Most strategists will clock and respond to a change in interest rates or cheaper competitors. But what about a change in vibes when the customer’s desires shift?
Strategy never sleeps. No matter how brilliant your plan is, small changes can undermine it. Changes come in lots of forms, some obvious, like a cheaper competitor or a recession. Others can take us by surprise.
John owns a car dealership just outside of New York City. New car sales are dipping. His buddy, Trevor, also owns a dealership. The two meet for dinner. John can’t avoid noticing how much Trevor is spending—steak, lobster, and a rare and expensive bottle of wine. He’s flushed with cash. How?
Well, Trevor had noticed his customers griping about parking prices and the hassle of finding spaces in the City. Plus, he knew that congestion pricing would further aggravate the situation. He recognized an opportunity. Instead of buying new inventory, he leased 25 select parking spaces around New York and is renting cars by the hour, using pay and go technology. He’s killing it. Customers love using a brand new, dealer-serviced car, but not having to own it, wash, park it or insure it.
They’re not buying cars, but they’re still paying Trevor to drive them.
The Advancing Storm
Imagine you’re navigating a speedboat on a calm day. The engine is humming, and the boat cuts through the mirror-like water. In the distance, a tiny ripple forms along the horizon. You don’t notice it at first, watching the bow as it continues in a single raised line across the stillness.
When you finally spot that angular motion in the distance, the glass-like surface becomes bumpy. You cut your speed but not enough. When the boat climbs onto the first huge wave it is shocking. You brace as the keel lifts to a near vertical line, hovers in the air, and then slams down onto the hard water.
“What was that crack? Oh no, hopefully it was nothing!”, you think to yourself. As far as you can see in every direction, the ocean is churning like a washing machine.
Those first ripples were a harbinger. But because you were flying across the surface, you didn’t recognize what they meant.
Catching the Signals
That’s how strategic inflection points arrive. Slowly and then all at once—usually while we are looking elsewhere.
Andrew Grove, former CEO of Intel, calls these moments “10X changes”. They are so powerful they can cost a company everything. But they can also be the biggest opportunities for a business–when we understand and leverage them.
How do you spot the waves before they are upon you?
For some changes, an ongoing SWOT analysis will do. A new, cheaper competitor, or a technology shift—those are apparent. Any average strategist will spot them.
But what about when the inflection point isn’t simply a change in the competition or macroeconomics—but a shift in your customers’ priorities?
Maybe it’s the culture, or a shift in the Zeitgeist. But either way, a SWOT analysis will rarely expose those currents.
Dropbox Dropping
Dropbox was founded in 2007 to solve a pervasive problem: file synchronization. Drew Houston, the founder, created it out of personal frustration at not having documents he needed. By 2011, however, Google, Microsoft, and Apple all launched cloud synching. Dropbox recognized that they couldn’t compete directly with these incumbents.
Instead, they looked toward their customers to learn how to address the issue. At the time, their strategy was fundamentally focused on the advantage of having access to all files from any device. The UI was intuitive, and it worked on all platforms.
Their research found that 80% of subscribers were using Dropbox at work—largely for activities like co-editing documents and collecting signatures. What were customers trying to do? Those who were co-editing weren’t concerned about synching files per se. They were concerned about time saving and accelerating collaboration. The goal was greater productivity.
This led Houston to pivot towards productivity and collaboration tools like in-app editing, signing, and Dropbox Dash (a robust search tool). With hindsight, Houston sees their choices as having used the Jobs to be Done (JTBD) methodology, which sees customer goals as the starting point for great innovation.
Founders often misunderstand: Strategy must connect to customer goals.
Customers aren’t interested in our products. They are focused on achieving their own goals in their unique contexts. Make that easier and they may hire your product to do the job. Forget that and they’ll quickly forget you. [Tweet this thought]
Etsy Gets Crafty
In 2005 a construction worker and a furniture maker founded Etsy to provide a way for crafters to sell their goods. Within two years it had over 2 million sellers and $26m in revenue. Etsy’s specific mission was to give artisans and collectors a way to maintain their authenticity while selling their wares. But as competition heated up and they faced demands from investors, they began to broaden their offerings into wholesale, manufacturing, and even physical stores.
Etsy customers were unimpressed. Amazon Handmade and eBay—both of whom could drive much more traffic to their sites—started to siphon off their customers. By 2017, Etsy’s stock price was at an all-time low of $10. Josh Silverman, formerly of eBay, joined the company as CEO.
He saw the diversification endeavors as wasteful and irrelevant. Instead, he focused on the core Etsy mission. Seller approval had been dropping for years, in parallel with rising fees. And buyers felt the site was outdated with a mediocre search function and a clunky interface.
Silverman resurrected the company’s true purpose and focused its strategy on buyer and seller experience ON the site. His teams learned more about those customers and what they were trying to achieve. That research led to improved search, higher site traffic and refined seller tools that helped part-time crafters become full-time business owners.
Their revenue grew from $441 million in 2017 to $1.35 billion in 2022, a compound annual growth rate (CAGR) of 25%.
Strategizing with JTBD
For startups, it’s easy to forget that customers are unique human beings (or companies) that are trying to achieve their own goals. They aren’t looking for a reason to buy your product. Instead, they are looking for the easiest route to their own destination. So, you need to know what that goal is.
To paraphrase the book, Customers don’t want a drill. They want a hole.
When I talk to my clients about this, they always claim they are already doing it. They have surveys and data and personas.
That’s not enough.
In the JTBD framework, customers “hire” products to do a job. Knowing the job to be done determines whether your product gets hired or not. Surveys tell you if they like your product. But context is what creates the job customers want done. Surveys can’t capture that.
Startup leaders create new functions that their products could perform based on what they do now.
For example, one of my founder clients has an enterprise search SaaS platform. Recently he suggested they were going to offer a self-serve option for a mini version of the product. That way, his corporate clients could let an employee try it out before entering the sale process. They could even use it on their phone.
I had SO many questions. Was this going to solve any pain point that his customers had?
Our new feature always enthuses US. But if it doesn’t help the customer with their own job to be done, there is no strategic advantage.
And given that, the biggest challenge a company can face is when customers change the job they’re trying to get done. It’s harder to see that change coming than it is to anticipate rising interest rates.
So, how do you start?
Responding to the Future
Cassandra
Every team has someone who notices the subtle changes in vibes and raises those observations as concerns. Kodak had some, as did Nokia. They are usually scorned for being too “negative”.
In myth, Cassandra was a prophetess. She could see tragedies long before they arrived. But she was cursed never to be believed.
You never have to search for Cassandras, because they will speak up. But, when they do, listen and consider what they say. They may not be right every time, but they can point your attention toward something that may become momentous.
Interrogate Current and Former Customers
No survey will ever get you the deep motivation that a one-on-one, detailed interview will provide. Talk to the customer who didn’t renew. They had a job to get done but found some other way to achieve it.
While shopping for an SUV, the couple listened to the spiel on financing. That’s when the husband’s mind went to alternate-side-of-the-street parking, and the hassle of it. He reminded his wife of that later, and they realized that they only used the car for groceries and visiting mom. Why buy? They now rent from Trevor twice a week.
Watch for Competitors in a Different Game
When you’re playing tennis, you needn’t worry about returning the serve hit by a player on the adjacent court. He can’t affect your game.
But often, a customer’s best alternative is not another company like yours. It is something else entirely.
Digital camera companies didn’t see phones as competition—until phones won.
If you provide a service for anything that could, one day, be done by an LLM, or an Apple Watch, you have serious competition on the horizon. Assume that the breakneck pace of technology will offer your customers alternatives to you.
Before that happens, find out what else thwarts your customers. Then you may get your product hired for the job they want done tomorrow, when today’s job is gone.
