The Five Cs of Opportunity Identification

Simply asking "what job is the customer trying to get done?" can be a powerful way to enable innovation, because it forces you to go beyond superficial demographic markers that correlate with purchase and use to zero in on frustrations and desires that motivate purchase and use.

Seductive simplicity hides a rich, robust set of opportunity identification tools. Through our experience utilizing the "jobs-to-be-done" concept in a range of settings, my colleagues and I have developed five tips for would-be innovators: the five Cs of opportunity identification (modeled after marketing's famous four Ps — price, product, place, and promotion).

1. Circumstance. The specific problems a customer cares about and the way they assess solutions is very circumstance contingent. A parent looking for a convenient way to diagnose whether their child has an ear infection thinks and acts very differently from someone who suffered a broken arm. In the first circumstance, MinuteClinic and other convenience-oriented, kiosk-based solutions work wonders; in the second they clearly fall short. Create a simple "job-circumstance" matrix that has primary jobs-to-be-done on one axis and common circumstances on the other axis. It is a simple way to visualize opportunities for innovation.

2. Context. Ask a customer to report what they did in the past and you are likely to get something that bears only a loose resemblance to reality. Ask a customer to describe what they will do in the future and you are going to get guesses that are less than accurate. As innovation thought leader and former Procter & Gamble executive Karl Ronn puts it, "You have no conscious memory of how you do routine tasks."

The trick is to get to context — to find a way to be with the customer when they encounter a problem and watch how they try to solve it. Ronn, who helped P&G turn Swiffer and Febreze into billion-dollar brands, believes that small-sample contextual research is much more valuable than larger sample focus groups.

3. Constraints. One of the time-tested paths to growth is to develop an innovative means around a barrier constraining consumption. Southwest's discount airline service, which attracted people who might otherwise take the bus or not travel at all, and Nintendo's Wii gaming console, which appealed to families looking for simple entertainment, are but two examples of companies reaping the rewards of this strategy. One warning: understanding why a customer doesn't consume is critical. If it is because existing solutions are too expensive, require specialized skills, or are inconvenient, then innovate away. If it is because of basic indifference, be careful. Success might not be quite as attainable as you thought.

4. Compensating behaviors. One of the biggest challenges facing the would-be innovator is determining whether a job is important enough to consider targeting. One clear sign is a customer spending money trying to solve a problem. After all, it is easier to shift spending then to create it. Even if customers aren't spending money on a comparable product or service, they may be spending time by following a compensating behavior. That is, a customer using a product or service in an unintended way to try to solve a problem.

A classic example of an innovation springing from a compensating behavior is Intuit's popular QuickBooks product. About 20 years ago, Intuit noticed that a number of customers of its personal financial software package Quicken self-identified as small business owners. That couldn't be right, Intuit thought, because Quicken lacked the ability to do dual-entry accounting, the cornerstone of any robust financial system. It turned out small business owners had a very simple job to do: make sure I have enough cash to meet payroll at the end of the month. Professional packages were too complicated, so they used Quicken instead. Intuit quickly developed accounting software that hid the accounting, and took over the market lead in a month.

5. Criteria. Customers look at jobs through functional, emotional, and social lenses. Quality is a relative term; you can only determine if a solution is good by first understanding the criteria that matter to a particular customer. Have a look at my picture in my bio below, and ask yourself what matters to me when choosing a barbershop. I don't care about the ability to do fancy styles, shampooing, or hair coloring. I want something simple, reliable, and cost-effective.

QB House, a business with branches in Singapore and other regional markets, nails these criteria. The company has designed a set of processes to deliver simplicity and reliability. Its tagline is "10 minutes, just cut." QB House isn't for everyone — you don't see many people with perfectly coiffed hair when waiting there — but it does a wonderful job of appealing to customers like me who are looking for the basics.

Finding the job not done well that serves as a platform for innovation need not be guesswork. Methodically looking for the five Cs can bring clarity to the search for innovation opportunities.

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.