Bring markets into perfect focus by seeing them through the customers’ eyes
The market selection process should result in a prioritized market portfolio; a prioritized list of markets worthy of investment and pursuit. The markets selected should hold the growth potential needed to achieve the desired revenue objectives. Unfortunately, the market selection process is fraught with problems. Most of which can be tied directly to the way markets are traditionally defined to begin with. When looking at markets through a jobs-to-be-done lens, we see that a market should be defined as a group of people who are trying to get the same job done. This insight has a significant impact on the market selection process and on the quality of the markets that we select for pursuit.
Companies often define their markets around the product or technology they are selling. We hear, for example, companies say they are in the MP3 market, the semiconductor market, or the toothpaste market. We see companies size their markets, and market opportunities, by determining the dollar volume of the products being sold. Using that calculation, they decide to invest or divest in a market based on trends in revenue growth.
But here is the problem, and the myth. A product is not a market. Every product will one day become a thing of the past. Vinyl records and cassettes gave way to CDs and MP3s, but those formats too will fade. But just because a technology or a product becomes obsolete doesn’t mean the market disappeared. It means that the market (the people who hired the product to get a job done) moved on to buy another product; one that helped them get the job done better.
Defining a market around a product or technology leads to highly inaccurate market-sizing calculations and a poor market selection strategy. Companies end up selecting a market for pursuit that is falling off a cliff (as Microsoft did when they invested in the Zune), while missing out on the real opportunities for growth (such as the opportunities Pandora discovered with its online listening product).
We define a market the way customers do, as the combination of the people (job executors) trying to get a job done, and the job they are trying to perform. For example, carpenters (job executors) who are trying to cut a piece of wood in a straight line (the job) constitute a market. So do interventional cardiologists (jobs executors) who are trying to restore blood flow to an artery (the job). By defining a market as a customer and job, we end up with a stable unit of analysis upon which to base our market selection decisions.
Using this thinking, we can easily see that even though the market for iPods is now decreasing, the market for people listening to music continues to thrive and grow.
When developing a market selection strategy, we must not only be able to correctly identify who the customer is (i.e., correctly identify the job executor), but we must also be able to correctly determine what job they are hiring products to perform. That is not always easy. Here are three insights we use to get the answer right:
At Strategyn, we know all the market selection pitfalls. With two decades of experience, we are the best in the world at defining the market at the right level of abstraction. It is part of our innovation process, Outcome-Driven Innovation (ODI). We bring markets into perfect focus by seeing them through the customers’ eyes. Learn more about our growth strategy consulting services.
The first step in profiting from the customer is knowing who they are. We work through the confusion and the resistance to make the right choices, so value can be created. This is part of our innovation process, Outcome-Driven Innovation (ODI).
In this timeless 2002 Harvard Business Review article, Tony Ulwick first introduces the concept of Outcome-Driven Innovation to HBR readers. He explains how Cordis Corporation (now a division of Johnson & Johnson) used ODI to increase its angioplasty balloon market share from 1 to 20 percent by knowing who its customer was and helping that customer get the job done better.
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In this groundbreaking 2008 Harvard Business Review article, Tony Ulwick and Lance Bettencourt reveal an important discovery they made while turning jobs-to-be-done innovation theory into practice: job mapping. Recognizing just who is your customer, a job map breaks down the job the customer is trying to get done in a way that enables us to discover all the customer’s needs.
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What is Outcome-Driven Innovation?Outcome-Driven Innovation is the most effective innovation process in existence today. This white paper, by Strategyn founder and ODI inventor Tony Ulwick, explains why innovation has historically been an ineffective process, the discoveries he made that led to ODI, and how we use it to identify just who is your customer and accelerate company growth.
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What Customers Want, the best seller by innovation thought leader Tony Ulwick, explains what Outcome-Driven Innovation (ODI) is and why it works. Ulwick, who pioneered jobs-to-be-done thinking and invented ODI, details how ODI transforms jobs-to-be-done theory into a practical method for understanding just who is your customer and an effective process for innovation and growth.
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Choose from a dozen case studies with companies such as Microsoft, Ingersoll Rand, Bosch, and others, and learn how we apply our ODI methodology to identify just who is your customer and help companies grow.
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