500: Evolving trends in product management: What every PM and VP Needs to Know – with Tony Ulwick

Product Mastery Now for Product Managers, Leaders, and Innovators

Outcome-Driven Innovation – for Product Managers

Watch on YouTube

https://www.youtube.com/watch?v=rw2aAFg2kyo

TLDR

Tony Ulwick, creator of Jobs-to-Be-Done, introduces Outcome-Driven Innovation (ODI), a revolutionary approach to product management. ODI shifts focus from generating ideas to understanding and addressing customer needs, leading to more successful products and innovations.

• ODI prioritizes understanding customer needs over generating product ideas
• The approach uses both qualitative and quantitative research to identify unmet customer needs
• Key components include the job map, need statements, and the opportunity algorithm
• ODI stays focused on customer problems, not potential solutions

This customer-centric approach to innovation offers product managers a structured method to create products that truly meet market needs and drive business success.

Introduction

Welcome to the 500th episode of this podcast—that’s 500 weeks, or nearly 10 years of episodes for product managers and leaders. I have a special guest to discuss how we have seen product innovation change over the last several years—what has worked and what has not. As a product professional, you need perspective on where things are headed and what is working, which is aided by looking at the changes that have occurred. Let’s gain perspective from the knowledge and experience of one of the most influential people in product innovation, Tony Ulwick.

The Birth of Outcome-Driven Innovation (ODI)

Ulwick’s lightbulb moment came during his time at IBM. He was part of the team that created the PCjr, a product that flopped badly. This failure led to a crucial question: What if we knew beforehand how customers would judge our product?

This idea became the foundation of Outcome-Driven Innovation. Ulwick realized that if we could predict how customers would measure a product’s value, we could design products to meet those criteria. Even better, if these criteria stayed the same over time, we could use them to guide long-term product development.

Building the ODI Framework

After the PCjr setback, Ulwick moved from engineering to product planning at IBM. He started exploring what makes innovation successful. His early research involved a simple but powerful method: asking customers to compare products.

“What makes Product A better than Product B?” This question led to valuable insights. Ulwick found that customer needs fell into three main categories:

• Functional aspects: How well does the product do its job?
• Consumption aspects: How easy is it to use the product?
• Financial aspects: Is the product worth its cost?

Over time, this categorization evolved into the Job Map concept. The Job Map breaks down what customers are trying to do into steps like planning, gathering materials, doing the task, and checking results. This framework made innovation more predictable and effective.

Fine-Tuning the ODI Process

As Ulwick refined ODI, he drew inspiration from various sources. Theodore Levitt’s famous quote, “People don’t want a quarter-inch drill, they want a quarter-inch hole,” resonated deeply. It reinforced the idea of focusing on the customer’s underlying goal.

Collaborating with Clay Christensen led to the popular term “Jobs-to-Be-Done.” This catchy phrase made it easier to explain the concept of focusing on customer goals rather than product features.

A key part of refining ODI was creating stable criteria for good need statements, which Ulwick calls “desired outcomes.” These statements are:

• Stable over time: They don’t change quickly
• Actionable: You can do something about them
• Measurable: You can tell if you’ve achieved them
• Controllable: You can influence them
• Predictive of success: They indicate if a product will do well

The Research Process: Qualitative and Quantitative

ODI uses both qualitative and quantitative research to understand customer needs deeply. Here’s how it works:

1. Qualitative Phase:
   • Understand the job to be done
   • Break it down into steps
   • Identify all the ways customers measure success
2. Quantitative Phase:
   • Create a survey based on qualitative findings
   • Ask hundreds or thousands of customers to rate:
     • How important each outcome is
     • How satisfied they are with current solutions

This data helps identify unmet needs – outcomes that are very important but not well satisfied by existing products.

Ulwick introduced the opportunity algorithm in a 2002 Harvard Business Review article. This simple calculation helps prioritize needs based on importance and satisfaction scores. It’s been about 93.5% effective in spotting the best opportunities for innovation.

A key principle of ODI is keeping customers focused on their problems, not potential solutions. This ensures that the research captures genuine needs rather than preconceived ideas about products.

The Surprising State of Innovation Practices

Despite ODI’s proven effectiveness, many companies still use an “ideas first” approach. They focus on generating and managing ideas rather than understanding customer needs. Ulwick finds this surprising and attributes it to the challenge of changing ingrained habits.

This resistance to change is a significant hurdle in implementing more effective product innovation strategies. It highlights the need for education and training in customer-centric innovation methods.

Making ODI Work Better

To help companies implement ODI more successfully, Ulwick’s team has introduced several improvements:

1. Project Cohorts: These are training sessions that guide teams through each step of the ODI process. They help team members understand how to use the data effectively.
2. Deep Dive Research: After identifying top opportunities, researchers investigate why these needs are problems, what causes them, and how customers currently work around them.
3. Ideation Support: With a deep understanding of unmet needs, teams are better equipped to come up with effective solutions.

These enhancements have significantly improved the success rate of ODI implementations. For example, one company solved 14 unmet needs in just three hours after going through this process.

Researching Customers in the Remote Work Era

As more work happens remotely, product managers face new challenges in customer research. Ulwick suggests moving from observation to focused interviews. The key is to keep customers thinking about their problems, not potential solutions.

Here are some strategies for effective remote research:

• Conduct interviews in a controlled online environment
• Train customers to be good interviewees
• Use immersion sessions with small groups of customers
• Collaborate on validating job steps and creating the job map
• Validate findings with a broader, global customer base

This approach allows for deep insights while adapting to the realities of remote work and global markets.

AI in Innovation: Promise and Limitations

Artificial intelligence tools like ChatGPT are emerging as potential aids in innovation. These tools can help generate initial job maps and outcomes, providing useful background information.

However, Ulwick emphasizes that AI should complement human expertise, not replace it. The most promising approach combines AI capabilities with human insight and experience. This blend of technology and human skills offers the best path forward in product innovation.

Conclusion

Outcome-Driven Innovation offers a structured, customer-focused approach to creating successful products. By understanding and addressing unmet customer needs, product managers can greatly improve their chances of market success.

As business landscapes change and new technologies emerge, ODI principles remain relevant. They adapt to new challenges while keeping a laser focus on customer jobs and outcomes. For product managers aiming to boost their innovation game, mastering these concepts can provide a significant edge in the market.

Useful links:

• Check out Tony’s book The Statue in the Stone
• Get a free ebook: JOBS TO BE DONE: Theory to Practice
• Watch Tony’s video What is Jobs-to-be-Done?

Innovation Quote

“If I had one hour to save the world, I would spend 55 minutes defining the problem and only five minutes finding the solution.” – Albert Einstein

Application Questions

1. How does your current product development process compare to ODI? What aspects of ODI could improve your process?
2. Think about a recent product that didn’t do well in your company. How might using ODI have led to a different outcome?
3. How could keeping customers focused on problems, not solutions, change your approach to customer research?
4. How might you use the opportunity algorithm to prioritize product features or improvements?
5. Discuss how AI tools could help your product innovation process. How would you balance AI insights with human expertise?

Bio

Tony is the originator of Jobs-to-be-Done. I first discovered Tony when I read his book, What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services and then invited him to speak at the Denver PDMA chapter, back in 2006. He published that book while I was working on my PhD in Innovation and it resonated so strongly with my research on why products fail and what to do instead. He is also the author of the more recent book Jobs to be Done: Theory to Practice. Both are valuable and should be in your library. Tony also has 12 patents to his name. He began his career as a mechanical engineer, product planner, and market researcher for IBM and founded his consulting firm, Strategyn, 10 years later, which has helped leading companies generate billions of dollars in revenue growth.

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.