On “Competing Against Luck” by C. Christensen, K. Dillon, T. Hall, D. Duncan

In this business masterpiece, the late Clayton Christensen and co-authors share research-based insights into why some products are successful in the market while most aren’t. These insights can be used to improve the odds of success by making and delivering products that take into account the context in which they are “hired”.

The authors argue that the real value of a product is often different from the perceived value and this dichotomy often leads to organizations building the wrong products or building the right product and delivering it poorly. This often leads to confusion on who their competitors are, how to make sense of the sales data, how to improve the product, etc.

The Milkshake Dilemma

As an example of this, the book mentions the “milkshake dilemma” which goes as follows: in a given store, every morning, several customers come in to buy milkshakes. The store manager wanted to improve sales and went on to develop new flavors. To their surprise, this made little difference. The authors argue that the reason people were buying milkshakes from this store specifically was not necessarily the taste (i.e. perceived value). The real reason could be that those customers were commuters who wanted a milkshake to drink while on their way to work and wanted something heavy to fill them up and sweet. So the perceived value here is taste but the real value is quite different: a consistent drink that makes the commuter feel full and enjoy their time on the road. Therefore, because it is inconvenient to park the car and wait in line to buy a drink, the store should probably arrange to make it easy for the customer to grab a milkshake (e.g. set up a drive through, set up a vending machine, etc).

“New products succeed not because of the features and functionality they offer but because of the experiences they enable.” — Clayton Christensen

Netflix competition

The authors list a variety of case studies that demonstrate this theory but the one that struck me the most is about Netflix. The authors argue that the competition of Netflix is not just other places where you watch TV shows and movies: HBO, Amazon, Hulu, etc. Their competition are all the things that people do for entertainment: going to the movie theatre, watching sports, grabbing a glass of wine and reading, etc. For instance, in an interview, John Doerr asked Netflix’s CEO “what are your superpowers?”, to which Reed Hastings answered :

“Fundamentally, we are trying to do something big. We are trying to end boredom and loneliness.” — Reed Hastings

This simple realization gives the Netflix product an edge because it is built with the context in mind and gives an insight into pricing, content, method of delivery, etc. That said, if Netflix ever decide to introduce a new product, they are probably more likely to succeed with introducing a gaming product in their suite than say a news product.

The Theory of Jobs to Be Done

The book also introduces the concept of “hiring a product to do a job” which basically means “using a product to meet a specific need”. This concept draws a line between “what a product is meant for” and “what it is used for”. An example of this is smoking: while a cigarette is designed to give the body the nicotine it craves, smokers sometimes take a cigarette break because they want to go to the smoking area and socialize, take a break from work, etc. In this sense, a cigarette is competing with all the other things that a smoker could do to socialize and take a break (e.g. go on social media, etc). Or as the authors put it:

“Facebook is actually competing with cigarettes to be hired for the same Job to Be Done. Which the smoker chooses will depend on the circumstances of his struggle in that particular moment.” — Clayton Christensen

Closing thoughts

This book changed my views on product development quite significantly. I can put those thoughts in two buckets: 1) using data effectively to determine what to build, 2) the importance of delivery.

On the first one, I no longer see a user as a person but as a human with needs, struggles, feelings, ambitions, dreams, etc. For instance, if I am working on a software product, I often raise questions about: who the user is? do they care about productivity? for how long and how often they use the product? will the product help them with their career? and their personal development? etc. When all the data is collected, we can identify the “job” and build a product that can be “hired” to do that job.

On the second one, I want to make sure products are presented correctly. For instance, if the user is already happy and used to a certain workflow, I won’t try to convince them to ditch that. I’ll try to make sure their flow is not disrupted by introducing a new product to it (e.g. by making it easy to integrate, compatible, cross-platform, does not require new skills, etc) or as we say in the software business: integrated seamlessly.

If you are building a new product, you definitely need this book in your reading list. And like the great egyptian author Abbas Al-Aqqad once said that some books are meant to be read multiple times, I believe this is one of those.

Energy & Computing @ Shell & GWU (Opinions my own)