Innovation: Blind luck or science? (Part 1)

Richard de Kock: 0:16

Welcome everyone. We have a great session today, all about a topic shrouded in mystery. That's right. We're talking about innovation, and who better to learn about innovation from than Tony Ulwick, the pioneer of jobs theory and inventor of outcome driven innovation? This session is part one of a two part series, so please be sure you catch the follow up session in the next two weeks.

Richard de Kock: 0:38

Now, before we start, I wanted to let you all know and remind you that I'm a full time Microsoft employee and that this podcast and the thoughts and ideas shared by myself, your host and my guests are in no way affiliated to Microsoft's business, products or services. And with that let's start our hunt for clarity. So, tony, thank you so much for joining us and being a guest on the search for clarity. You are known as the pioneer of jobs to be done theory and the inventor of outcome driven innovation, the founder of strategy which you formed in 1991, and formerly an IBM employee. Is that right? That is all correct. Good, so I passed the test. So far. So far, so good. So far, so good. So, publications that you've written and I'm probably going to need some corrections here with the research that I've done, but I believe one of the first publications you had was Harvard Business Review turning customer input into innovation around 2002. I don't know of anything prior to that. Is that correct?

Tony Ulwick: 1:41

That was the first HBR piece. I did publish a book called Business Strategy Formulation in the late 1990s. I think it was 98-99 timeframe, right Got you.

Richard de Kock: 1:53

So the main book you published thereafter was what Customers Want Using Outcome Driven Innovation to Create Breakthrough Products in 2005. And then your main book, which I think received a lot of attention and again, I'm sure the others did as well. But one of the books you became very popular was Around Jobs to be Done Theory to Practice Released in 2016. Is that right? That is correct. So I thought let's start off at a really rudimentary level. For people, what is innovation? How would you define it in terms of its outcome? So usually when people say innovation, people are thinking massive bottom line impact, or are we talking about things that could also result in slight process improvements, something in between? What do we mean by the term when we're using it in your context?

Tony Ulwick: 2:40

Sure, so, as you can see, it's going to include all the above. But, Richard, I think this is a great question because it's the beginning of everything regarding innovation. So we have to define it, and I have a very specific definition, and we define innovation as the process. First off, it is a process of devising solutions that address unmet customer needs, and we know that people buy products and services to get jobs done. So you could also say that it's the process of devising solutions that help people get their jobs done better and more cheaply. So when you think of it like that whether it's slight process improvement or something huge or breakthrough, or radical or disruptive, it really depends on the degree to which you've achieved the goal. In other words, are you helping customers get the jobs done a lot better and more cheaply? If you can do that I'm not sure how we label it, but it's way out there right? We call that a dominant strategy. If you can get the job done worse but far more cheaply, well. That's the classic disruptive innovation that Clay Christensen talks about. If you can get the job to better and charge more, well. That's the differentiated strategy that Michael Porter talked about years ago. So I think the premise is pretty simple. We're just trying to help people get a job that's better and cheaper, and the degree to which you can get the job done better and cheaper kind of defines the type of innovation or how successful you've been at it.

Tony Ulwick: 4:22

But laying out like that, I think it's quite simple, and I also wanted to clarify the difference between innovation and invention, and when invention is a new solution. Sometimes it's never been done before, tried before. But a lot of innovation doesn't require invention. A lot of innovation is putting together technologies that exist to get a job done better and cheaper. When we first helped Motorola with their 2A radio business back in the 90s, they came out with the talk about, I would say, very simple technology in fact 30-year-old technology, but it helped people communicate in remote locations much more effectively than the existing solution. So you could say it got the job done better and cheaper. It was very successful. It didn't require invention, Right? So then I also wanted to mention ideation. Sometimes people talk about ideation as being synonymous with innovation, but to me it's just part of the process of innovation, Right, Like once you know the customers on their needs, then it's time to come up with solutions or bring some solutions that might address them. So that's the ideation process. It's a subset of the innovation process.

Richard de Kock: 5:40

I'm really glad you clarified that, because I don't really think there's a very clear definition about those three as you've just put it out there today, so that's really helpful.

Tony Ulwick: 5:49

Yeah, what? I think the importance of that is the way innovations become classified too, right, because you know, some of the articles say you know, here's the 10 types of innovation, or the five types, or the three types, or the eight types. I mean, it's been categorized in so many different ways, I think, adding unnecessary complexity, right? I think the model we described really helps to keep it simple. We're just trying to get a job done better and cheaper and the degree to which you can do that. It takes the success you have.

Richard de Kock: 6:21

Now I know that you mentioned in your job to be done book that failure at the IBM. I think it's called PC Junior, right? Was that what it was labeled? That's right. That's what inspired you to find the right way to do innovation, and you did this through and this is what got me really excited. You applied a lot of statistical research. You applied multiple quality tools such as SIGS, sigma, process control principles, etc. Can you tell us a little bit leading up to that, because I'm curious about your total quality background and your knowing how to start playing with these tools and then how you landed on you know the great idea and what got you to think in that way back then?

Tony Ulwick: 7:03

Sure, so I started my career at IBM as a manufacturing engineer. So I was out on the line helping to improve products for manufacturability, laying off the lines. So you know, after working in that environment for a few years, I switched over to work in the PC Junior on their manufacturing line, and this product was going to be IBM's entrain to the home computer space. It was going to be Apple. It was going to be the greatest thing since sliced bread. But it wasn't. In fact, the day after it was introduced the headlines in the Wall Street Journal read the PC Junior is a flop, and it was Now. We didn't believe it for a good year or so, but it certainly was Now. This led me into thinking that there's got to be a better way.

Tony Ulwick: 7:52

I wondered how a company like IBM, with all its fast resources, could make an investment in a product that failed so miserably. And you know, at that time I didn't know that this happens to every company and that is a widespread problem. I just thought we just missed the bone. But over a period of about five years I worked on a small team in the product planning area to try to figure out a better way, and during this timeframe QFD became fairly well known.

Tony Ulwick: 8:21

Voice of the customer started. Statistical process control, six Sigma, all these things started coming together. And you know, being a manufacturing engineer, it occurred to me one day, back in around 1989 or so, that that quote that Levitt talked about people don't want the quarter inch drill, they want the quarter inch hole. I had seen that a million times, but it finally occurred to me that if we think about talking to customers around what they're trying to accomplish, you know, like creating the quarter inch hole, instead of talking to people about making better products, if we truly could understand what we're trying to accomplish now, we can study a process, just like you could study a manufacturing process or any process, right?

Richard de Kock: 9:10

Right yeah.

Tony Ulwick: 9:11

And so the thought immediately clicked and I thought well, you know what, if we can figure out what metrics use to measure success as they go about and try to execute this process that they're doing, we can use those metrics to help guide the creation of better products. And it turns out that's exactly right. You know, the way we say it now is people buy products to get jobs done and they have a set of metrics they use to measure success as they go about and execute those jobs. We call those metrics the customer's desired outcomes. Now, it's very similar to what an engineer would do on the manufacturing line, right? But what you're trying to do is, as we would say, is you're trying to measure. And you know we ask what can you measure and control to produce a predictable output?

Tony Ulwick: 9:57

Right, we're applying the same thinking here, but now it's customer facing. We're saying, okay, let's go talk to customers and see how do they measure success? What metrics are they using to judge success from getting a job done? So that's what led to outcome-driven innovation. And you know you talk about how the influence of total quality management played in my thinking. In fact, when I started Stratagen, I first called it the total quality group. I sold it For that very reason, because I thought what we were doing is applying total quality principles to strategy formulation, and so that's the connection points between, you know, the manufacturing discipline and the innovation process that we created.

Richard de Kock: 10:47

You highlighted that companies generally, when it comes to the innovation process, they take on either an idea-generating process approach to innovation so go out and just scrub the decks and find every possible idea they can find from every possible employee they can find and customer focus groups, et cetera, just collect these huge amounts of ideas and backlog them, et cetera or they take on a needs-first approach where they're identifying customers' unmet needs and ensuring that those who are met. You mentioned that these approaches are fundamentally flawed.

Tony Ulwick: 11:19

Well, the first approach is fundamentally flawed. The second approach is hard to execute. Got you Thanks for clarifying. So the idea-generation approach that is fundamentally flawed, in other words, this idea-first approach, where you just come up with ideas, brainstorm solutions, go out and test them with customers, iterate, retest, iterate, retest what you're doing there. Every time you're retesting, you're learning more about customers' needs, right? So over a period of a year, you may go through 10 iterations of a product and eventually learn 20 or 30 or 40 different customer needs. Now, is that a complete set? No, no, you still don't know all the customer's needs. So what they're doing, in effect, is learning about a couple of customer needs, maybe satisfying one or two, and then putting together a product that might address those one or two unmet needs. Now, if you do this, that's always a path for incremental innovation. In other words, if you only know one or two unmet needs and you work to satisfy them, you're not going to get the job done significantly better, because there might be 100 customer needs, 30 or 40 of which might be unmet. So you're just a Me Too product. So this idea-first approach will never be better than the needs-first approach.

Tony Ulwick: 12:45

The reason I say that is in order to judge the value of an idea, you have to be aware of how well it's created. You have to be able to evaluate it against all the customer's needs to see how well it's creating value. If you don't know all the customer's needs, you can never complete. The evaluation Makes complete sense. So you could keep iterating. You could keep taking that idea out there and testing and iterating, and recreating and iterating, but it's an extremely inefficient approach and the only way it will become predictable is once you've finally learned all the customer's needs and what you're unmet. So you can get there. But it'd be extremely inefficient and this is why we say the needs-first approach makes far more sense.

Tony Ulwick: 13:28

Let's go talk to customers, understand all their needs, figure out what you're unmet, figure out if there's segments of people with different unmet needs, and then go address those unmet needs with solutions. Now it makes more sense, right? That's marketing 101 logic. So there's nothing new there, just that it's really hard to do. And so for a couple reasons. One is there's no agreement in most companies as to what a customer need even is. So you know, the sales team talks about customers needs as latent needs and unarticulated needs, and the marketing team may call them the exciters or the delighters. The product team may think of them as specifications and requirements. R&d may think about them differently, but the point is every you know each function has a different view of what a customer need is. So if a product team can't agree on what a need is, how can they agree on what the needs are which are unmet, and so on?

Tony Ulwick: 14:28

so that's that's the first problem. The second is this notion that Just focusing on one or two needs is okay. This gets back this incremental improvement right? There might be a hundred customer needs, 30 of which are unmet. If you stumble across one or two of them and you include Solutions in the next product generation, you're only getting the job done a little bit better, sure. And then six months, nine months, a year later, you may put another iteration out and get the job done a little bit better, right. And you can do this year after year and just make incremental improvements that never really pull you far ahead of the pack, whereas the whole time there were 30 unmet needs, right? So can you imagine if that first iteration of product you addressed seven or eight of them, and then the next iteration you had five or six more, and the next iteration is four or five more? Right now, what you're doing is you, it's the degree to which you're getting the job done better. That's putting you way out in front.

Tony Ulwick: 15:31

It's it's like you're coming up with one breakthrough solution after the other, and it makes it extremely hard for For competitors to duplicate what you're doing, because you know they don't agree on what a need is either right, and they can't agree on what needs are unmet. So once you have this common language for communicating a need, it changes everything, and this is why we spent so much time tying customer needs around the job to be done Right. Like we said before, if you define a market as a group of people trying to get a job done, well, we can define customers needs as the metrics they're using to measure success as they go about and get the job done. And once we know these metrics that are very tightly tied to this process, we can figure out where people struggle to get the job done. Are they underserved? Were they over-served? Were? Opportunities exist for adding value, for reducing price, and now we're introducing science to this traditionally random process of innovation.

Richard de Kock: 16:36

Yeah, I mean. Something I noticed from your book as well was the emphasis you placed on the syntax and the structure of creating a need, like a custom-need statement, so that you are being very clear as to the definition of what that is. So you're using a uniform language across every department, so to speak, Because this has been a problem for quality for so many years. What is quality? Well, the marketing department's got a view of it. It's interesting to hear the same problem for innovation and your customer needs. It's that frame of reference that we've all got a different view of the world and not a common view.

Richard de Kock: 17:17

Now, anyone who has ever looked up innovation in books or on the internet will find a plethora of approaches and opinions on how this should be done. So today, with technology at the centre point, it seems the mantra behind everything is innovation, innovation, innovation, and we're seeing this explosion of ideas and approaches on how to do innovation correctly. I'm curious to find out are there any? Well, is there any substance out there, Tony? Or are you of the opinion that jobs to be done is the only approach that provides success when it comes to innovation?

Tony Ulwick: 17:51

Well, there are different approaches, of course. I read about them all the time and they generally fall into two categories the ideas first approach and the needs first approach. Still today, jim, still today, absolutely, and I would argue that more companies, either knowingly or unknowingly, use the ideas first approach.

Richard de Kock: 18:13

I see it very often as well.

Tony Ulwick: 18:14

Yeah, they may say, oh no, we've talked to customers. I'm sure they do, but they're talking to them about their solutions, right, and then they're iterating on the solutions. It's pretty rare that you know this ideas first approach, that they spend a lot of time really understanding all the customer's needs. In fact, people that fall in this category often believe you cannot know all the customer's needs and that the customers don't even know their needs. You know they have the latent needs that they don't know they have.

Richard de Kock: 18:44

Yeah, and that's a really interesting point Because I mean, I was from that school of thought. Tony, when you look through all the resources out there, you seem to find many advocates for a no single approach, because the problems they claim that you're trying to solve are unique and different, requiring different approaches to address. And another aspect of this is when we consider what it's like to be innovating in the world as it is today. You know consumer's behavior has been completely disrupted by COVID. So when taking a needs first approach, how sure are you that, given their erratic behavior, that they really know what they want or what they need? I mean, it's tempting for us to consider the logic of the no single approach being advocated. What's your view of this context and do you believe the jobs to be done is still able to address this effectively?

Tony Ulwick: 19:34

Yeah, yeah, I think so. You know customers can't relate that well to solutions Like when you present a customer with a solution and say what do you think? Basically, what you're asking them to do is to translate the features that they're seeing into some benefits that then could be attached to their unmet needs. And you're forcing them to go through that whole exercise. And it's very hard for someone to look at a product and look at its specs and so on and try to figure out well, how does that help me satisfy my unmet needs? So they may often say I don't know or they can't evaluate it. But this isn't their job, right, it isn't their job to evaluate the products. It's an engineer's job to evaluate how well a product is addressing the unmet needs. This is why I go back to this misunderstanding where people think customers have late needs. They don't know their needs, they can't articulate their needs. Well, if that's true, why would you ever talk to customers about their needs?

Tony Ulwick: 20:40

And I see a couple quotes often come up, like the Henry Ford quote that if I asked people what they wanted, they would have said faster horses or steep jobs. If people don't know what they want until you show it to them, these statements are often held out by the idea's first approach, people as a justification for that Going about a needs first approach. Now, what they don't realize is what steep jobs and Henry Ford was saying had nothing to do with. People don't understand their needs. What they're saying is you know, if I ask people what they wanted, what solution they wanted, they would have set a faster horse. Or people don't know what solutions they want until they see them.

Tony Ulwick: 21:23

That's true, they don't know what solutions they want, but it's not as if they don't know what they're trying to achieve and how they measure success, right? So when you put it through this jobs be done framework, it gives you a new lens around which to bust those myths. Right? People know exactly what jobs are trying to get done. People are trying to cook a meal, for example. They know that they're trying to minimize the time it takes to cook the meal and minimize the likelihood of over cooking, undercooking, you know, minimize time it takes to clean up. They knew all that well before the microwave was discovered, but very few customers could have ever said, hey, we need a microwave, right, because they're not the they're not the technologists, the materials experts or the scientists, right, and they don't have to be.

Tony Ulwick: 22:07

In other words, innovation is the job of the organization and, in the role that the customer plays, is to give you the inputs that you need In order to make innovation predictable, which are the metrics people use to measure success from getting a job done. So, richard, as you mentioned, you know, with COVID, you know just a lot of change. The basics still hold up. You know. We've Certain jobs have taken on a greater importance during COVID, but the process of innovation remains exactly the same. Right, once you know what the job is and how people measure success, you can figure out exactly where they're underserved and create products that get the job them better and cheaper.

Richard de Kock: 22:47

And one of the things I liked about your framework is that you actually map out, you know, the general jobs that you would be needing to evaluate, which is a great frame of reference to get started with, especially Sort of. You codify all of that really well in the publication.

Tony Ulwick: 23:02

Yeah, yeah, in fact, we introduced the the job map, as we call it in a 2008 hbr article that goes into pretty good detail, but at a very high level.

Tony Ulwick: 23:13

We found that People execute jobs or processes in a certain flow, or they should be anything, let's put it that way and and we so we created the job map that shows that, that universal flow, and what we do, what we help clients do, what we suggest they do, is that when they define, after they've defined, the job the customer is trying to get done, that's done by talking to the customer. That's done by talking to the customer is that they work with the customer to break it down to these job steps. So we create the job map. Now, the value of the job map is twofold. One is it points out the beginning and the end of the job, and what we have discovered is that most products only get part of a job done.

Richard de Kock: 23:58

And because I'm part of the requirements that you find right.

Tony Ulwick: 24:01

Yeah, because they're getting maybe you know Two of the eight steps of the job done. Well, the customer doesn't want to cobble together lots of solutions to get the job done, but they're forced to, and we see this in so many markets right, where people are cobbling to multiple solutions together to get a job done. You think about, like social media. You know how many people are on just one platform. They're very good point. Yeah, many are on ten platforms. That's. That's because you know it's very rare that any of the platforms get any one of the jobs done completely, so they have to cobble together the solution. So if you know what the entire job is now, you have a roadmap for the future, because that's not going to change over time. Jobs are stable over time. So your goal as a company can be to get the entire job done on a single platform. So that's the North Star right and everything right do for the coming years is is designed to help the customers get that job Done better and more cheaply.

Richard de Kock: 24:58

So now you know what the job is right.

Tony Ulwick: 25:01

And then then we layer, of course, the outcomes on top of that. For every job stepped, it might be five or ten very specific metrics people use to measure success and once we know all those, we have this complete picture of this deep understanding at a very granular level of how customers measure value. That goes back to the syntax you talked about earlier. You know we've Spent a lot of time fine-tuning those statements, because these outcome statements have to be useful inputs for marketing, for development, for R&D, for the sales team. They have to be statements that can be captured from customers. They have to be statements that can be prioritized by customers so we can figure out which one's the most important, poorly satisfied. So there's a lot of pressure on these statements, right? I always joke about this and I say it's really unfortunate that we have to define needs using words. Right, we can't use numbers, we have to use words. So these words have to communicate from the customer to the organization how to create value for that customer.

Richard de Kock: 26:06

Thanks so much, tony, and thank you all for joining our session today. We got a lot of groundwork covered today and we've learned a lot about innovation, how it's defined. We got to hear about how Tony developed his approach over the years and what sparked his thinking to create what he's done and his approach. We got to learn about how ideation as an approach is flawed and how a needs-based approach was a more effective approach to innovation. And, finally, we got to hear where organizations should be focusing their efforts amidst all the noise around innovation today, join us in our next session, where we're going to discover how the jobs to be done process actually works, how people can practically start to implement it, and learn about what the biggest challenges typically are to adoption and how we can work around those. Also, and this is important don't miss out on joining a two-day virtual jobs to be done fundamentals class led by Tony himself.

Richard de Kock: 27:02

This is going to be on the June, the eighth and the ninth. It will be a great opportunity for you to get hands-on experience in uncovering areas to innovate, defining your market in a way that unlocks hidden growth, capturing underlying needs that drive customer behavior, aligning your team around an understanding of those needs and learn how to build an innovation capability in your organization Basically unlock everything you've heard in this podcast today. You can get the details for this at strategycom. Forward slash fundamentals-class. And, to make life easier, you can find the link at the end of the transcription. If you go to wwwthesurgeforclaritycom. Also, you can get a free copy of the jobs to be done book, with a link at the end of the transcription as well. We look forward to catching you in our next episode. I hope this one's been a good one for you. Until then, keep the search for clarity continuing.