Anthony W. Ulwick

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EMPLOYING THE FIVE GROWTH STRATEGIES

The Job-to-be-Done Growth Strategy Matrix can be used to prescribe proactive short- and long-term strategies for success, but to use it, a company must know whether or not there are underserved and/or overserved segments of customers in the target market. Without this knowledge, there is no way to know which strategy to adopt, and the chances of picking the wrong one are high. For example, in an overserved segment, a differentiated strategy would likely fail, as no customer is seeking a more expensive product or service that will get the job done better. Conversely, in an underserved segment, a disruptive strategy would likely fail, as no customer is seeking a cheaper product or service that would get the job done worse.

The most effective way to discover whether or not there is an under-or overserved population is to segment a market around a complete set of prioritized customer desired outcome statements.

Our Outcome-Based Segmentation^TM methodology, which has always been part of our ODI process, was specifically designed for this purpose (see chapter 4).

Once a company knows where in the matrix its target customers can be found, it can adopt the appropriate strategies for each segment. Let us examine each strategy more closely.

Employing a Differentiated Strategy

A differentiated strategy works when a highly underserved segment of customers is targeted with a premium-priced offering that gets the job done significantly better. This strategy results in a disproportionate share of profits and is the strategy pursued by many of the world’s fastest-growing and most profitable companies.

Nest, for example, a recent entrant into the home thermostat market, beat Honeywell, White-Rodgers, and other well- established incumbent firms with a product that was targeted at a highly underserved segment of the market, superior in performance, and offered at seven times the price of competing solutions ($250 versus $35). While capturing less than 10% market share, Nest is estimated to have captured over 25% profit share while shaking up the industry and putting its competitors on the defensive.

A differentiated strategy is attractive because it enables a company to enter a market at the high end, capture significant profit share, and work its way down market over time to gain additional market share. This is a way to move from employing a differentiated strategy with an initial product entry to employing a dominant strategy with other products over time. A company can successfully move down market by lowering the price of its older products as it introduces newer and better products into its portfolio, as Apple did with the series of iPhone product offerings, and/or

by using operational innovation as a means to lower production costs, as Uber did when it employed freelance drivers to supply rides in its UberX offering.

Incumbents have much to gain by pursuing a differentiated strategy as they can afford to target their existing products at well-served or even overserved customers once their new, high-profit products are introduced. This puts the incumbent in a position of both profit and market share growth.