Point: When innovating, look at the “job” the customer hires a product to do

Story: At the World Innovation Forum, Clayton Christensen cautioned companies against focusing only on customers when they create incremental innovations. Instead, he recommended understanding the job that the product is hired to do by those customers.

To illustrate the “product’s job” concept, Christensen described a fast food chain’s milkshake sales. At the demographic level, many milkshake buyers are working-age people. But the demographic similarity is not what drives people to buy milkshakes. (When the company researched demographically similar people, the results did not improve sales.) In fact, a focus on age and gender missed the job that milkshakes perform — why do people “hire” (buy) the milkshake? What job do they want the milkshake to perform?

Through further research, the fast food chain found that about half of milkshake sales occurred in the morning. These buyers came into the restaurant by themselves, bought a milkshake and nothing else, and drove away with the milkshake rather than consuming it at the restaurant. Looking deeper, researchers learned that the buyers were commuters, and the job of the milkshake was to provide distraction on a long commute and to tide them over until lunch. For this job, the milkshake competed with bananas, donuts, breakfast bars, and coffee. Commuters hired milkshakes over the competition because milkshakes take a long time to eat, don’t slosh or leave crumbs, and can be held in one hand or be put into a cupholder during the drive.

A very different group of milkshake buyers came in the afternoon and evening. These buyers were predominately dads with little kids. The dads were buying milkshakes for an entirely different job: that of assuaging guilt over not having enough time with their kids. Kids liked the milkshakes, and the dads could finally say “yes” to something and feel good about themselves.

Understanding the jobs people hire milkshakes to do is important when it comes to incremental product improvements. The two jobs for milkshakes call for diametrically different innovations. Thicker milkshakes would delight the bored commuter, but they would frustrate time-pressed dads because kids take too long to finish thicker shakes.

Simply put, innovations that would boost sales in one group would displease the other group. Commuters might want improvements like increased thickness, small added fruit chunks, and a grab-and-go purchase system that lets customers buy a milkshake without standing in the regular food line. In contrast, dads might want a smaller, thinner milkshake that provides fun but quick treat for the kids. The strategy for innovation in this case may be to have two different shake formulations: one for the morning and one for the afternoon/evening.

The point is to understand WHY someone buys the product, not WHO buys the product. The demographics of milkshake buyers are less important than the fact that one segment buys the product as a distraction and protracted meal while the other buys it as a sweet attraction and quick desert.

Action

• Delve into the job(s) of the product, not the consumer(s) of the product.
• Segment by purpose, not person.
• Identify and innovate around job performance dimensions rather than product performance dimensions

Point: Innovate the experience, not just the product

Story: At the World Innovation Forum today, C. K Prahalad asked the audience about their experiences with “Build-a-Bear” — an e-commerce company that lets kids of all ages design their very own Teddy Bear. Audience members reported spending as much as $200 in choosing the look of the bear, the amount of stuffing in the bear, adding a custom sound to the bear, getting the bear’s birth certificate, buying clothing for the bear, and buying accessories and siblings for the bear. This culminates in making “The Bear Promise” to care for this personalized stuffed animal. Discussing the depth of the experience and the simplicity of the physical product revealed that the bear embodies both negligible product costs and priceless customer experiences.

One of the “trick questions” for job interviews is to ask the candidate, “How would you redesign a Teddy Bear?” This example shows that the design of the bear may not change much, but the design of the experience of buying the bear may be where the real opportunities are. In fact, Build-a-Bear is more about the customer redesigning the Teddy Bear than it is about the company redesigning the Teddy Bear. Therefore, C. K Prahalad recommended that companies think more about experience innovation to complement and enhance product innovation.

The Build-a-Bear phenomenon is not unique to toys. Other companies provide experience-intensive products. These include Medtronic’s pacemaker (the device is augmented with remote monitoring, health records coordination, and provider networking services), Bridgestone Tires (by-the-mile fleet usage pricing with value-added vehicle usage services), Nike’s iPod-connected shoes (shoe sensor feedback that drives work-out feedback and performance). The point is to think about the value chain of the experience, rather than the value of chain of the product.

Action:

• Seek to solidify customer relationships through well-designed experiences
• Innovate to improve the value of the experience, not just the performance/cost of the product
• Leverage customer innovation through co-creating experiences and products
• Create an ecosystem of collaborators to support the experience

Point: Help your customers save water by making better use of your products
Story: The UN designated March 22nd as World Water Day, to draw attention to the need to manage this vital resource. Many companies are examining how to reduce their water usage. Some companies are also looking at their value chain of customers and suppliers, helping their partners reduce water consumption as well. JohnsonDiversey, one of the S.C. Johnson family of companies, is a leading global provider of institutional cleaning and hygiene products. Because it sells cleaning products to large companies, JohnsonDiversey explored how it could help its customers reduce water consumption. For example, breweries use five times as much water to clean their facilities as they do to make their product. JD realized it could help its customers improve their cleaning practices. JD audits water usage at customer plants and then shares best practices from among all customers to reduce water usage and costs. The company also helped food and beverage customers in 21 sites around the world save a billion gallons of water in 2007 through its water management program.

Action:

• In thinking about water conservation efforts, look beyond your company’s borders.
• Examine how your products influence water consumption by customers and consumers
• Create products that enable less water consumption
• Share ideas among your customers to help everyone reduce water usage and costs.

Sources: MIT Crossroads presentation by Antonio Galvao, VP Global Plan and Deliver at JohnsonDiversey and JohnsonDiversey’s Responsible Resource Solutions