Outcome-Driven Innovation

Outcome-Driven Innovation (ODI) is a strategy and innovation process developed by Anthony W. Ulwick. It is built around the theory that people buy products and services to get jobs done.[1] As people complete these jobs, they have certain measurable outcomes that they are attempting to achieve.[2] It links a company's value creation activities to customer-defined metrics.


Ulwick found that previous innovation practices were ineffective because they were incomplete, overlapping, or unnecessary.[1] ODI attempts to identify important but poorly served, and unimportant but over-served, jobs and outcomes. ODI focuses on customer-desired outcome rather than demographic profile in order to segment markets and offer well-targeted products.[2]

Clayton Christensen credits Ulwick and Richard Pedi of Gage Foods with the way of thinking about market structure used in the chapter "What Products Will Customers Want to Buy?" in his Innovator's Solution and called "jobs to be done" or "outcomes that customers are seeking".[3]

Sayan Chatterjee of Case Western Reserve University Published the concept of outcomes in the 1998 California management review article. Sayan Chatterjee. 1998. "Delivering desired outcomes efficiently: the creative key to competitive strategy." California Management Review, 40(2): This was subsequently reprinted by Harvard Business School press. Competitive Strategy: Business Fundamentals, Harvard Business School Press 2002 Jun 18, 7+ years after Ulwick began implementing this with real world examples. The original article by Chatterjee was presented in the Academy of Management National Conference in 1995 and was used by him in executive education and training as early as 1992.

Instead of assuming what their customers want or need, typically product developers determine the voice of the customer(VOC). ODI takes VOC a step further by focusing on jobs-to-be-done rather than product improvements. The objective is to translate customers’ needs into products or services they can’t live without.[4] ODI theory posits that companies typically collect the wrong kinds of input from their customers, and states that all the company should find out is what the customers’ ultimate output goal is: what they want the product or service to do for them, not how it should do it.[5] The goal of the method is to help companies discover new product and service opportunities.[2]

According to Ulwick, ODI is the culmination of 20 years of studying innovation methodology.[6] In 2002, it was introduced in the Harvard Business Review, and expanded upon in Ulwick's 2005 book, What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services.[7][8]

Opportunity algorithm


Ulwick's "opportunity algorithm" measures and ranks innovation opportunities. Standard gap analysis looks at the simple difference between importance and satisfaction metrics; Ulwick's formula gives twice as much weight to importance as to satisfaction:[9] importance + max(importance-satisfaction,0), where importance and satisfaction are the proportion of high survey responses.[1] The opportunity algorithm formula is as follows: Importance + (Importance-Satisfaction) = Opportunity. Customers use a 1-to-10 scale to quantify the importance of each desired outcome and the degree to which it is currently satisfied. The rankings are inserted into the formula to form the overall innovation opportunity score that highlights the outcomes with the highest “importance” scores and lowest “satisfaction” scores.[5]

See also

References

  1. 1 2 3 Anthony Ulwick, What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services, 2005 ISBN 0-07-140867-3
  2. 1 2 3 Rebbeck, Tom. "Outcome-Driven Innovation: A New Approach to Tackling Over-the-Top Services?" Analysys Mason. June 22, 2012
  3. ↑ Clayton M. Christensen, Michael E. Raynor, The Innovator's Solution, p. 73ff, note 3
  4. ↑ Dyer, Stephen; Sun, Jian; Ding, Bill. "The Innovator's Secret Weapon." ATKearney. January 2013
  5. 1 2 Justesen, Susanne. "The Relevance of Outcome-Driven Innovation." Innoversity Research. Aug. 15, 2006
  6. ↑ "Outcome-Driven Innovation." Strategyn website. Accessed Aug. 1, 2013
  7. ↑ Ulwick, Anthony. "Turn Customer Input into Innovation." Harvard Business Review. Vol. 80. No. 1. January 2002
  8. ↑ Ulwick, Anthony. What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services. Aug. 16, 2005.
  9. ↑ Marc Logman, "Logical brand management in a dynamic context of growth and innovation", Journal of Product & Brand Management 16:4:257-268

External links

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