Jobs To Be Done

One of Horace Dediu’s organizing questions is “what is the job to be done?”. I find it valuable. In his Critical Path podcast #122, he reviews Apple’s September 9 announcements from this perspective. (Note the illusions in the opening video.)

The JTBD notion posits that we spend time and money on things that do a job we want done. As he says, for what job are we hiring this product or service? Part of why I find this question, as he poses it useful, is because he sees it in terms of our nature, in the sense of “wealth” as I see it. What moves us? What do we seek and desire?

So in attempting to understand who will suffer by the introduction of iPhones and iPods, he speculates that one of the teenage JTBD is of being cool. To the extent that an iPod does this job better than the latest jeans, it is the clothing maker who’s business is at risk by the introduction of iPods.

Likewise, the wholesale destruction of the low-end camera and camcorder industry by smartphone cameras reveals that there was a JTBD by reducing the “friction” of making photographs; eliminating a separate, bulky device with lots of confusing settings. It turns out this friction was frustrating to many of us, and when we had an alternative, we hired it to do the job of reducing this friction, to the detriment of incumbent manufacturers whose products did not.

If, Horace suggests, we think only about product categories, say the phone handset industry, instead of the JTBD that a product solves, we will miss the actual impact of a product. Just ask the music industry.

As I understand Horace’s view, there are two types of JTBD: jobs that can be done better, and jobs that we would like done, but aren’t actually being done. Before cameras, the job of preserving moments was not being done, and we were willing to pay to have it done; with the payment including the effort required to operate, carry, and protect the camera. Smartphones didn’t introduce photography, but they did make it easier and better, and we hired (are hiring!) them to do that job.

I am also fascinated by Horace’s analysis of ApplePay. There are, he posits, two parts to the payment system: the “rails”, that is, the mechanisms of clearing and communicating; and the “risk”, that is, transaction disputes and fraud. One of the JTBD that Apple is solving is reducing fraud risk by eliminating the need to expose one’s card information, and by adding fingerprints to identity verification. Another JTBD is increasing convenience and speed for both customers and retailers.

So ApplePay is improving an existing JTBD rather than introducing a solution for one that is not being done. And of course, Apple’s share of the transaction fees are surely small, but Horace points out that, after the expenses of setting up the software and putting together the deals, Apple’s cost of revenue is very low. Horace speculates it could be less than 20%, implying 80% profit. And it appears they are likely to capture a meaningful portion of all transactions… Nice work if you can get it!