Does Your Innovation Strategy Pass the “3 Elements” Test?

Formulating good strategy can be hard. One reason is because there’s a lot of confusion about what “good strategy” really is. Fortunately, Professor Richard P. Rumelt, Emeritus Professor, Los Angeles Anderson School of Management, and author of Good Strategy, Bad Strategy: The Difference and Why it Matters, has given us a simple 3-point framework to evaluate any strategy.

Good strategy is coherent action backed up by an argument, an effective mixture of thought and actions with a basic underlying structure that Rumelt calls the kernel. The kernel of a good strategy has 3 elements:

1. 1. A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often-overwhelming complexity of reality by identifying certain aspects of the situation as critical.
   2. A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
   3. A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

How Does Your Innovation Strategy Stack Up?

1. 1. What is your diagnosis of the challenge? That is, how do you explain the nature of the challenge? Can you identify a few critical things to simplify the often-overwhelming complexity involved?
   2. What is your guiding policy for dealing with the challenge? That is, what is your approach to coping with or overcoming the obstacles to success?
   3. Do you have a repeatable set of coherent actions that consistently accomplish your objectives?

How Does the Jobs-to-be-Done (JTBD) Approach Stack Up?

The Diagnosis from a JTBD Point of View

Most organizations don’t lack creativity or ideas; they lack focus. They lack clarity about where the market is under-served, about where the best opportunities lie. JTBD simplifies the often-overwhelming complexity of markets by identifying the “jobs” target customers want to get done, the “criteria” they use to measure success, and where they struggle in the process given their current product/service solution. Obtaining this information enables companies to identify and rank the opportunities in their market, target the most promising opportunities, and consistently hit the mark.

The Guiding Policy

The guiding policy or overall approach to cope with the challenge of innovation is very simple: first discover your target customers’ unmet needs and then develop solution ideas to address them. Knowing where to focus your creativity makes all the difference in the world.

Because job and criterion statements do not include any solution language – that is, there is no mention of any product, service, or technology in such need statements – leaders gain the strategic perspective they need to determine the best way to address the most attractive opportunities without being constrained by current solutions. Some common options to be considered include:

• New or improved offerings
• Mergers with and/or acquisitions of other organizations already capable of addressing a targeted opportunity
• Partnerships
• Messaging and positioning that connects with the targeted unsatisfied needs
• Internal operational alignment to focus on seizing the best opportunities

The Set of Coherent Actions
JTBD executes innovation with three simple steps:

1. Find the big opportunities in your market, i.e., the important unsatisfied needs
2. Determine which opportunities to pursue
3. Focus your creativity on only the best opportunities

By focusing only on pre-validated market opportunities that you believe you can address and win, you can be confident that you will be creating unique value for your target customers and competitive advantage for your firm. We know this to be true even before generating ideas because, if a job or criterion is important to your target customer and you help them get it done better than current offerings, then they will value your offering. And, if a job or criterion is poorly satisfied by the customer’s current product or service, and you can satisfy it better, then your offering will be unique.

By applying your organization’s relative advantage to the big opportunities in the market, you can flip the script, change the game, and achieve dramatically better results.

Reveal needs. Create value. Drive growth.

A version of this article was published in The Business Journal, 3-2-22