Book Notes: Competing Against Luck by Clayton M. Christensen

Here are my notes, quotes and thoughts from Competing Against Luck: The Story of Innovation and Customer Choice by Clayton M. Christensen.

The main premise of the book is customers actually hire your product to do a job.  He calls this “Jobs Theory” or “Job To Be Done.”  The job a customer wants done isn’t always what’s apparent on the surface, but it usually involves progress.

Many customers don’t choose your product after considering an alternative product.  They are comparing you to doing NOTHING.  Inaction just might be your biggest competitor.

“Perspective is worth 80 IQ points.” – Jeff Bezos, Amazon

Innovation and Customer Needs

1. Look for unresolved needs in your own life. Sony founder Akio Morita advised against market research, urging instead to “carefully watch how people live, get an intuitive sense as to what they might want and then go with it.”
2. Look for inaction.  Chip Conley from Airbnb says 40% of their guests would not have made a trip at all or stayed with family if Airbnb didn’t exist.  Kimberly-Clark fought hard to break the stigma of adult diapers with new products, because those most in need of the product were embarrassed to purchase.
3. Look for where people create workarounds.  ING Direct became the fastest growing bank in the United States because they built a model around customer needs.  OpenTable exists because people created personal workarounds to making restaurant reservations with friends.
4. Look for what people DON’T want to do.  Many parents DON’T want to take their kids to the doctor when they have strep throat or a cold.  So QsickMedz and Minute Clinics stepped in to solve that problem.
5. Look for unusual uses.  Very few people actually use Arm and Hammer baking soda for it’s original purpose.  ZzzQuil was born because people had been taking NyQuil to help them sleep.

Taking usability is a better measurement you are making products with the customer in mind.

“How many apps do you have on your phone that seemed like a good idea to download, but you’ve more or less never used them again?  If the app vendor simply tracks downloads, it’ll have no idea whether its app is doing a good job solving your desire for progress or not.”

“The principal pull of the old is that it requires no deliberation and has some intuitive plausibility as a solution already.  Loss aversion – people’s tendency to want and avoid less – is twice as powerful psychologically as the allure of gains.” – Daniel Kahneman

In other words, people do what they do.

The typical American Doll purchaser will spend more than $600 for a doll that is nice, but definitely not amazing.  The dolls connect girls to the past, and parents purchase because they want to create experiences with their girls and “put off adolescence for a little bit longer.”

“American Girl is story, not stuff,” – Pleasant Rowland, founder.

95% of consumers use reviews and 86% says they are essential when making purchase decisions.

Resources, generally speaking, are fungible.  They can be bought and sold.  Products can, often, be easily copied.  But it is through integrating processes to get the job done that companies can create the ideal experiences and confer competitive advantage.

Processes are invisible from a customer’s standpoint, and they can’t be seen on a balance sheet – but the results of those processes are not.  Your processes are like your subconscious.

Most company reorganizations and restructuring doesn’t accomplish anything.  A 2010 Bain and Company study report that fewer than 1/3 of major reports reviewed delivered any material improvement and many actually destroyed value.  This is often because reorganization is company focused and few people are looking at things through the eyes of customers.

Amazon focused on when ordered are delivered not when they are shipped.

Stack fallacy highlights the tendency of engineers to overweight the value of their own technology and underweight the downstream application of that technology to solve customer problems and enable desired progress.  The result is often cool features nobody uses.

If processes are not aligned with customer needs, optimizing the process means getting better at doing the wrong thing.

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole. – Ted Levitt.  Customers don’t want products; they want solutions to their problems.

Keep your eye on the customer job, not just the numbers.

1. Data is always an abstraction of reality based on underlying assumptions.  Data is man-made, and if often leads managers to manage the numbers instead of lead toward the customer problems.  Data has the agenda of the person who created it.
2. Surface growth often leads companies to create many products for many customers and lose focus on the core reason success came in the first place.
3. We can always conform the data and the messages to our beliefs.  We see the information that tends to support our point of view.

Focusing on real customer needs is like an innovation North Star.Mission statements are usually phrased at such a high level and so generically that employees find it difficult to use them as guides for auctioned decision making, and innovation.  “I want to be a good father” doesn’t really guide you through he weekly schedule and routine of actually being a good father.

Mission statements are usually phrased at such a high level and so generically that employees find it difficult to use them as guides for auctioned decision making, and innovation.  “I want to be a good father” doesn’t really guide you through the weekly schedule and routine of actually being a good father.

Focus on the core customer need as the defining and aligning organization principle of what you do.