It seems like a simple equation: product plus innovation equates to a better product, which means better sales and company growth, right?
Not necessarily, said Clayton Christensen, a professor at the Harvard School of Business and author of The Innovator's Dilemma.
Speaking at the Qualtrics Insight Summit, Christensen said what many companies fail to do is define just what problem their products are solving--what job, in a sense, customers have that needs doing. "Whenever we find we have a job to do, we have to find something we can hire to get the job done," he said.
Take McDonald's' milkshakes. Christensen was among a handful tasked with finding ways to increase sales of the restaurant's desserts. The restaurant tried increasing their quality, but it had no effect on sales. Christensen said they stood in a McDonald's for 18 hours, carefully taking note of each customer--their demographics, what they ordered, if they were alone or with others, and if they ate it at the restaurant or took it with them. They found a disproportionate number of the orders of milkshakes were occurring before 8:30 a.m. by people who didn't order anything else and took them to go.
The following day, when they waited outside for those people and asked them why they had ordered the milkshakes, they found a common thread. The people had long, boring commutes and would get hungry by the middle of the morning. The job they were "hiring" the milkshakes to do, then, was to satiate their hunger and help distract them from the monotony of the road.
"[They said] 'When I come to McDonald's and hire a milkshake, it is so viscous--it takes 23 minutes to suck it through that straw. Who knows what the ingredients are; I don't care, I'm still full at 10 o'clock/" he said. "Understanding the job to be done is just critical to creating products and services that will create growth. You can see in understanding the job how you can improve the milkshake for the jobs that need to be done."
Understanding the role a product is playing is also crucial for understanding who and what the competition is, he said. In the case of the milkshake, then, McDonald's' competition wasn't Burger King or Wendy's--it was bananas, donuts, bagels and candy bars.
"The markets that you're serving are probably much bigger than you think they are, and you can understand it if you understand the job people are hiring it to do," he said. "To realize that the markets we are in are stable, predictable...