How do companies grow? Growth can be externally and market driven, when a company serves a growing market. Growth can be achieved by expansion investments like acquisitions and mergers. However, the main internal driver, the heartbeat for growth is innovation. To be more precise: growth happens when a firm creates new value for existing as well as for new customers.
In this article, we want to present a growth framework from Jobs-to-be-Done perspective, introduced by innovation pioneer Anthony W. Ulwick in Edizon’s Special JTBD webinar. This framework will help you to identify the most promising growth areas for your company, and to create new revenue streams in adjacent markets that can be pursued 1) quickly, and 2) at low risk.
Four questions guide you from your standpoint to new growth:
The first aspect you really have to understand in this context is how a market is defined in Jobs-to-be-Done (JTBD) theory, because JTBD provides a different perspective of looking at a market: In JTBD theory, a market is defined as a group of people (called job executor) plus the job they want to get done. For example, a market is defined as
The beauty of this market definition is that it enables a company to look at a market through the eyes of the customers. For example, young adults can “hire” different products or services to get the job of “securing the financial future” done: they can take out a life insurance policy, buy a property or invest in a fund savings plan. Looking at a market through this “customer lens” helps companies to avoid their “functional fixation” and to identify customer needs independently from existing products or services (= solutions). If markets are being defined in this way, the identified customer needs will be valid on the long term and can serve as the fundament for company-wide strategic decisions.
In general, there are three different growth paths for companies: Companies can 1) grow within their market, 2) expand into adjacent markets or 3) enter completely new markets (which we generally do not recommend because it includes high risk).
Jobs-to-be-Done (JTBD) theory provides several growth stimuli to grow within an existing market, as Tony Ulwick outlines in his article Measure Customer Progress Using JTBD + Outcome-Driven Innovation (we really recommend everyone responsible for growth to read this excellent article!). For example, a company can help their customers to get a certain aspect of a job done better or cheaper than existing solutions, a company can help their customers to get an entire job done without cobbling together different solutions, or a company can help their customers to get a job done in many different contexts with a single product.
By defining a market from JTBD perspective, this growth path is always included, since a job-to-be-done is never static: jobs-to-be-done naturally evolve to be more complete and comprehensive, as I outline in my article “Anticipate the future”. However, the growth potential of existing markets is limited, and growing within existing markets requires a lot of effort and time. Therefore, the obvious alternative and probably more effective growth path is looking beyond the fence and identifying the low hanging fruits there.
When defining a market for core market growth, the guiding question is: “What job is the customer trying to get done?” When defining a market to discover adjacencies, the question shift towards “What job does my product or technology do?” The aim is to take your current technology and apply it in different ways to generate value.
An adjacent market is a market that includes either the current job executor or the current job-to-be-done, from the perspective of the company. There are two growth avenues to grow into an adjacent market (see matrix at the end of this article):
1) A company can help new job executors to get a job done that is already served by a company’s products or services. For example, a company that provides bleaching kits for dentists to bleach the teeth of their patients can develop a solution that enables everyone to bleach their teeth at home. In this case, the job of “keeping teeth bright” stays the same, but the job executor shifts from dentists to private persons. The advantage of this growth avenue is that you already own a certain technology and have the knowledge, and just apply it to another group of people who can benefit from it.
2) A company can provide solutions for a new job their current job executors are trying to get done. For example, a consultancy that helps business professionals to prepare for the next stage in their career can also offer a solution that helps business professionals to maintain a satisfying work-life balance. The advantage of this growth avenue is that you already have a relationship with your current job executors and do not have to invest heavily into increasing awareness, generate trust or create a positive image.
The advantages of growing into adjacent markets are obvious: the uncertainties are manageable, as either the customer or the technology is familiar terrain; and the revenue streams can be created relatively quickly and at low risk. In general, we recommend to grow into adjacent markets and avoid growing into completely new markets, because there the risk of failure is far higher.
Let’s step back and take a short exercise: Take pen and paper and try to quickly find adjacencies in your market by answering the following questions:
Can you see how quickly growing space opens up with this simple exercise?
Often companies find lot of applications for their technology. Confronted with a long list of adjacencies, they ask themselves: How can we identify the best alternative to pursue? There are several job-based evaluation criteria to identify the most promising adjacent market to pursue:
For a more detailed evaluation, you can download the market selection tool from the Strategyn resource center.
For those who want to listen about growing into adjacent markets from Tony W. Ulwick himself, we recommend to listen to the Edizon’s Special JTBD webinar (start with Minute 24).
For those who want to get more food for thought about growth, read the HBR Article The 6 Ways to Grow a Company.
And for those who want to discuss the results of the exercise above, communicate surprising results or have questions: write us on email@example.com, subject: adjacent market exercise.
We wish you success in your growth endeavours and hope that the Jobs-to-be-Done growth framework will give you some inspiration on how to grow quickly and at low risk!
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