The “Jobs to be Done” Theory of Innovation

SARAH GREEN CARMICHAEL: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green Carmichael. The theory of disruption was spelled out in the 1997 book, The Innovator’s Dilemma by Clay Christensen. Christensen, a professor at Harvard Business School, wrote about the difference between sustaining technologies and disruptive ones. And he did that to explain why some of the biggest and leading technology companies of the day failed to catch the next wave of innovation in their industries and went out of business.

Now he’s come out with a new book looking at innovation from the other side. It’s not about how big companies fail, but about how successful companies know how to grow. The book is called Competing Against Luck. He spoke about it to an audience in London recently, where he was interviewed by the editor of Harvard Business Review, Amy Bernstein. Christensen began by speaking about his theory of jobs to be done, giving an example from a well-known fast food chain.

CLAYTON CHRISTENSEN: McDonald’s, a number of years ago, as this idea of the jobs to be done was emerging, they decided that they needed to increase the sales of their milkshakes. And, as you know, McDonald’s– these are very sophisticated marketing people. They have data about– up the gazoo about anything you need.

And they had a demographic profile of the quintessential milkshake customer. Actually, I fit the profile perfectly.

And so they would invite people like me into offices, explain that they were trying to improve the milkshakes so that people will buy more of them. Can you give us any guidance? And the customers would give them very clear guidance. They would then improve the milkshake, and the impact on sales or profits was negligible.

So we convinced them, as this idea of the jobs to be done began to emerge in our minds, if they would let us put that lens on to understand milkshakes. And the question is, somewhere out there, there’s a job that arises in the lives of some people sometimes that causes them to hire a milkshake to get the job done.

And we need to understand what’s the job. So one of my colleagues stood in a McDonald’s restaurant for 18 hours one day and just took very careful notes– what time was it that he bought the milkshake at? What was he wearing? Was he alone? Did he buy other food with it? Did he eat the milkshake in the restaurant or get in the car and go off with it?

And it turned out that about half of the milkshakes were sold before 8:30 in the morning. It was the only thing they bought, they were always alone, and they always got in the car and drove off with it. So to figure out what was the job, we came back the next morning and we positioned ourself outside the restaurant so that we can confront these people as they were emerging with their milkshake.

And we’d say, I’m having a real problem here with your behavior.

What job are you trying to get done that cause you to come to McDonald’s to hire a milkshake at 6:30 in the morning? And the they would struggle to answer the question, we said, I’m sorry for a tough question. Try this. Think about the last time you were in the same situation where you needed to do the same job, but you didn’t come here to hire a milkshake from McDonald’s. What did you hire?

And it turned out, that they all had the same job to do. That is, they had a long and boring drive to work. And they just needed something to have while they were driving to stay engaged with life and not fall asleep. One hand had to be on the wheel, but geez, somebody gave me another hand, and there’s nothing in it. And I just needed something to do while I’m driving.

I’m not hungry yet, but I know I’ll be hungry by 10:00. So I also need something that will just go thunk and stay there for the morning. So what do I hire to get that job done when I don’t hire a milkshake? And one guy said, you know, I never thought about it this way before, but last Friday, I hired a banana to do the job.

Take my word for it– never hire bananas. They’re gone in less than a minute, you’re hungry by 7:30. Yeah, as you can say, I hire donuts a lot. I can never hire just one. But that creates problems on their own.

And I do bagels sometimes, but bagels are dry and tasteless. And so I have to steer the car with my knees while I put the cream cheese on.

And then if the phone rings, I have three problems and two hands, and– one guy said, I hired a Snickers bar once, but I felt so guilty I’ve never hired Snickers again. But let me tell you, when I come here to McDonald’s and hire this milkshake, it is so viscous. It takes 23 minutes to suck it up that thin little straw.

What the ingredients are, I don’t care. All I know is that I’m still full at 10 o’clock. And it actually fits right here in this cupholder. And it turns out that the milkshake does the job better than any of the competitors’. And the competitors are not just Burger King milkshakes. But from the customers’ point of view, the milkshake competes against bananas and donuts and bagels and coffee and Snickers bars and probably some other things.

And so that’s one job that accounted for about half of the– and then later in the day, customers hired a milkshake to do something totally different. And that essentially is between a parent and a child. I want to just have a venue in which they believe that I’m listening. And I just need to have some kind of a mechanism to put us on the same– I want to know what’s going on. Would you please let them know how much I care for them?

That’s a very different job to do. And understanding what the job is puts you on a very different trajectory. So how could you improve the milkshake for the morning job to be done? It turns out that the reason why they had been worked so hard to get input from the customer and it had no impact on sales or profits is that they had been improving the milkshake on dimensions of performance that were irrelevant to the job to be done.

So how we would improve it knowing that you understand what the job is, well, I’d move the milkshake from behind the counter to the front of the counter and give people a prepaid swipe card so you could just dash in, gas up, and go and never caught behind a line when we’re late for work. You probably make it thicker to take longer to suck it up, and so on.

Last question– how big is the milkshake market? It’s a serious question. Well, of course, you wouldn’t know the answer, but it turns out that the size of the market is much bigger than the sum of the milkshakes sold by McDonald’s, Burger King, and Wendy’s. Because from the customers’ point of view, they compete also against bananas and donuts and so on.

And in the part of the market in America where they implemented this, the sales of the milkshakes increased by 7x when they improved it in ways that really connected, because competing against bananas is like duck soup.

And fortunately, Peter Drucker figured this out before we did when he said, the customer rarely buys what the company thinks it’s selling. And understanding the job to be done, we found, really helps us in making innovation predictable. Because the job exists. And if we make the job so that it does it better, we can predict that the customers will buy it.

Why don’t we organize ourself around a job to be done? And what happens is the original job to be done, that was the basis of starting a new company. Almost always, successful companies were focused on job to be done at the beginning. And then the logic takes over.

And the logic is, well, we have these customers. And they use us to get a job done. Our customers have other jobs. And so maybe we ought to offer other products so that they can get those jobs done as well. And so The New York Times, the job that it was organized around, was they publish anything that was fit to print.

But we have this relationship with our customers. Surely we have to offer more things. And so one job that arises is I’m on the tube for 45 minutes every morning. I don’t want to waste my time. So can I hire something just to help me be productive. And for a while, you had The New York Times to read. But it was very cumbersome.

And so then a company called Metro came. Just a simple product you could go from beginning to end in about 25 minutes. And now we have smartphones. But we hire those things to get that job to be done.

If I need to get rid of junk, or if I want to buy junk,

The New York Times had personal advertisers. Now you can hire Craigslist. Sometimes I need to buy a car. Sometimes I have a car I want to sell. And so The New York Times offered advertisements to get that job done, too.

I need a job, or I need to hire somebody to fill a job. And so they have advertisements to do that job well. I need to buy a home or sell a home, and so on. And so The New York Times added all of these things to their product, thinking that they will do better. And then they have been being disrupted by companies that focused around a single job to be done. And we do it better than anybody else.

And the newspapers, most of them, are just falling off the cliff because they’re not focused. Innovation around a job to be done starts with the understanding that there is a job given the situation that I’m in. And each job has a functional dimension, but an emotional and a social dimension to get the job done.

If we understood that, then we can answer the second question, which is, so given this, what are the experiences in purchase and use do we need to provide in order to nail the job perfectly? And if I can provide those experiences to nail that, then I can ask the next question– so, if we need to provide these experiences to the customers, what do we need to integrate? And how do we need to integrate them?

And if we can go through that architecture in a consistent and insightful way, this is where we differentiate our product versus the competitors’. It’s not by making a better product than the competitors. That is very easy to copy. But if we put into place experiences that the customers need, that’s where differentiation occurs. And that’s the place where customers decide to buy my product rather than your product.

You know, when I realized I have a job to do, the next step is, oh, darn it. I have to buy something to get the job done. What should I hire to do the job? And I look around, and if I can’t find a product to get the job done, then I have to shop and test drive and bring it home and put it on and return it and get this and add it to that, because nobody developed a product that does the whole thing well.

And looking for something to get the job done can be very costly in terms of time and money. And if we, instead, have a brand that just pops into people’s minds so that when they realize I have this job to do, what can I hire? If a brand pops into our mind, then I will be delighted to pay a premium price to get the job done. Because buying a product that doesn’t do the job well is very costly.

So the third of our five children, Michael, went to Stanford to get a Ph.D. And after he’d been there for about a week, he called us up and said, mom and dad, I found my apartment. I need to furnish my apartment tomorrow. So Michael found himself with a job he had to do. That is, he needs to furnish his apartment tomorrow.

When you find you needing to get that job done, which is the job I need to do is I have to furnish my apartment tomorrow, is there a brand that pops into your mind?

IKEA has been rolling out its business model around the world for a 15 years, and they have no competitors. And why? Well, they don’t have any secrets. It’s not that there’s no money in it. Their owner is the third-richest guy in the world. And he got rich by selling substandard furniture to the low end of humanity– college students.

And why is it that they will pay a premium price? Because it does the job well. And if they didn’t hire something that did the job well, then they’d have to go to this store and this store and buy this piece of furniture and throw that away. And going for a product that doesn’t do the job well is so costly that they’re delighted to pay a premium price.

AMY BERNSTEIN: So Clayton, what you were saying about integrating around a job and you introduce the idea of The New York Times makes me wonder what you think about the AT&T-Time Warner proposed merger.

CLAYTON CHRISTENSEN: Doesn’t it just rip your heart out?

Because two good companies, you know? And so they have no sense of merger there at all. And this has been done before.

AMY BERNSTEIN: Right.

CLAYTON CHRISTENSEN: So in finance, not many years ago, Citibank went through the same logic. And that is, oh, geez. We have credit cards and customers who have checking accounts, and they also invest their savings. And so they need financial– your investment help. And they are buying a home. And so some of them need mortgage.

And their customers need– all of these things arise in their lives. And so Citibank buys all these companies, because the customer needs all of these things. The problem with that is the job that causes me to need a credit card arises at a different point in life than when I hire life insurance. And so they put them together.

And because these jobs arise at different points in time and space, integration around the customer just doesn’t make sense. And so for these guys– we need to pray for them.

AMY BERNSTEIN: Well, the regulators may do it for them.

CLAYTON CHRISTENSEN: Yeah. That’s right.

AMY BERNSTEIN: So talk about how your theory of jobs to be done helps us identify threats and opportunities.

CLAYTON CHRISTENSEN: For me, it allows me to go to that second level. If I just simply think that I’m in the business of making a product, and I win if my product is better in functionality than the competitors’ then I win and if I get behind in that race then I lose, it doesn’t give me any guidance about where and how can I differentiate what I’m offering so that they will pay a premium price for an average product.

And that you have to understand, so what are all of the Experiences And I can’t provide experiences unless I understand what the fundamental job is. So to me, that helps me be a better innovator. Because I have– it’s kind of like a North Star, and my innovators in my company can do all this work, sometimes out of the line sight of the executives.

But if you have that North Star, the job to be done, they will, I think, collectively do a better job in innovating. Amy, can I say one other thing?

AMY BERNSTEIN: Of course.

CLAYTON CHRISTENSEN: So this question kind of helped me a lot to understand what happened to Kodak. This is a wildly successful company. And we assume that they were just disrupted by digital imaging. And if the idiots had just been invested in the right thing, they would have survived. And the jobs to be done theory helped me frame it very differently.

Kodak saw digital imaging coming. And starting in the early 1990s, they invested $8 billion to get really good at digital imaging. Really invested. The people they hired were from Bell Labs. But they didn’t get the job right, nor did any of us get the job done right. And we thought that the job that people hired a camera with film to do was to preserve memories for posterity.

But it turns out that 98% of all of the images ever taken have only been looked at once. And think about it. What you would do is you’d get the prints and you’d go through them. And then what would you do? Put them in the envelope, put it in a box, in a drawer, and you’d never look at them again. And so there must not be a job there that people were trying to do. It’s just we assumed, but they didn’t.

And then looking back on it, inadvertently, Kodak and their distributors made a different proposition that we will give you double prints, not single, when you bring your film in for processing. And the nice thing about that was when we were doing this. If there was really a photograph it just clicked, we had an extra that we could put it in an envelope and send it to my mom. And that was a different job to be done.

And mom, I love you, but I’m busy today, and I can’t write to you. But look at this photograph. And the photograph, the job to be done, was I want to communicate. And actually, you can communicate a lot with an image. And little by little, I think the job coalesced in our minds is that we could use imaging rather than writing to communicate to people who are not here and now.

And so as the new technology emerged that wasn’t what Kodak developed, but it was just a tiny little lens, flash memory, you could put it in a smartphone, and I can send you 20 images just like this, and you can see them, and you know so much more of what’s going on in your family’s life that the next generation, actually, they don’t want to have to be bothered to write letters at all.

But we, little by little– the job to be done became clearer and clearer in our minds. And I think Facebook is a part of that. We use these things to communicate. And there’s a very different job, which is, I actually don’t want to be in communication. I’m a nerd, I’ve got a deadline, and the last thing in the world I want is to have to communicate with humans. I find that arise in my life occasionally, you know.

And that’s a very different job.

SARAH GREEN CARMICHAEL: That’s Harvard Business School professor Clayton Christensen speaking in London about his theory of jobs to be done. Christensen is the author of the new book, Competing Against Luck– The Story of Innovation and Customer Choice. He was interviewed by Amy Bernstein, the editor of Harvard Business Review.

Thanks for listening to the HBR IdeaCast. You can follow HBR on Twitter @HarvardBiz, and feel free to connect with us on Facebook and LinkedIn, too.