Understanding customers is overrated, says Clayton Christensen

Clayton Christensen, at the SAS Institute’s forum in Las Vegas. Picture: Fran Foo Source: Supplied

Famed for his 1997 book, The Innovator’s Dilemma, Professor Christensen said organisations should instead ask the question ‘what job does the customer need to get done?’.

He warned that making improvements to products could prove futile and have no impact on sales if the question was left unanswered.

He cited the example of now defunct US computer maker Digital Equipment, an untouchable force in the 1980s and 1990s which in the late 90s began to waver — albeit under the same management team — because it didn’t understand the job customers needed done.

DEC didn’t realise personal computers would be a threat to its business because PCs were initially marketed as toys or low-level machines, unlike the powerful minicomputers it made.

But PCs later infiltrated corporate America because they could do the job of a minicomputer, both faster and cheaper.

Likewise, during Julius Caesar’s time, the horse and chariot were used for deliveries. Today, courier companies can get the task done.

“For centuries the job to be done has not changed (but) what people can ‘hire’ to do the job has changed,” Professor Christensen said, in an address at software analytics firm SAS Institute’s forum in Las Vegas.

Another example was a project by Harvard for a fast food restaurant trying to increase sales of its milkshakes.

After a few focus groups the restaurant launched an improved line only to face disappointment.

Professor Christensen said Harvard then embarked on uncovering the “job” that arose for people to “hire” a milkshake.

His colleague stationed himself at one of the restaurants for 18 hours, carefully taking notes.

Professor Christensen and his team wanted to know what time a customer bought a milkshake, whether it was a sole purchase, was the product consumed in-store or in the car as they left.

They realised that nearly 50 per cent of the milkshakes were sold before 8.30am to mostly men.

“They (customers) were always alone, it was the only thing they bought, and they all got in the car and drove off with it,” he said.

The next day, the group spoke directly to those patrons and realised they all had the same job — a “long and boring drive to work”, Professor Christensen said.

To understand why the product was so popular, the Harvard researchers asked the customers to nominate other “hires” used as replacements for milkshakes.

One person said he “hired a banana to do the job, but they’re gone in a minute and you’re hungry by 7.30am”.

Another said doughnuts, but they got the sack for messing up his clothes and “making his fingers gooey”. Bagels were dry and tasteless, and spreading cream cheese while driving was too dangerous.

While one other said: “I hired a Snickers to do the job once but I felt so guilty I’d never do it again.

“But when I come here and hire a milkshake, it is so viscous it takes me 23 minutes to suck it up that thin little straw and I have something to do (on the long commute).”

Most customers didn’t know the ingredients but said it did the job better than any of the competitors — not milkshakes from rival outlets but bananas, bagels, doughnuts, and Snickers.

Professor Christensen said once the job was understood it became very clear why the product improvements had no impact on sales or profits.

“They had hired it on dimensions of performance that were irrelevant to the job to be done.

“Once we understood the job it was clear how to improve it to do the job better,” he said.

He cited Ikea as a prime example of a company that caters for the job that needs to be done. He found it “interesting” that the 29 billion euro Swedish furniture giant had no direct competitors after 70 years.

* Fran Foo travelled to Las Vegas as a guest of SAS Institute

Source: The Australian - 23rd October 2014