7 Lessons From How Borders Group Failed To Unsettle Disruption
Juana Rodriguez
5 April 2022
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As we have seen in previous disruption posts, companies such as Blockbuster, Kodak, Blackberry, Nokia, customer Jobs-to-be-done was the hard-learned lesson that product managers, developers, marketers, and innovators need to adopt to enter a new paradigm about the real meaning of value-for-customers.
The value of a product is not about the physical features only. Instead, it is the ability of what the product does for the end-customer. Hence, it is the need of the hour that innovators start producing products that help customers achieve their goals and objectives; in other words, make their lives better.
’Jobs To Be Done’ provides a way of understanding the foundational question of innovation success: what causes a customer to purchase and use a particular product or service?. This theory goes beyond superficial categories to expose the functional, social, and emotional dimensions that explain why customers make the choices they do. People don’t simply buy products or services for the sake of it; they pull them into their lives to make progress.
Inspired by the work of Adam Klement, let’s describe the most common challenges and how to pave the way for successful disruption.
The average time spent on the S&P by any company can be seen as a marker for the stability of companies. This average continues to shrink; in 1960, it was 33 years; in 2016, it was about 24 years, and its forecast to be just 12 years by 2027. There are a number of reasons why companies fall off this ladder of success, including being overtaken by a faster-growing company or a merger.
Another reason for this sharp demise from the coveted list is the fact that it has never been easier to create new products. The supply chain optimization leads to a better reach of customers within months of their conception. This high pace increases the speed at which innovations disrupt the incumbent market and then go on to replace them.
Last week, I was curious to test a “no-code” service platform to create a mobile application using a google sheet (glide), yes it’s that easy. I was very proud of my output, a rudimentary prototype that took me only two hours. After its completion, though, I started to wonder how many companies focusing on developing a mobile app will be disrupted by this new service.
This process is known as “creative destruction”, and it’s on the rise thanks to technology. Creative destruction isn’t new; what is new is the speed of the change. In The Origin of Species, which was published in 1859, Charles Darwin wrote that the “extinction of old forms is the almost inevitable consequence of the production of new forms.”
We know that the extinction of the dinosaurs facilitated the adaptive radiation of mammals. In this case, creation was the consequence rather than the cause of destruction. But this transformation took millions of years. Now, change is taking place at a rapid pace. It can be seen through the company’s lifespan, which has diminished from 33 in 1960 to 12 years by 2027.
What is common since old age is that destruction begets a new spirit of creation. For example, the scarcity of wood and the needs of everyday life forced humans to discover substitutes for wood. It also forced the use of coal for heating, forced the invention of coke for the production of the iron, and many more processes just to meet a basic need.
When one innovation wins, another loses. Why? Because a day has only a few minutes for a customer to spend on multiple products. For example, before the lockdown, I used to get a café latte from a coffee shop on my way to work every morning. During the lockdown, I bought a coffee machine that makes an awesome and fresh latte. Now I make my own latte, and subsequently, the coffee shop has lost my business.
The global pandemic has accelerated this creative destruction; we are seeing more and more new businesses arise while others are struggling to survive. I am working with several entrepreneurs and startups who are looking to carve a way out of this disastrous situation. These companies are doing this by being not only creative but also extremely reactive to external stimuli.
Companies are used to seeing competition in terms of product category; for example, the best digital camera or the most outstanding television. The ‘jobs-to-be-done’ theory, lets us look at competition from a totally different viewpoint. It isn’t about the best in a specified class but how customers can benefit from such a product to make their lives better.
Kodak and the digital camera manufacturers never foresaw that a mobile phone could become their principal competitor.
To succeed, you need to see how customers view competition. Does a television compete with television only? Or does it compete with the internet, outdoor activities, online games, and other recreational activities?
This new perspective will help you learn how to gain a better understanding of the customer view on what does and doesn’t count as competition for a JTBD.
Focusing on the present needs of a customer won’t get you so far in terms of disruption, the real innovation lies in creating systems to help customers progress in their daily lives. The following example clearly depicts how this theory helps customers in reality.
The 1860s introduced to us a company by the name of Pony Express burst on the scene of mail services. It was sprung up to facilitate customers to send their letters or messages across state lines using relays of horse-mounted riders. Although the company provided a speedy way to communicate, it only lasted about nineteen months. What was the reason behind this sharp decline, you may ask?
The answer is Western Union, a company that sought out an even quicker way of communicating. The telegraph became a revolutionary change in the lives of people as it made the written or ‘physical’ mail somewhat redundant. The transcontinental telegraph by Western Union looked to the future, whereas Pony Express was only looking to solve the common man’s needs of physical mail. Western Union made thought on the lines of “What if we can let customers communicate without the physical messages?”
Innovators are in the business of studying customers’ needs, but what they forget often is that these studies can be misunderstood. Customer’s needs can relate to the problems or complaints a customer may have of a current product they are using. Or these needs may show what the customers are expecting in a newer product. Hence, innovators get blind-sided by the assumption that these are the actual needs of the customers; instead, they’re just a feedback of using a product.
An excellent example to demonstrate this erroneous data reading is how giants such as Nokia, Palm, Research in Motion (RIM), and Motorola worked tirelessly to fulfill the needs and expectations of their customers. They thought that an affordable mobile with a physical keyboard was the need of the hour. Instead, we can see how users these days don’t shy away from paying hundreds of dollars for a keyboard-less smartphone.
The physical keyboard on a smartphone is redundant nowadays. It tells us that if we want to disrupt and create products for the future, we cannot look at the products of today. Customers sometimes don’t even know what they need until they get that item. It is for this reason, innovators and manufacturers must look at one guiding principle to enhance innovation; customers and their quest for progress.
The change and innovation that results when focusing on the customer’s progress rather than their needs is more futuristic. There are no limitations when a manufacturer thinks in this way as the limitations of the current products are lifted from their shoulders, and the canvas is blank to repaint from scratch. If companies felt like “what if we give our customers a smartphone with no keyboard? Would it help them progress further? They may stand a chance of creating something unique and futuristic.
To adopt a strategy that looks to the future, we should begin with the assumption that tomorrow may not resemble today. It involves looking into customers’ jobs-to-be-done and dominant future trends.
When a Kodak engineer in 1975 made a breakthrough by inventing the digital camera, the response from Kodak’s management was anti-climactic. The management decided to shelve the digital camera citing reasons that their productivity would be smashed to pieces. The management was alluding to the billion-dollar sales Kodak made selling photographic films. The photographic film would thereby stand redundant upon the advent of a digital camera.
It is, therefore, quite common to see that it’s legacy rather than a technology that stops big organizations or even small ones from adapting and innovating.
Recently, I was part of a company portfolio review. There was a yearly meeting where product managers have 20 minutes to share their offer status, project, and resources needs. Many of them were asking for more time to prove the value of their offer. Even though they had spent several years trying to increase the value, or even when it was clear that their product was at the end of its life, their key arguments, “we had spent millions on this product so we must continue? Why should we change when we can make a few more millions”?
The difficulty of leaving a “legacy” is not just limited to the big corporations but extends to entrepreneurs as well. While working with entrepreneurs, it is often the case that they argued to keep the current status of their products alive. They say that they spent a lot of time and effort working on their offer. These excuses may sound reasonable at times, but make innovations in businesses a bit harder. What companies forget is that if they don’t adapt or change, someone else will do it.
The Net Promoter Score (NPS) is a system of analyzing customer experience based on surveys. We implemented NPS to ascertain customer experience. In the beginning, we looked to customers to give feedback regarding their satisfaction with our services. To achieve this, we conducted face to face interviews. As the company grew, we moved to a self-report model with online survey-based responses. If the NPS was higher than the previous year, it meant we were going on an upward trajectory.
The numbers can let us make simple assumptions and offer some clarity. At the same time, though, they can also hide insights and opportunities that the interviews duly provided. The new data and figures were incomplete at best and misinformation at their worst. So, it made us go back on our tried and tested formula of interviewing customers. It helped us get a deeper understanding of the challenges facing such customers; meanwhile, we kept the online survey as a global indicator of sorts.
Figures can often be misleading, or they can be even misused. Someone said, “If you torture the data long enough, they will tell you whatever you want.” We see the explosive figures of Facebook and begin making assumptions. We also judge their business model, and in 2020, their market cap was 766 billion US dollars.
In the same vein, Twitter has grown exponentially. In the last five years or so, the revenue of Twitter has risen from only $106 million in 2011 to $3.4 billion annually in 2019. Despite these staggering numbers, analysts, as well as journalists, seem to write off Twitter and write pieces such as “The End of Twitter.” Why may you ask? The reason for this criticism comes from a deeper problem that looks at Twitter’s growth in numbers, a bit differently. Looking at the numbers, Twitter’s MAU (monthly active users) may seem stuck at 313 million. Hence it is understandable that the management sees this as stagnation.
The obligation for the management thus becomes to increase the number of users, but the vital question should be, why not focus on the existing customers? Chopping and changing too much may get you a lot of new users, and hence a better MAU, but in the long run, it may drive users away. As the grandmother’s advice goes, “If you try to please everyone, you may end with pleasing nobody.”
Many managers and innovators seem to be influenced by notions such as measurement is the key to managing things. Data may be an essential part of analyzing something, but it may prove disastrous if data was used for analysis without any context to knowns and unknowns of a system. The most damaging result of just using data for a complete analysis is that data can paint a false picture. The visible figures may point towards excellent sales, but they may hide the flaws of a particular product resulting in stagnation. This stagnation will almost inevitably result in overconfidence that the product will last forever.
If you’re still trapped in yesterday’s assumptions, by using today’s data for the sake of extrapolating future values, you may need to think again. Dynamic environments react to data differently, and hence this data usually puts constraints regarding choices and opportunities to expand the business.
It is often seen that managers fail to grasp these challenges related to disruption, and customer jobs-to-be-done. A predisposition related to slowing sales may blind these managers to discard innovative solutions. A lowering of prices, offering newer features, and changing for the sake of changes may entice some new users, but it is detrimental to the company overall.
Innovation can be risky, nerve-racking, and indeed hard for managers and entrepreneurs. Even those who have been successful at this art will tell you that it is indeed a daunting task. A firm grasp on ‘Customer Jobs-to-be-done’ can help in this regard and attain an innovative mindset. It instills in us a belief that we should always be on the lookout to continually improve ourselves and take some risks in the path to disruption.
Any thoughts?
