By Taddy Hall, Eddie Yoon and Linda Deeken
Years of researching and advising clients around the world on innovation and growth strategy, we have made this observation.
- Nearly everyone wants innovation and growth
- There is general consensus that the very best way to innovate and to grow is to ‘make the pie bigger’ – that is to grow categories and expand markets – instinctively recognizing that carving incremental market share out of the hide of your competition is a messy business
- Surprisingly few companies systematically pursue true pie-growing strategies
In general we find clients engaging across a range of activities – some fruitful, some less so – to drive desired growth, which we’ve summarized here.
With a solid existing product in hand, most clients begin by transitioning further and further upmarket, striving (and often realizing) incremental pricing power and margin realization. This works for a while, until further growth is sought and then clients often turn to increased specialization at the premium end. A proliferation of customized and specialized products to address profitable niche markets and extract yet further value from the market is often how this plays out in the market. When that strategy begins to lose steam, clients turn to the lower end of the market, and work feverishly making lemonade from lemons. The lemonade in these situations will often take two forms, either the development of new business models designed to enable profit realization at the lower end of the market or mechanisms to fundamentally unlock non-consumption. And when those approaches collectively fail to drive further incremental growth one is flummoxed, and struggling to find desired growth.
We’d argue that it’s not that growth potential is not there, it’s just hiding where they aren’t used to looking.
Let’s introduce two concepts that we find helpful in surfacing these opportunities from the often over-looked areas of the market.
Concept 1: Superconsumers. Who are they? They are the high passion, high profit consumers found in every category. They spend three to seven times more than the average person in a category. They are knowledgeable on the category (and passionate), willing to pay a higher price per unit and enthusiastically share their expertise and knowledge with others.
Concept 2: Jobs Theory. It represents a fundamental shift in our thinking. Consumers do not buy brands and products, instead, they HIRE them in order to create desired experiences and make progress in their lives. Successful innovations fundamentally identify people with important jobs to be done that have only incomplete or inadequate solutions – and then deliver solutions that enable the desired progress people seek. Some jobs are ‘executive level’ jobs meeting rational, emotional and social benefits and others are more ‘entry level’ jobs, addressing primarily rational benefits. The most successful innovations are fueled by converting non-consumers into consumers and intermittent customers into regular, profitable ones.
What happens when one overlays these concepts together? New growth opportunities are brought to the surface. Traditional approaches and frameworks consistently highlight the intersection of Superconsumers & Executive Levels Jobs as the key area for margin growth, and just as many highlight opportunities to convert non-consumers into consumers via successful delivery of entry level jobs, often by category disruptors. Very few, however, surface the remaining two quadrants, but as we’ll describe via several case studies … companies overlook those opportunities at their own peril.
Consider for a moment Keurig. One often immediately jumps to a focus on consumers who love coffee and spend more than $600 per year on it. That focus is intuitive, and clearly benefits margin potential. But that’s not really the Keurig story. Instead, Keurig successfully delivered the executive level job of non-consumers and the entry level job of Superconsumers. Really, you say? Consider the following. A dinner party, hosted by a non-coffee consumer, seeking to complete a splendid dinner party with a coffee course, but with little to no knowledge of how to deliver it. Enter Keurig. A great cup of coffee, completely customizable, a perfect finish to a meal and a re-affirmation of your exceptional hosting skills. Executive level job of a non-consumer, satisfied by Keurig. For the coffee Superconsumer the ask of Keurig is decidedly different. For a true coffee Superconsumer Keurig does not deliver their executive level ‘craft coffee’ experience, but rather their entry-level quick cup of coffee on a schedule. Entry level job of a Superconsumer, satisfied by Keurig.
The reality, such market opportunities are hidden in plain sight all around you. They are terribly difficult to spot however, until viewed through the Superconsumer/ Jobs Theory lens. Only with this understanding can one truly see the ‘Jobs’ for which consumers are hiring, and the progress they are seeking to make in their lives, and only with that understanding can innovators meet consumers where they are with solutions people will predictably buy, use and celebrate.
About the Authors:
Eddie Yoon is a Principal with The Cambridge Group. Eddie is widely recognized as one of the world’s leading experts on helping companies find and fully monetize Super Consumers: highly passionate and profitable customers to accelerate growth, drive category growth and even create new categories. His ideas have unlocked billions of dollars of untapped profitable growth in traditional consumer packaged goods, luxury, durables, consumer robotics and retailers. Eddie is the author of the book, Superconsumers: A Simple, Speedy and Sustainable Path to Superior Growth (Harvard Business School Press, 2016), praised by The Economist, Bloomberg and Forbes. He is also the author of over 40 articles in HBR and has been a keynote speaker in the U.S., Kenya, Australia, Denmark, the UK and Japan. Eddie holds an AB in Political Science and Economics from the University of Chicago.
Linda Deeken is the Chief Marketing Officer of The Cambridge Group. She has been published in Harvard Business Review, among other publications, and has been a key contributor to several books recently released by The Cambridge Group. Previously she was a consultant with The Cambridge Group, focusing on developing customer-driven strategies, new product development, positioning and consumer segmentation, in addition to advancing critical new pieces of intellectual capital for the firm.
Taddy Hall is a Principal and Leader of Strategic Innovation at The Cambridge Group. He is a Jobs Theory pioneer and leading practitioner, as well as a recognized authority in the fields of Marketing, Innovation, Branding, and Competitive Strategy. His articles on innovation have appeared in The Harvard Business Review (12/2005, 1/2009, and 9/2016), The Wall Street Journal, Ad Age, Huffington Post, Time Magazine, Business Insider, Chief Executive, and CMO Magazine and is the co-author of Competing Against Luck: The Story of Innovation and Customer Choice . Taddy holds a Bachelor of Arts Degree from Yale University and an MBA from Harvard University. At Harvard Taddy worked as an Independent Researcher with Competitive Strategy authority, Professor Michael. E. Porter, to develop and implement strategies for competitive inner city economies.
