Taking the right decisions in innovation
In challenging times, taking the right innovation decisions matter even more. While stopping all innovation efforts is not an option, initiatives and projects must be reconsidered and reevaluated. But how to make the right call? Which projects hold the biggest promise of success? Which projects must be sharpened and which should be shelved?
Incorporating the customer perspective can be a great help. Because only those projects which add most value to customers will build the future. The CFI (Customer-Focused Innovation) approach laid out here allows companies to prioritize the innovation portfolio and to sharpen initiatives from the customer point of view.
Jobs-to-be-done logic to take the customer perspective
To take the customer perspective for assessing innovation projects, we apply the Jobs-to-be-done logic. The basic idea of Jobs-to-be-done is simple: People pursue goals in whatever they do. Under the Job-to-be-done logic, these goals are referred to as “jobs”. To attain the respective goals, people use specific solutions which may include a product or service, but also a supplier or an activity. Every solution is consciously or subconsciously judged by how effectively it helps to master the job.
Uncertain times demand tough decisions about priorities and focus of innovation initiatives. The wrong call could lead to lost opportunities. The customer perspective must be incorporated in the decision making process. The CFI (Customer-Focused Innovation) approach provides that perspective by identifying and quantifying customer Pain Points. Fact-based decisions on priorities and focus of initiatives are made from a customer view, increasing the chances of betting on the most successful initiatives.
For instance, an everyday job such as communicating over long-distance is addressed using means such as WhatsApp, a phone, a letter, or – back in the old days – a messenger. A job is solution-agnostic and remains unchanged for a long period of time. Means, by contrast, are subject to technological change (fig. 1).
Fig. 1: Three examples for the Jobs-to-be-done logic
A solution is used as long as it helps the user attain his or her goal. Existing solutions are only replaced by new ones when users consider this change to be “worthwhile”. To make Jobs-to-be-done actionable, Vendbridge has developed the CFI approach, and refined it in over 100 projects. The four typical phases of the approach are:
1. Frame: Defining the right focus
The process begins by determining the stakeholder groups with the strongest influence on purchase and use of the company’s products/service. This can be done with straightforward stakeholder mappings. Then the customers’ core jobs to focus on are defined as an initial hypothesis. Each job must express a purpose or goal; it has to be formulated in a solution-neutral manner and must be neither too generic nor too narrow. To get this initial discussion right, CFI uses a tool, the Jobs-to-be-done hierarchy to frame the business challenge from the customer’s perspective (Fig. 2).
Fig. 2: Simplified Jobs-to-be-done Hierarchy
2. Discover: Exploring the customer reality
Based on the job hypothesis, each job is then explored in depth with the customer. This is one of the crucial elements of the CFI method when it comes to uncovering customers’ realities: Through the exploration process, customers’ problems are identified in the form of Value Metrics, expressing what customers expect when trying to get a job done. The result is a metric system of 60 to 100 criteria, capturing all expectations customers have related to the Jobs. The Value Metrics always follow strict rules and are formulated in a solution-neutral manner (fig. 3).
CFI Value Metric for the job: To travel from A to B
to determine the shortest path to a destination…
… as quickly as possible…
… when travelling to a previously unknown place.
Fig. 3: Example of a Value Metric syntax
While 100 Value Metrics may seem quite a lot, in our experience it is about the number required cover a typical job. After all, customers’ judgment is based on quite a number of very clear-cut expectations, not on just a few general requirement concepts.
In a second step all identified Value Metrics are rated by a representative group of target customers. They are asked to rate both the importance of each metric and the degree of its fulfillment – i.e., their satisfaction level – in their everyday lives.
The key result of this validation, which is the second CFI component, is a matrix with four boxes – the Customer Value Map (fig. 4). By showing the connections between all job steps and all Value Metrics, the matrix allows to define in a later step how a company’s future product/service strategy should be prioritized and formulated. All validated Value Metrics fall into one of four customer value categories:
Build value: Key Value Metrics are not fully met and represent customers’ Pain Points. Solving them creates the most value from a customer perspective, and thus offers the greatest potential for competitive differentiation with respective innovations.
Maintain value: From a customer perspective, these are essential requirements (“Essentials”). They are important to customers but the requirements are essentially met. Here, companies have limited possibilities to differentiate themselves – but they may have some homework to do in order to remain competitive.
Reduce value: Customer expectations are not high on customers’ priority list but are currently exceeded. These Value Metrics offer valuable potential for cost savings (which is why they are referred to as Cost Savers in the framework). Here, it is advisable to challenge one’s offering at regular intervals, as the most disruptive business models tend to originate from this quadrant.
Monitor value: These Value Metrics (referred to as Sleepers) can safely be disregarded or, selectively and with low priority, used as a source of ideas.
CFI Customer Value Map
Fig. 4: CFI Customer Value Map with examples of Value Metrics
1. To determine the shortest path to a destination as quickly as possible when traveling to a previously unknown place
2. To estimate as precisely as possible how much additional travel time has to be expected due to delays; e.g. late arrivals, congestions, etc.
n. To stay in contact with the people that are expecting you for as much time as possible throughout the journey
The very first analysis usually produces valuable insights with regard to where the transformation should be headed. To sharpen this customer understanding further, the Customer Value Map can be analyzed for different stakeholders and by various criteria, such as socio-demographics, regions, need clusters, product categories, and competition.
3. Spin: Aligning initiatives to the customer reality
Once the Value Map is established, projects and initiatives can be matched to the true outside in customer perspective. This means that initiatives are cross-checked with customer Pain Points and evaluated by if and how strongly they provide value to the customer. Three outcomes are possible:
Initiatives strongly address Pain Points and should be prioritized
Initiatives have no clear benefit to the customer and must be sharpened
Initiatives focus on irrelevant aspects and should therefore be de-prioritized
The whole approach leads to two results: Firstly, at a quite early stage, it becomes clear which ideas and concepts are likely to be successful in the market and which ones aren’t. Secondly, the acquired customer insights add a new quality to the process of agreeing on targets and approaches in the organization. There will be no room for speculative discussions, and decisions on innovations and initiatives are taken quickly and based on facts.
4. Develop: Promise-centered value propositions to guide development
Knowing the Pain Points of each stakeholder is the basis for aligning the innovation concepts with customer needs. A value proposition convincingly links the innovation with the Pain Points in a story (Fig. 5). This story describes what value the innovation will bring to the customer once it is actually in the market.
Fig. 5: Promise-centered Value Proposition Framework
The key ingredient of a compelling value proposition is the promise. It links the customer perspective, i.e. Jobs and Pain Points with solution features and makes explicit what the stakeholder will get. The promise proposes the answer to a requirement or problem a customer tries to solve, with specific features, services or evidential proof. Over the years, we have seen over and over again that this promise-centered Value Proposition Framework is very powerful to guide the development process on digital services or physical products alike.
Navigating uncertainty through the customer perspective
The CFI approach enables organizations to navigate uncertain times with more comfort because the decision making processes are de-biased from a customer perspective, Pain Points are known and the development of the most promising ideas stays on course thanks to sharp value propositions. The risk of making the wrong decision in uncertain times is reduced and chances of betting on the most successful ideas are increased.