| This post is PART 1/6 of a paper entitled “Origins and Progression of Jobs Theory.” Summary—It is argued that ambiguity around customer needs and customer value is the root cause of innovation failure; jobs theory is built on prior theories of customer behavior; how JTBD became bifurcated creating two schools of thought; the two schools are synthesized to create the JTBD framework; post synthesis, JTBD concepts are expanded and refined. |
Entrepreneurs and companies don’t have trouble generating ideas for new products and services. The problem is that a great many of those ideas do not result in viable solutions. In his book, Winning at New Products, Robert Cooper points out that for every seven new innovation ideas, about four of those ideas enter the product development process with only one making it to market.
The innovation projects that are abandoned along the way still cost companies plenty of time and resources. But that’s not the worst of it. Out of the new products and services that do launch, about 40% of those offerings do not meet revenue and profit targets (1). That is, they disappoint.
The number of innovation disappointments has been consistent for the last 60 years according to several studies conducted by the Product Development Management Association (PDMA) (2). Not surprisingly, many studies suggest that the root cause of innovation failure is ambiguity around defining customer needs and customer value (3–5). According to the late Harvard Business School professor David Garvin, “Studies comparing successful and unsuccessful innovation have found that the primary discriminator was the degree to which user needs were fully understood” (6).
I argue that while customer needs and customer value are related, they are not the same thing. Yet these two concepts are very often conflated, creating ambiguities at the front-end of the innovation process. Successful innovation requires an unequivocal understanding of customer needs and customer value (a self-evident claim).
With few exceptions, there are two questions that have not been clearly answered in the scholarly and practitioner literature—1) How can innovators precisely and completely define customer needs? And based on these needs—2) How can innovators define the value that customer want from solutions?
Entrepreneurs and companies struggle with innovation because they do not clearly define the “jobs” customers are trying to get done. Lacking this understanding, they cannot define all the customer needs associated with those jobs. Without a complete set of customer needs in hand, entrepreneurs and companies cannot precisely define the value customers want from solutions to get those jobs done better, faster and/or cheaper. Innovation efforts become risky because solution design is informed, to one extent or another, by inputs other than the satisfaction of customer needs.
Solution providers often tout the many features and benefits of their solutions, assuming customers will value those attributes. However, providers are not the arbiters of value. Rather, value is something perceived in the mind of customers. As such, only the customer can judge the value of a solution. For this reason, merely claiming that a solution offers a certain “benefit” does not make it valuable.
Solution attributes that do not help a customer get a job done well will have little to no value to a customer even if a solution is functionally superior to competing alternatives. A solution will struggle to achieve and maintain viability in the market to the extent that the benefits offered are not aligned with customer value,
Ambiguity around customer needs and customer value obscures the aim of innovation. With such ambiguities, it becomes very difficult to create products and services that are more valuable than competing solutions in the mind of customers. That is because perceived value thresholds drive customer switching behavior. A rational customer will not switch from a solution they are currently using to a competing solution that does not offer them additional value to get a job done better. Conversely, a rational customer will consider switching to a competing solution that offers them the additional value they want at a price they are willing to pay.
Fundamentally, creating demand for new and existing products and services means attracting customers using competing solutions, including those using no solution at all. Motivating customers to switch from competing solutions-in-use to your company’s solutions is the essence of demand creation. When entrepreneurs and companies cannot precisely define the value that customers want from their solutions, demand creation becomes unpredictable. In this paper I rationalize why jobs-to-be-done is an effective approach for completely and accurately defining customer needs—a capability which is the very foundation of demand creation.
Jobs-to-be-done is a theory-based approach that makes explicit the relationship between customer needs and customer value. The jobs-to-be-done framework enables innovators to capture and define a complete set of needs for any job that customers are trying to get done. Customers are then asked to prioritize the importance and satisfaction of a set of needs which precisely defines the value customers want from solutions to get a particular job done better, faster and/or cheaper.
Ambiguity Around the Meaning of Customer Needs
So, what exactly are customer needs? If you are not sure, then you are not alone. This is a question that scholars and practitioners alike have been wrestling with for decades. Defining customer needs has been an elusive thing indeed. The following are some of the most cited definitions from the academic and practitioner literature—
Customer needs are problems to be solved. These needs, either expressed or yet-to-be articulated, provide new product development opportunities for the firm (7).
A customer need is an opportunity to deliver a benefit to a customer. This definition contains three components: a benefit that has value (the what), a customer who values the benefit (the who), and a context that creates the opportunity to deliver the benefit (the when or where) (8).
A customer need is the lack of something requisite and is independent from any particular solution developed to address it … thus needs are of essential and logical property and are bound in the problem context (9).
A sentence that describes from the customer’s vantage point the need, issue, problem that needs to be solved or solved more effectively (10).
Customer needs are the problems that a product or service solves and the function it performs. They describe what products let you do, not how they let you do it … In general, needs and problems are fairly stable, they change only slowly, if at all, over time … Customers have general problems for which they need a solution and that relate to the overall product function … Customers also have very specific needs or aspects of the overall function that a successful product must also meet (11).
A [customer need] is a statement of a problem as opposed to describing what the product must do. The question to ask is— “What outcome do customers desire that they cannot now achieve?” (12).
A customer need is a description, in the customer’s own words, of the benefit to be fulfilled by the product or service (13).
A customer need is a state of dissatisfaction or frustration that occurs when an individual’s desires outweigh the individual’s actualities (14).
Summarizing the aforementioned, customer needs are defined as problems to be solved, statements of problems, solution benefits, the lack of something requisite, and statements of dissatisfactions. Other common definitions include motivations, functional requirements, desire sets, preferences, functional goals, functional tasks, and critical to quality characteristics. Further, it is often said that customers have both articulated and unarticulated needs.
I suggest that all these perspectives on customer needs overlap in the sense that they refer to different aspects of the same underlying concept. Combining these perspectives yields the following definition—customer needs are the solution benefits that customers seek that can solve the problems in their lives and businesses, where these needs can be articulated or unarticulated.
From this broad definition, it becomes apparent that customer needs are most often defined within a solution context. The logic is as follows—customers have problems; consequently, they experience dissatisfactions and frustrations (aka: “pains”); customers seek out solutions that offer benefits that can solve those problems thereby removing or mitigating their pains.
But questions arise such as—How do we consistently define benefits? Why do customers want those benefits anyway? How do we define problems? What causes those problems? Are there other needs that aren’t necessarily problems? What is the best way to ensure that all customer needs are captured whether they are articulated or not? These open questions suggest that defining customer needs within a solution context is not sufficient for the purpose of innovation.
In fact, I argue that customer problems and solution benefits are not needs at all. Customer problems have to do with unsatisfactory outcomes with respect to what customers are trying to accomplish (means to ends). Benefits are the capabilities offered by a solution that can help customers obtain or achieve the outcomes they want and avoid the outcomes they do not want. Problems and solution benefits are certainly related to customer needs, but they do not define those needs.
The problem of defining customer needs within a solution context is that the nature of problems changes with customer circumstance which, in turn, can change the importance of needs. Also, competing solutions are continually getting better, faster and cheaper which can change the satisfaction of needs. For the purpose of innovation, we want to define customer needs based on something more stable than the problems of the day and the limitations of available solutions since these are dynamic in nature.
Further—if customer needs are defined within a solution context, then innovation efforts will be constrained around that context. As such, the focus of innovation will be optimizing current solutions rather than exploring all possibilities pursuant to finding the best way to help customers get a job done at the lowest cost to the provider.
Focusing on solutions ahead of understanding customer needs often leads to situations where providers incrementally innovate based on the current solution paradigm (aka: the dominant design) with little notice that the entire paradigm is about to change. For example, the shift from a Sony Walkman to the MP3 player or the shift from the Blackberry to the iPhone.
A premature focus on solutions also increases the likelihood of getting blindsided by “substitute offerings” that lie outside of established product/service categories. This underscores that customers are loyal to the job, not solutions. As such, customers will always buy/use solutions that get jobs done well (as expected) at the lowest possible price without regard to provider-defined categories.
If you ask customers directly what they need or want, they will likely tell you things like, “I need to get a professional degree” or “I need to find a better way to save money” or “I want to improve my credit score” or “I need to find a faster way to place orders” or “I need to lose weight” or “I want to avoid getting the flu” or “I want to feel safe in my house” and “I need an easier way to prepare a tax return.” This reflects that customers are primarily focused on obtaining or achieving wanted results and avoiding results they don’t want.
Toward those ends, customers can only evaluate the features/benefits (attributes) of offered solutions based on how well those attributes can help them generate wanted results. Since they are not professional innovators, customers are seldom aware of the many other solution possibilities that can better satisfy their needs.
Because customer feedback is limited to means (solution attributes) and ends (wanted results), experienced marketing professionals have learned that asking customers directly what they need or want does not provide the inputs required for successful innovation. Instead, they elicit needs indirectly by interviewing customers to understand the underlying context (implicitly the “job”) around which those needs arise.
With this understanding, all solution possibilities are considered that can generate the results that customers want at the lowest cost to the provider. In this way, providers can create and maintain highly profitable products and services that satisfy customer needs better than competing solutions at a price customers are willing to pay.
This is why mapping customer “pains” associated with the use of solutions-in-use and then defining those pains as customer needs or “problems to be solved” is a poor approach to innovation. A better approach is to first understand all customer needs around the jobs customers are trying to get done and then determine which of those needs are not well satisfied. With this insight, providers can systematically identify high-potential innovation opportunities.
Ambiguity Around the Meaning of Customer Value
What exactly is customer value? More to the point, what determines the value that customers want from solutions to get jobs done better, faster and/or cheaper? Customer value has been a challenging concept to define for both scholars and practitioners because it is a multifaceted construct that has roots across marketing, psychology, economics, and behavioral economics.
As such, customer value has many meanings depending on the context used. Like customer needs, customer value is defined in many different ways. The following are the most cited definitions from the academic and practitioner literature—
“Perceived value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given” (15, 16).
“Customer value is what customers get (benefits, quality, worth, utility) from the purchase and use of a product versus what they pay (price, costs, sacrifices)” (17).
“The trade-off between the benefits (“what you get”) and the sacrifices (“what you give”) in a market exchange” (18).
“All customer-perceived consequences arising from a solution that facilitate or hinder achievement of the customer’s goals” (19).
“Customer value is 1) interactive; 2) relativistic: a) comparison of objects; b) differs between persons; c) situation dependent; 3) embodies preferences; 4) is attached not to the object itself but rather to the relevant consumption experience” (20).
“Customer value is the customers’ perception of what they want to have happen (i.e., the consequences) in a specific use situation, with the help of a product or service offering, in order to accomplish a desired purpose or goal” (21).
“Six principles provide a definition of customer value – 1) solve my problem completely, 2) don’t waste my time (minimize my total cost of consumption, which is the price I pay plus my time and hassle), 3) provide exactly what I want, 4) deliver value where I want it, 5) supply value when I want it, 6) reduce the number of decisions I must make to solve my problems” (22).
“Customer value is defined as a consumer’s perception of net benefits gained in exchange for the costs incurred in obtaining the desired benefits” (23).
“Customer value is market-perceived quality adjusted for the relative price of your product” (17).
“Customer value is a customer perceived preference for and evaluation of those products attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations” (5).
“Customer value refers to a preference judgment while the customer’s values refer to the criteria by which such judgments are made” (24).
“The five values influencing market choice behavior are functional value, social value, emotional value, epistemic value and conditional value” (25).
“A truly marketing-minded firm tries to create value-satisfying goods and services that consumers will want to buy; management must think of itself not as producing products but as providing customer-creating value satisfactions” (26).
The following perspectives indicate that an operationalized definition of customer value is still unsettled.
“In the field of business and management, conceptual confusion in customer value research has occurred primarily due to the dynamic nature of customer value; the customer value definition is highly debated and, surprisingly, often studied without an explicit definition of the concept” (27).
“Without value, there is little likelihood of any market development of sustainability. Yet research into consumer value is still underdeveloped” (28).
“Although perceived value has received growing attention, no clear and widely accepted definition of the concept yet exists” (29).
“Customer perceived value is an imperative that firms must pay attention to and has become a major focus of interest in marketing. Despite the interest, empirical operationalization of perceived value remains unsettled” (30).
“Although the significance of customer value is widely recognized, the growing body of research about customer value is quite fragmented and the definition of customer value is divergent” (31).
“Current efforts to measure perceived value have shown it is difficult to quantify value; The construct of perceived value has been identified as one of the most important measure for gaining competitive edge and has been argued to be the most important indicator of repurchase intention” (32).
“Although a core concept in marketing, surprisingly little is known about what value is, what its characteristics are, or how customers determine it” (33).
“Only by understanding how value is achieved can goods and services be designed in such a way as to attract customers. What is less clear and of central importance, is why consumers desire the goods and services on offer and what is the nature of the value that they place on or receive from them” (34).
What is interesting is that none of the aforementioned definitions of customer needs and customer value explicitly mention a relationship between the two of these concepts. Clayton M. Christensen suggests that there is an almost invisible substrate that connects customer needs and customer value—namely the customer’s job-to-be-done.
As Christensen states, “customers have jobs they want to get done and they hire products and services to help them get these jobs done well.” The operational aspects of the job-to-be-done is what marketing professionals are trying to infer from customer interviews and customer data. Christensen posits that the underlying job and related concepts explains why customers choose one particular solution over competing alternatives (35–37).
Continue to Part 2 of 6
References
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