Published in the San Diego Union-Tribune
October 10, 2022
By Neil Senturia
Harvard professor Clay Christensen was famous for the book “The Innovator’s Dilemma,” and later in his career, he wrote a lesser-known, but equally compelling book, “Competing Against Luck.”
In that book, Christensen, who died in 2020, wrote that 84 percent of companies prize innovation, yet 94 percent say they were dissatisfied with their own performance. Wow, doing the same thing over and over again — well, you know the definition of insanity.
The secret to winning the innovation game, he said, is simple: “What job would consumers want to hire a product to do?”
I have started a little NFT software company, initially to serve nonprofits. Our business model is very clear and rational because I am sure I know what that certain customer will want. But what I didn’t fully grasp is that there is more than one kind of customer for my software. One size does not fit all.
So this different customer shows up, I give him the pitch to convince him to do it my way, and he shows me the highway. I pull off the road, circle back and try to convince him of the error of his ways. Then he takes a sharp knife and punctures my tires. You would think I could learn.
Finally, after getting a new set of Pirellis, I stop to really listen. It turns out that I could do what he wanted, although it was not in my original business plan. Start me up, I am behind the wheel, going 85 in a 45 zone, and then the kicker shows up: He wants me to do it for free.
Free is not normally the slide you lead with in a business plan.
Christensen wrote, “It helps if a company can sell not only a product, but an experience.” Huh, so that’s the secret. I’ll be sure to mention that to Steve Jobs when I see him next. You say the thing needs to be more than itself.
Now, this guy belonged to a new class of customers that I had never considered, and yes, I finally understood what “experience” he wanted to deliver. And this fellow has a mailing list longer than the San Diego trolley, so I was beginning to see some mutual benefits.
“When we buy a product, we essentially ‘hire’ something to get a job done,” Christensen wrote. The key is understanding what is your customer’s real sweet spot.
Now for the last trick, the Penn & Teller moment, we need to understand how to embed an experience into a product. At this point, managers usually turn to the data analytics team, but most of the time, the company uses the data to make a left turn from the right-hand lane, against the light. They get it wrong.
The reason that happens — according to Christensen — is “the people who create the data include information ‘they’ think is salient, and they exclude the data that is irrelevant to them.” In frustration, the customer rejects your product and seeks a workaround to the problem, until the correct solution shows up. Cheap furniture, thy name is IKEA.
But, can we make money providing an experience? Christensen said you can sell a service at a premium price if “it gets this job done perfectly.” If you need a 3/32 Allen wrench when you are out on the water and the engine has stopped, you are not going to remember what you paid for the set.
Here is the loudest rant from Christensen, “Companies do not understand context, they lose the connection with what causes customers to buy their products in the first place.”
Make a specific individual responsible for the “experience.” It can’t just be a corporate wave in the wind. What gets measured gets done. But it is critical to measure the right things. Amazon focuses on when orders are delivered, not when they are shipped.
Christensen said, “delivering experiences is done by having a process to deliver those results.” And when your offering provides that experience, you have liftoff.
Here is the finale to the customer who first punctured my tires. His vision was bigger than mine. And I could see the benefit our little company was getting. And I agreed to provide him with our software for this joint terrific experience for free — or almost free.
Senturia is a serial entrepreneur who invests in early stage technology companies.
Please email ideas to Neil at [email protected]
Rule No. 732:
Allen wrenches — don’t leave home without one.