Outcome-Driven Innovation (ODI): A Strategy Tool for Product Leadership

Outcome-Driven Innovation (ODI) is a strategic tool focused on understanding customer needs and improving product innovation based on their desired outcomes. Rooted in the Jobs-To-Be-Done (JTBD) framework, ODI helps companies identify opportunities for innovation by analyzing the "jobs" customers need to accomplish and focusing on the outcomes that drive customer satisfaction.

1. Origins of Outcome-Driven Innovation

ODI draws from the JTBD theory, developed in the late 1990s by innovators like Bob Moesta, John Palmer, and Clayton Christensen. One famous example is Christensen’s "milkshake marketing" story, which analyzed why customers were "hiring" milkshakes—revealing insights that shifted marketing and product development focus.

In 2003, Christensen published The Innovator’s Solution, further expanding on these ideas. He introduced ODI as a research-oriented approach to understanding customer needs, and subsequently published the books The Innovator's Dilemma and Competing Against Luck (translated as "Muito Além da Sorte" in Portuguese), both of which deepened the JTBD methodology.

2. Understanding Jobs-To-Be-Done (JTBD)

At the core of JTBD is the idea that people "hire" products to make progress in specific circumstances. For example, a parent might want to become a better parent, but how they do this will depend on context. If a child is struggling in school, the parent might hire a tutor, while on a sunny day, they might take the child to play outside. Therefore, JTBD focuses on understanding two critical elements:

1. Progress a person wants to make.
2. Specific circumstances of that situation.

3. Steps in a Job-To-Be-Done Process

Through research, Christensen and Anthony Ulwick developed a typical JTBD process, often consisting of eight steps:

1. Planning the task.
2. Gathering information relevant to the task.
3. Organizing that information.
4. Confirming the choice or decision.
5. Executing the decision.
6. Monitoring progress.
7. Modifying actions as needed.
8. Completing the job.

While these steps are flexible, they provide a structured framework for understanding customer actions and identifying areas for product improvement.

4. Example: Applying JTBD to Physical Activity

Suppose a customer outcome is "achieving a healthier lifestyle through physical activity." They could follow these general steps:

• Research various activities.
• Choose one that fits their lifestyle.
• Engage in the activity regularly.

Each step also has associated desired outcomes (e.g., minimize time spent researching or maximize enjoyment). By identifying these outcomes, we create a clearer picture of what the customer wants.

Key Concept: Increase/Decrease Metrics

When measuring outcomes, ODI recommends phrasing them with "increase" or "decrease" terms, as they clarify goals and simplify the structure for future surveys. For example, "Decrease the time spent finding the right activity" is more actionable than "Find the right activity quickly."

5. Conducting Research in ODI

A core part of ODI involves measuring importance and satisfaction for each outcome in the JTBD framework. Here’s how this works:

• Importance: How crucial is it to the customer to increase or decrease this metric?
• Satisfaction: How well does the current solution meet their expectations?

Identifying Gaps: Opportunity for Innovation

By assessing these metrics, ODI identifies opportunity gaps—outcomes that are important but where satisfaction is low. For instance, if customers find it important to minimize the time spent on a task but are unsatisfied with current options, this is a clear area for improvement.

6. Growth Strategy Matrix

With ODI insights, we can use the Growth Strategy Matrix, which considers:

1. Job Quality: Will you make the job easier, harder, or the same?
2. Pricing: Will you charge more or less?

The four main strategies are:

• Better and More Expensive: Improved service/product quality, with higher pricing (e.g., Uber Black).
• Better and Less Expensive: Improved quality, lower pricing (e.g., UberX).
• Worse and Less Expensive: Lower quality but accessible pricing, targeting non-users or underserved customers (e.g., UberPOOL).
• Worse and More Expensive: Offering a limited, necessary service despite higher pricing (e.g., food options on airplanes).

7. Aligning Products to Market Opportunities

ODI guides two approaches for strategic alignment:

1. Optimizing Current Products:

   • Target Communication: Focus on underserved outcomes for specific customer segments.
   • Tailored Media Campaigns: Highlight the product's strengths in areas with low satisfaction among competitors.
   • Sales Empowerment: Provide sales teams with outcome-based arguments to demonstrate the product's unique benefits.

2. Creating New Products:

   • Feature Adaptation: Leverage existing features in new ways.
   • Accelerated Development: Speed up R&D for faster market response.
   • Partnerships and Licensing: Collaborate with other companies to enhance or complement the product offering.
   • Acquisitions: Purchase companies that add strategic value to the product line.

8. Suggested Process for Outcome-Driven Innovation

To effectively implement ODI, consider this step-by-step process:

1. Qualitative Interviews: Start with in-depth interviews to map out customer jobs and their desired outcomes.
2. Outcome Validation: Reconfirm these with participants to ensure alignment.
3. Quantitative Survey: Measure importance and satisfaction for each outcome.
4. Identify Opportunities: Use data to prioritize outcomes with significant importance-satisfaction gaps.
5. Strategize for Growth: Based on your target outcome, decide whether to improve or reduce quality and adjust pricing accordingly.

By using the Outcome-Driven Innovation approach, companies gain a powerful way to address unmet customer needs, align product features to specific outcomes, and strategically position themselves in the market.