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Finding opportunities to unseat incumbents


On Quora, this question was asked:

Competition: How do you assess the value of a new product or service vs an incumbent’s?

Is there a starting set of criteria? eg. price, quantity provided, ease of use, breadth and so on. I’m thinking specifically of a product to supply financial news and information and prices.

What struck me about this question is that it has the entrepreneur’s optimism in it, while also running into the classic issue of running into entrenched players in the market (e.g. Bloomberg, Reuters). Entrenched players can be quite hard to displace. Not impossible of course, as we’ve seen with RIM’s one-dominant Blackberry.

I put together an answer that combines two concepts. It’s re-published below.

———————-

Focus on two areas to distinguish yourself from the competition:

  • Jobs to be done
  • 9x-improvement ideas

JOBS TO BE DONE

Start from the customers’ perspective. Always. In this case, get a handle on their Jobs-To-Be-Done. What are they hiring incumbent providers for? How are they using the financial information?

Given you’re looking at a startup in this field, I’m sure you have a good initial sense of what customers are doing. But I’d wager it’s incomplete. I work in the innovation management software realm, but I know I have incomplete knowledge about the jobs-to-be-done.

By knowing three things, you will be a long way toward identifying the competitive opportunities for your idea:

  1. The jobs-to-be-done
  2. The level of satisfaction with each
  3. The ranked importance of each

Next, I want to borrow a phrase from Jack London, “You can’t wait to know the jobs-to-be-done. You have to go after them with a club.” This means engaging prospects. There are some methodologies out there, such as Steve Blank’s The Four Steps to the Epiphany (2005 Book).

One thing I’d stress is that in soliciting the jobs-to-be-done, I’d stress three elements that should be known:

  • Context: “When I…”
  • Job: “I want to…”
  • Success metric: “Decreased…”

I recently wrote up an approach to doing this, you can see it here:
Applying jobs-to-be-done to product and service design by Hutch Carpenter on Jobs-to-be-Done

An important result of that process is the generation of an opportunity map:

JTBD Opportunity Map

 

See where the highest priority, lowest satisfaction jobs-to-be-done are. Then…

9X-IMPROVEMENT IDEAS

OK, after talking with different prospects in your target market, you’ve got a good sense of what they’re trying to get done. You know where they feel current solutions are falling short, and how important the various jobs are.

And you know what they value in an outcome (success metric).

Here’s the tricky part of innovation. You need to displace the incumbents. Which is not easy. MIT researcher Andrew McAfee has a great post on the subject of displacing an incumbent: The 9X Email Problem

In it, he highlights research by a colleague regarding customers’ behavior when it comes to replacing an existing product/service with a new one. The gist of it is:

  • People tend to underweight the prospective benefits of a technology by a factor of 3
  • People tend to overweight the value of whatever it is they are being asked to give up by a factor of 3

Together, you get the need to improve on the current situation by 9x.

The good news is that the success metrics described by prospective customers in the job-to-be-done phase point to where a 9x improvement could potentially be designed.

Certainly, though, this is the art of innovation. How well does an idea deliver on improving those success metrics?

I’m @bhc3 on Twitter.

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About Hutch Carpenter
Senior Consultant for HYPE Innovation (hypeinnovation.com)

3 Responses to Finding opportunities to unseat incumbents

  1. Pingback: Geek Reading January 30, 2013 | Regular Geek

  2. Keith Perry says:

    Hutch; great input. I like the “there is a reason” spin on the “why people want 9x” question. This factoid helps the entrepreneur focus their question….yes they can solve world hunger by 1%, but what can they solve by 9x? Build the latter, not the former.

    • Thanks Keith (and nice seeing over “here”). The 9x effect does bring innovation closer to science than what is traditionally understood. There still is plenty of art – myriad solutions *potentially* could deliver the improvement on an under-fulfilled job-to-be-done.

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