Jobs-Based-Positioning

Jobs-to-be-Done based Positioning

Leveraging disruptive theory to predict the future

July 8, 2011

2the forum for growth and innovation

So what…

Using this framework, you can predict the best focus for product innovation


Executive summary

Jobs-to-be-Done theory allows us to discern performance characteristics of businesses• Product proliferation can be explained by people’s differing preferences when it comes to

how jobs are fulfilled– This serves to reconcile categorical “needs-based” marketing with a jobs-based

theory, as demographic needs based assumptions serve to approximate how certain M.E.S. groups will desire jobs to be fulfilled

If we are able to distil jobs to performance characteristics, we can then make assumptions about future performance leveraging disruptive theory

• Theory will explain the functional value of products moving forward; which is only one aspect of predicting what consumers will want to buy

• Zeitgeist, scarcity (perceived and real), and the law of diminishing marginal returns (Products over-serving customers) will impact affect the remainder of the product’s or company’s market potential

Reconciling JTBD and disruptive theory can provide a prescriptive theory of product development / marketing


The Jobs-to-be-Done Matrix


The Jobs-to-be-Done matrixTo be used when evaluating your product’s position in the market

Hi +

Hi +

Hi -

Mid / Lo +

Mid / Lo -

RelativeFunctional

Performance

IndustryWillingness to

Pay1

Job Characteristic 1





Your products excel relative to your competitive set on functional performance in areas that customers appreciate and in which customers are willing to pay a premium

Your products excel relative to your competitive set, customers may appreciate your performance, but will not pay a premium

Your products do not excel relative to your competitive set, but if they were to do so, you could charge a premium

Your products do not excel relative to your competitive set, but if they did consumers would still not pay for these characteristics

RationalBrain / Logos

EmotionalBrain / Pathos

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1. Where willingness to pay is a function of scarcity (perceived or real) and average relative importance

Significance of present positionSignificance of present position


High +

High +

Mid +

Mid -

High +

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Breaking down the the JTBD MatrixJob characteristics: Ex; Ford’s gasoline engine cars

Job CharacteristicsJob Characteristics

Assumptions

Implications

Example

To fulfill a given job-to-be-done various characteristics can increase user utility

• Products can fulfill multiple jobs-to-be-done

While the basic job-to-be-done of a car is to facilitate transportation, there are many characteristics that fulfill that JTBD

• Speed • Motorcylces, busses, and trains also

perform here• Efficiency (mileage, ease of usage, etc.)

• Motorcycles, hybrids, EVs, busses and trains also perform here

• Capacity (how much can I transport)• Here vans, SUVs and trucks excel

• Comfort• Here luxury vehicles surpass others

Companies can compete and attempt to differentiate from one another along different characteristics of performance

• Individual consumers value each of these characteristics differently – justifying SKU variety


High High +

High High +

Mid Mid +

Mid Low -

High Mid +

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Breaking down the JTBD MatrixRelative Functional Performance: Ex; Ford’s gasoline engine cars

Relative Functional PerformanceRelative Functional Performance

Assumptions

Implications

Examples

In each category of performance we can both compare our relative position and competitive improvements follow the Disruptive and Sustaining innovation curves

Disruption in the automotive industry today is being facilitated by electric engines. Currently they are not good enough for traditional uses of automobiles, but they are disrupting the new “around town” market

• While they fail on speed and capacity because of technical limitations, they are fundamentally advantaged in efficiency

• Traditional non-electric vehicles are positioned to lose in efficiency

• While EV’s are currently positioned poorly in convenience, we know as they improve along the disruptive curve, that will change

We can not only understand where we are today among our relevant competitive set, but also predict whether any systemic changes will influence our position in the future

• Because disruption is facilitated by fundamental technological advantage in a given characteristic, we can predict changes with some accuracy


High + +

High + +

Mid + +

Mid - +

High + -

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Breaking down the JTBD MatrixWillingness to Pay: Ex; Ford’s gasoline engine cars

Willingness to PayWillingness to Pay

Assumptions

Implications

Examples

Not all of consumer buying behavior can be explained by functional product characteristics

• Affected by not only products being good enough, scarcity, but also brand and zeitgeist

Currently, the zeitgeist is affecting WtP for efficiency and capacity and scarcity is affecting convenience in the automotive industry

• Efficiency is becoming a more central issue• If cultural changes continue to develop

environmental awareness, (average) people will start paying premiums for efficiency in their automobiles.

• Currently, the sale is focused on lifetime reduced costs

• People will pay less for convenience when it is abundent for gas vehicles and EV’s

• Economic and regulatory incentives suggest this will develop over time

Despite our abilities to predict functional performance changes using the low-end disruptive curve, we need to incorporate some piece of art in this analysis

• Cultural trends Zeitgeist• Economic, regulatory trends Scarcity• Interdependent, modular trends Good enough


The predictive power of the model

High +

High +

Mid +

Mid -

High +

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Ford’s gas automobile business todayFord’s gas automobile business today

High +

High +

Mid +

Low +

Mid -

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Ford’s gas automobile business in 5-yearsFord’s gas automobile business in 5-years

Ford can successfully market a line of gas cars outside of the luxury segment because they perform well in each

relevant job characteristic that is valued except comfort…

…however, in the near future Ford will only succeed marketing gas cars for those segments that value power and capacity far more than efficiency and comfort (i.e, Industrial)

To avoid significant disruption they should be investing in electric engines


Other industry examples


Example: Stop & Shop groceryBricks n’ Mortar facing disruption from Online Grocers

Mid -

Low +

High +

High -

High +

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Stop & Shop’s grocery business todayStop & Shop’s grocery business today

Mid -

Low +

Low +

High -

High +

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Stop & Shop’s grocery business in 5-yearsStop & Shop’s grocery business in 5-years

Currently, retail grocers such as Stop & Shop can maintain profitability because they offer convenience and bundle

distribution and experience (i.e., Customers can experience their products and cannot trust that online equivalents will distribute equally fresh goods). Customers will pay a price premium and

sacrifice on inventory selection for these job-characteristics

As online convenience improves, those products (dry goods) where experience is less valuable will likely shift to that channel,

which maintains inventory and price advantages. However, people will still value the uniqueness of produce which suggests grocers will not be displaced. They must instead concentrate on

selling those categories where people value distribution and experience (ie, Fruit, Vegetables, Meat, Prepared Food).

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Suggests business development prioritization


Example: Best Buy Retail (in 2005)Bricks n’ Mortar facing disruption from Online Consumer Electronics Retailers

High -

Mid +

High +

High -

High -

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Best Buy’s business in 2006 Best Buy’s business in 2006

Mid -

Low +

Low +

High -

Mid -

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Best Buy’s business in 2011Best Buy’s business in 2011

Best Buy built its business in the 90’s and early 00’s based on convenient reliable stores carrying everything. While online

shopping was an option in 2006, shipping issues, return policies, and the like were not well understood resulting in high relative

convenience. Best Buy was able to charge higher prices for the products in their stores because people were not price comparing

with online players lacking large fixed cost bases

Based on the disruptive innovation curve, we could assume that online competitors would be able to surpass BB in those areas

where they are fundamentally advantaged – Convenience, Price, and Inventory. Because Distribution of branded products is

relatively unimportant, this leaves Best Buy needing to change business models to monetize experience or shutter

?

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Suggests business model innovation need


Example: Tower Records(in 1999)Bricks n’ Mortar facing disruption from Online Music Retailers

High -

Low +

High +

Low -

High +

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Tower Record’s business in 1999Tower Record’s business in 1999

Low -

Low +

Low +

Low -

Mid +

RelativeFunctional

Performance


Pay1

Inventory

Price

Convenience

Experience

Distribution/ Trust



Tower’s business in 2004Tower’s business in 2004

In the late 90’s Tower provided almost everything better than it’s competitors. Their were more SKUs, more exclusive distribution

agreements, and stores were conveniently located.

For this reason they were able to chanre

However, in 1999, it would be possible to leverage disruptive theory to predict that improvements in online retailing would lead to losses in relative performance where the new technology was fundamentally advantaged; Inventory, Price, and Convenience.

The only area Tower could have protected was exclusive distribution which became impossible as Apple gained scale

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Experiment: Fill out your ownPick an industry in disruption or that has been

RelativeFunctional

Performance


Pay1

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RelativeFunctional

Performance


Pay1

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Supporting the JTBD Matrix Assumptions


Supporting the JTBD matrix requires reference to well-documented past theory

Support JTBD components

Present predictive theories relative functional performance

Present predictive theories for willingness to pay

1

2

3


Products perform based on multiple JTBDs

1

Though Jobs-to-be-done theory provides companies with a wonderful tool to remind themselves of the right use cases and substitutes for their products, it is an over simplification to believe that a product should only have one job

• Products, in fact, are hired by users to do multiple jobs– i.g., My Watch

– I hire my watch, an A.B.Art watch to perform two jobs– Make me more appealing visually (by accessorizing my outfits)– Express that I am different (by being a non-mainstream brand)

– Another person might hire the same watch to perform two jobs as well, though it is quite possible those jobs are not the same

– Make that person more appealing visually (by accessorizing his outfits)– Provide a sense of nostalgia (by requiring a manual wind)

Because products are hired by different people to perform different roles, companies optimize product performance by understanding the complete set of job-characteristics for all jobs to be done, and prioritizing how much to invest in each so that a product can be manufactured at M.E.S. and best complete a set of jobs-to-be-done


Job characteristics are the primary drivers of product or service “hiring”

Certain assumptions drive this economic theory…

Certain assumptions drive this economic theory…

…which yields individuals choosing among imperfect bundles

…which yields individuals choosing among imperfect bundles

Daniel McFadden was awarded the Nobel prize for his work in discrete choice theory in 2000

People have varying tastes and needs that cannot be measured and predicted (randomness in preferences)

Products cannot be manufactured efficiently to complete the needs of all individuals

People seek to optimize utility subject to resource constraints

…Among others

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We prioritize and judge various bundles of options that allow us to fulfill the distinct tasks we “hire” products to do

• But the job of the corporation is maximize value by optimizing job characteristics to drive profitability


Understanding the drivers: Functional performance

Drivers of Relative Functional PerformanceDrivers of Relative Functional Performance

High High +

High High +

Mid Mid +

Mid Low -

High Mid +

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



Relative functional performance represents the technological capabilities of a product, as it relates to a job to be done or job characteristic

• We tend to require at least a minimal level of performance along these axes, but companies must excel in one or more to differentiate from a competitive set

– i.e., Apple is known for product design– i.e., Bang & Olufsen is known for sound quality

Though some sustaining innovations can influence this side of the matrix, the only predictable pattern of change will occur through disruption

• We know that disruptive products outperform sustaining products in at least one job-to-be-done or job characteristic

• When a low end disruptor is noticed, it is reasonable to believe it will outperform the incumbent based on its differentiated characteristic in the near term


The disruptive curve provides some insight into JTBD future

P

T

P

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Disruptive theory tells us how products performance will improve..

Disruptive theory tells us how products performance will improve..

…however, a product’s performance is actually its ability to fulfill JTBDs

…however, a product’s performance is actually its ability to fulfill JTBDs

Ps = ∫(wJ1+wJ2)Ps

PD PD

PsJ1

PsJ2

The average performance on all JTBDs will increase over time, but not necessarily at the same rate

A product’s performance must be thought of as the weighted average value of performance

on the jobs to be done

2


Often the disruptor is fundamentally advantaged on one or more JTBD axes

P

T

Disruptors fundamentally outperform incumbents on one or more JTBD…

Disruptors fundamentally outperform incumbents on one or more JTBD… …Which can be explained …Which can be explained

Ps = ∫(wJ1+wJ2+wJ3+…+wJn)

PD = ∫(wJ1D+wJ2D+wJ3D+…+wJnD)

Ps

PD

PsJ1

PsJ2

PDJ1

PDJ2

Disruptive innovations all have one thing in common – a scaleable, systemic, advantage in one or more job characteristic

• Most often these are technical advantages– i.e., Cloud access, Electronic storage

• Sometimes, true business model advantages can create legitimate disruptive opportunities

– i.e., Incubators vs. Consulting in entrepreneurial settings

The performance increase in low end disruption can be attributed to the ability to improve against other job characteristics

2


Understanding the drivers: Willingness to pay

Drivers of willingness to payDrivers of willingness to pay

Scarcity, perceived or real, is the primary driver of willingness to pay for a job-to-be-done

Scarcity can be influenced through two primary methods• Perceived scarcity can be influenced through traditional

marketing and advertising– Examples include Apple’s premium for design

driven by its ability to influence shoppers to accept no substitute for products despite a range of alternatives

• Real scarcity is influenced through the laws of supply and demand

– Various regulation and economic trends influence this driver of WtP

– In perfect competition (no brands, no IP, etc.) all pricing should be driven to marginal profit = 0

– This creates a pricing problem where marginal cost = 0

High + +

High + +

Mid + +

Mid - +

High + -

RelativeFunctional

Performance


Pay1

Speed / Power

Capacity

Comfort

Efficiency

Convenience



3


Traditional marketing changes WtP by increasing marginal utility and increasing perceived scarcity

3

LDMR changes influence how much of a product the customer demands

LDMR changes influence how much of a product the customer demands

And branding changes can make substitutes seem inadequate

And branding changes can make substitutes seem inadequate

U

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Augmented marginal utility

Marginal utility w/out Marketing

Traditional LDMR is implicitly acknowledged in

the disruptive curve’s customer demand

P

Q

Traditional economic theory suggests that two identical products should be in the same supply demand plane

However, often through relative positioning companies are able to convince consumers that substitutes possible – this

creates augmented supply curves (eliminating some suppliers)

If we perform conjoint analysis, willingness to pay for future product improvements can be predicted – this is real

scarcity, do people consider the market to host an abundance of products that are good enough…

However, this can be influenced by convincing customers that they need more in the future

Demand

Supply

Augmented Supply

Jobs-Based-Positioning

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