies or Cabbage Patch Kids, neither of which would help her connect with her beloved nieces. Her vision for the company was born almost entirely out of her own childhood memories.
The dolls were never sold in traditional toy stores. They were available only through a catalogue first, then later at American Girl stores, in a few major cities. This added to the experience, turning a trip to the American Girl store into a special day out with mom (or dad). American Girl stores also have doll hospitals that can repair tangled hair or fix broken parts. Some of the stores have restaurants in which parents, children, and their dolls can happily sit and be served from a kid-friendly menu, or host birthday parties. The dolls become the catalyst for experiences with mom and dad that will be remembered forever.
Many decades ago. Harvard marketing management guru Ted Levitt had said, “People don’t buy a quarter-inch drill. They want a quarter-inch hole.” In other words, people don’t want products; they want solutions—some jobs to done. Christensen notes that alone is the bedrock of competitive advantage. He writes, “I have found that creating the right set of experiences around a clearly defined job—and then organizing the company around delivering those experiences (which we’ll discuss in the next chapter)—almost inoculates you against disruption. Disruptive competitors almost never come with a better sense of the job. They don’t see beyond the product.”
Christensen is one of the world’s foremost management thinkers today. Anyone who is building a business will gain from the new perspective he provides to age-old ideas of customer-orientation.