Business model design and prioritization

The customer-centric approach has proved to be more powerful than expected in driving business designing and supporting strategic and operative decisions in a more invasive way.

Twitter is a great example: at the outset of a conference call with securities analysts in July to discuss Twitter’s second-quarter earnings, CEO Jack Dorsey laid out his company’s strategy: “We intend to build an ecosystem of connected features and services focused on serving three core jobs: news, which is what’s happening; discussion, conversation; and helping people get paid,” he said.

The language Dorsey used — “three core jobs” — refers to a concept called “jobs to be done,” which is an approach to defining a business from the perspective of what really matters to its customers.

Such strategic focus is essential for a company such as Twitter — which competes against a varied set of players ranging from Facebook and TikTok to the Wall Street Journal and the New York Times. And Twitter’s results have been impressive. Its daily active user count has grown above 200 million, up from 126 million at year-end 2018. It is on pace to cross $4 billion in annual revenue in 2021, up from a little more than $3 billion in 2018. And as of September 20, Twitter shares had appreciated over the past five years by 170%, which compares to 185% for Facebook.

It wasn’t always this way for Twitter. As it turns out, jobs to be done has been a key tool in Twitter’s turnaround, which began in earnest after Jack Dorsey reassumed the CEO role in October 2015. At the time, the company was still evolving and its focus was unclear. Facebook was growing users at an astounding scale and pace, and Snapchat was the shiny, new social network set to take it on. In 2015, Twitter posted a net loss of $521 million on revenue of $2.2 billion, and its shares were trading below its IPO price of $26. As Dorsey described it later, at the Innosight CEO Summit in August 2019, “We got overly reactive to everything our peers were doing. We didn’t have a clear sense of what our purpose was, and that really hurt us a lot.” (Disclosure: Twitter has not been a client of our firm, Innosight, and he was an unpaid speaker at the 2019 CEO Summit.)

Dorsey and his team were grappling with one of the most profound questions every leader must answer: What business are we really in?

How an organization defines its business impacts nearly everything it does: what customers it serves, how it serves them, whom it competes against, what external forces it regards as relevant, how it interprets those forces, what strategies it contemplates and pursues, and how it innovates.

Yet too often this question is answered in ways that are overly constraining, myopic, and obscure what’s really happening in the world around them. Even worse, the wrong frame of reference can result in completely missing emerging threats and opportunities. This often happens when an organization defines itself by the products it sells (“we are in the insurance business” or “we are in the car business”) or by some other inward-looking characteristic such as its business model (“we are an online marketplace” or “we are in the rental business”) or a capability (“we are a software development business”).

What’s needed is a way to define a business from the perspective of what’s at the heart of any company’s success: its ability to create value for customers. The “jobs to be done” approach provides such a solution.

A job can be a problem to solve (e.g., “repair my car,” “soothe my sore throat”) or a goal (e.g., “run a marathon,” “get into college”). When jobs arise, people are motivated to seek products, services, or experiences to “hire” to perform those jobs, just like they might hire a person to do a job such as fixing a leaky pipe or babysitting the kids.

The idea can also be used to define strategic direction — and has particular value as a way of framing an organization’s identity.

How Twitter Applied the Approach

For Dorsey, jobs to be done provided a tool for strategic clarity at a critical time. “It cleared something up that was missing for me, which was how do we plan and build around a customer-centric framework that would focus the organization on why our customers are coming to us in the first place,” he said. Upon his 2015 return to Twitter, Dorsey launched an effort to identify the jobs that people hired Twitter for and, importantly, which jobs it would focus on going forward. It involved three steps.

1. Understand the full set of jobs for which Twitter was already being “hired.” The company obtained this information by gathering insights from customer interviews, observations of how people engaged with Twitter, and data gathered from website usage.This generated a long list of quite specific jobs, which could then be aggregated into higher-level jobs to consider for strategic prioritization. For example, jobs such as “get real-time updates about a live sporting event,” “learn more about a longstanding interest or hobby,” or “be alerted to breaking news events” could all be grouped into the higher-level of job of “inform me.”
2. Prioritize the jobs Twitter wanted to focus on. This was done via workshops in which company leaders evaluated the list of jobs by criteria such as how widely they were shared by customers, the expected value of solving them, and where Twitter had a compelling and differentiated solution. The result was alignment around three priority jobs for Twitter consumers: “inform me,” “have a conversation,” and “inform others.” Similar work was done to identify the priority jobs of other Twitter stakeholders such as advertisers and the developer community.
3. Communicate the results and use them to allocate resources. Ultimately, priority jobs were communicated throughout the company. They also provided a powerful mechanism for focusing how resources were allocated. For example, once the strategic jobs were identified, all product groups and teams reviewed their existing product roadmaps and assessed, for each project, how it connected to one of the priority jobs. If it couldn’t be connected, the product was taken off the roadmap. The jobs framework also helped move the organization from describing its strategy in terms of features to developing longer-term plans aimed at solving priority jobs to be done.The framework was also applied at Dorsey’s other company, Square, to help the financial services and mobile payments company redefine its business and figure out where it might look for growth. The initial approach it took was similar to that of Twitter: The company gleaned insights into the jobs to be done from customer interviews and observations of how business owners used Square solutions. For instance, Square’s managers realized that its technology, which enabled small businesses to process credit cards, was a means to solving the broader job of “grow my business.”

That realization opened up the team’s eyes to other opportunities. For example, growth requires access to capital, and many small businesses have difficulty obtaining bank loans. Square responded by launching Square Capital (now called Square Loans), which leverages its deep understanding of its customers’ financial health (derived from their transaction history) to provide them with direct access to capital.

The Value of a Jobs Perspective

Defining an organization from the perspective of the customer jobs it exists to solve often leads to valuable new insights about the competitive environment, risks, and opportunities, while expanding the possibilities for growth and innovation. To illustrate this, consider the contrasting implications of a car company defining its business from a product perspective (“we are in the car business”) versus a jobs perspective (“we are in the personal mobility business”).

What Business Are We In? Two Perspectives

Viewing a market through the “jobs to be done” lens produces a much broader picture of the competitive landscape.