Innovation Tyrant: new product development companies

Sunday, March 25, 2012

Stephen Wunker: Steps to Put Christensen's Jobs-to-be-Done Theory into Practice

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Nine of the ten most valuable companies in America can trace their greatness to reconceiving a market’s boundaries. From ExxonMobil to Apple to Wal-Mart, these firms expanded markets that others saw as static. How can companies in today’s economy – seemingly hemmed in on all sides by hyper-competitive markets – break into new ground?

The wrong place to start is by asking customers what they want. Overwhelmingly, customers will answer based on how a market exists today. As Henry Ford reputedly said of his industry, “If I asked customers what they wanted, they would have said a faster horse.” Instead, you need to look deeper and examine underlying needs.

Clayton Christensen, the famed Harvard Business School Professor known for coining the term “disruptive innovation,” believes that one of his most enduring legacies will be an idea he first put forward in his 2003 book The Innovator’s Solution: don’t sell products and services to customers, but rather try to help people address their jobs-to-be-done. This seemingly simple idea has profound implications for re-framing industries. As I saw in years of consulting with Christensen to companies giant and small, it can revolutionize how firms compete. But the concept can also be tough to put into practice. A six-step process provides a rigorous way of defining the jobs you can address. Once those challenges are tightly defined, it is much easier to generate bold ideas for new solutions.

1. What are the high-level jobs-to-be-done?

Rather than looking just at what people buy, examine the needs that arise during their lives. Sometimes the job is much broader than the product or service that is bought. For instance, why did I take five small children to a movie on Sunday afternoon? Because on a rainy day I needed to get them out of house for a few hours. Could movie theaters expand their addressable market by emphasizing how they can occupy kids? What if the room used for the 20^th screen was adapted instead for inexpensive play like a childrens’ gym?

2. What are the current approaches and what pain points result?

Jobs-to-be-done can sprawl across dozens of industry categories. Clearly a company can’t address each job, but by looking broadly it can re-define its true “competition.” After it understands the full landscape, it can focus narrowly. Theaters may not want to invest in indoor playgrounds, but they need to see playgrounds as a rival every bit as real as a multiplex a few miles away. By understanding the pain points associated with competitive offerings, a business can better invest in emphasizing its distinctive strengths.

3. What benchmarks exist in the full range of competing offerings and analogies?

Companies should always compare themselves to directly comparable firms, but they should not be seduced by the simplicity of that exercise. Through examining all that the full set of rivals and analogous offerings can do, they can get excellent ideas for their own business. For instance, a movie theater could learn from Disney World about how to market merchandise to children and how to entertain people in lines.

4. What performance criteria do customers use?

Much psychological research has shown that even horribly complicated decisions are often reduced to a small handful of criteria that people can keep in mind at any one time. What are they for your industry? What adjectives describe a good solution? Asking customers these questions can open up surprising routes for improving current solutions or marketing existing offerings more effectively.

5. What prevents new solutions from being adopted?

Managers are often too enamored of their own ideas. Unfortunately, even compelling ideas can take a long time to catch on. Indoor plumbing took 4,500 years from its invention to become widely adopted. Really, is your idea better than indoor plumbing? Think in a disciplined fashion about all the obstacles hindering adoption of new solutions in your industry. Talk to customers about how they made a decision to adopt a recent innovation – not innovations in general, as that can average out important details, but rather a specific case study.

6. What value would success create for customers?

By understanding the value that lies in resolving a pain point, you can see how many degrees of freedom you have to engineer a new solution. For instance, if resolving an issue on construction sites could avoid 30 minutes of downtime twice a week, and that time is valued at $600 / hour for the crew, then you get a sense of potential price and cost of a new solution. Keep in mind that value could be defined by money, time, convenience, peace of mind, and other metrics.

Re-framing a market can be an immensely powerful engine of business growth. These six steps help to translate Christensen’s theory of jobs-to-be-done – an immensely powerful idea – into specific ideas for action. via forbes.com

Jim Woods is president and founder of InnoThink Group; a global innovation, growth and hypercompetition consultancy. He is an author and speaker on strategic innovation and competitive advantage. To hire Jim to speak to your organization - Call 719- 649-4118 or email us for availability.

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Thursday, March 22, 2012

Andrea Meyer: Collaboration Curves Improve Innovation and Performance

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Point: Unlike the diminishing returns of the Experience Curve, Collaboration Curves offer continuous, exponential improvement and innovation through knowledge sharing and interactions among a group of participants.

Story: Most of us have heard about the Experience Curve, which traces how a company’s rising experience in making a product leads to declining cost of that making a product. On average, the cost declines 20-30 percent each time that a company’s experience in making that product doubles. The Experience Curve, which has been systematically studied since the 1960s, holds true across a wide range of industries. The sad flip-side of the Experience Curve, however, is that the rate of improvement declines over time because it takes longer and longer for experience to double. It has diminishing returns. Can anything be done to sustain the rate of improvement? Is there another way to keep on advancing? There is: Collaboration Curves.

Collaboration — in the form of knowledge sharing and interactions among a group of participants — improves the performance of all. Before the internet, collaboration took place primarily face to face, along with some letter-writing between participants. For example, in the 1870s, the art movement that came to be called Impressionism arose. A group of young painters — Claude Monet, Pierre Renoir, Camille Pissaro and others — started meeting in cafes, talking and visiting each other’s art studios. They became a collaborative group; that is, they’d share their work in progress, talk about painting techniques, experiment with colors, and help each other learn and improve.

For example, the group broke with the tradition of black shadows. They experimented with shadows painted in purple, deep blue or a mix of other colors. Sometimes the shadows weren’t even that dark. This was a radical idea — no one had painted shadows in a different color before, but once one of the group came upon it, others adopted it as well. They also expanded the notions of what could be painted. The subject matter needn’t be a religious icon, mythological scene, portrait of a nobleman or an allegorical landscape — it could be something as simple as a haystack or water lilies, painted over and over at different times or day or different seasons, showing how the light and color changes with the times and seasons. Combining their experiences accelerated the Impressionists’ innovations in color, composition, brushwork, and subject matter.

Today, these collaborative groups can extend online, enabling people to talk and share with others anywhere, any time, thereby greatly — indeed exponentially — improving the group’s capacity to produce. In the old model, the experience of any one person (or company) grew linearly with time, which created an Experience Curve with diminishing returns. But a collaborating group can multiply experiences by combining lessons from the successes and failures of all to create a Collaboration Curve that sustains performance improvement. The internet, social media, and collaboration platforms greatly enhance the Collaboration Curve by increasing the number of people who can collaborate, increasing the geographic span of people who can collaborate, and increasing the access to the accumulated experience of the collaborative group.

Collaboration Curves were first identified by John Hagel, who heads consulting firm Deloitte’s Center for the Edge in Silicon Valley. “We’re seeing the emergence of a new kind of learning curve as we scale connectivity and learning, rather than scaling efficiency,” says Hagel in his Harvard Business Review blog (coauthored with John Seely Brown and Lang Davison). “Collaboration curves hold the potential to mobilize larger and more diverse groups of participants to innovate and create new value.”

So far, examples of internet-enabled Collaboration Curves are more anecdotal rather than rigorous because of their nascency. But Hagel has found that collaborative environments like the popular online game World of Warcraft offer participants a way to continue improving beyond what individuals could accomplish alone. In the business world, similar collaboration curves take place on SAP’s software developer sites, and large open source projects such as the Eclipse Foundation. What’s exciting is that “Collaboration curves may reverse the diminishing returns dynamics of the experience curve and deliver increasing returns to performance instead,” Hagel says. The opportunity for interactions among the many participants lets performance continue improving through the continuing contributions of ideas by other participants.
Action: Hagel found that there are three prerequisites for these online collaboration groups to work and generate the Collaboration Curve effect.

Attract Participants: First, you need people. That’s pretty obvious, that you need people to make this work. But what’s exciting is that the people don’t all have to be talking or active all the time – it’s perfectly ok to begin by just being an observer who lurks and learns from others. Indeed, in SAP’s software developer network (SAP SDN), most participants do just that — learning by reading the discussion forums before they contribute anything themselves.

Interact: to get better results, you start interacting with others, in discussions — in person or online — sharing experiences, making suggestions, giving feedback. The more interactions, the faster the performance improvement.

A supportive, multi-layered environment: Supportive means friendly and online. It also means that the technology supports the interaction through discussion boards, archives, live chats, video. Interaction must be easy not only among peers but among all cross-cutting groups. Digital infrastructure lowers interaction costs, enabling large, diverse groups of people to share information and learn from each other, driving performance improvements for all. via workingknowledge.com