Outcome-Driven Innovation

In his book The Innovator’s Solution, Harvard Business School professor Clayton Christensen states that customers buy products and services to help get a job done. We have held that position for many years – and it forms the basis for our outcome-driven thinking. Outcome-driven innovation is a unique approach to innovation in that it is not focused on the customer, the product, or the competition – rather, it is focused on the job the customer is trying to get done. We have discovered that from the customer’s perspective, it is the job that is the stable, long-term focal point around which value creation should be centered.

This thinking has two far-reaching ramifications for those responsible for value creation. First, when the job is accepted as the unit of analysis, it means that companies must not capture requirements on a product or service; instead, they must capture requirements on the job that the product or service is intended to perform. So, instead of obtaining requirements on corn seed, for example, a corn seed manufacturer would want to obtain requirements on the job of farming corn.

Second, to capture these requirements, the jobs that customers are trying to get done must be dissected and studied to determine what customers are measuring when they are judging their satisfaction with the way the job is being performed – that is performance related to speed, predictability and output.. These metrics – or desired outcomes, as we call them – are the customer’s fundamental measures of performance when getting a job done. They are at the heart of outcome-driven innovation.

When farming corn, for example, corn farmers base success on their ability to minimize the number of seeds that fail to germinate, to increase the percentage of plants that emerge at the same time, and to minimize the yield loss due to excess heat during pollination. These three examples of desired outcomes adhere to Strategyn’s specified structure, content, and format for outcome statements.

Capturing these outcome statements is just one step in the outcome-driven innovation process. Once these outcomes are uncovered for any given job – and 50 to 150 are common – quantitative research is used to determine which are both important and unsatisfied, thus revealing where the market is underserved and where opportunities for value creation exist. It is critical that the outcome statements adhere to a standardized structure, content, and format because that standardization makes it possible to properly ascertain their relative importance and customers’ satisfaction with them. This is where most other innovation efforts falter: they are unstable and unpredictable and fail to reveal opportunities for growth. The outcome-driven innovation methodology works in all industries and contexts because it addresses the fundamentals of innovation.

Many companies use the customer insight gained through outcome-driven innovation research to drive marketing and development activities. This customer insight makes it possible to segment markets, position products, prioritize the development pipeline, focus creativity, systematically devise breakthrough solutions, and assess acquisitions. The true outcome-driven company uses this insight to drive many activities that lead to growth.