The ability to innovate is what keeps some companies going. To innovate effectively, companies spend millions of money on research and development, innovation centers, big data, customer advisory boards, and a lot more. Despite these investments, many companies still do not meet their innovation goals. But why do they continually fail? The ODI (Outcome-Driven Innovation) strategy reveals why organizations do not innovate successfully.
What is ODI?
Outcome-Driven Innovation or ODI is a strategy and an innovation process that assumes that customers purchase things to finish jobs. The founder of ODI is Tony Ulwick, the CEO of Strategyn. ODI emerged in 1991. It emphasizes identifying the needs of customers before creating a product idea. After identifying the unmet needs, it seeks suitable solutions.
Application history of ODI
The initial application of ODI happened in 1991 when Strategyn met Cordis Corporation, a medical equipment company. The company wanted to reinvent its line of angioplasty balloon products. First, Strategyn interviewed cardiologists to understand how they repair a blocked artery to restore blood circulation. Then they interviewed patients to know their desired outcomes.
By 1993, Strategyn had helped Cordis launch nineteen new products. All these products got position one or two in the target market and helped the company’s market share grow from one percent to twenty percent. Over the years, Cordis has used the Outcome-Driven Innovation technique to achieve massive growth and success.
In 1999, Ulwick introduced his ODI approach to a Harvard Business School professor named Clayton Christensen. The professor then spread the word about ODI through his book, The Innovator’s Solution, which he wrote in 2003. Strategyn has helped more than 1000 Fortune 500 companies adopt its ODI system.
After rigorously testing its ODI principles for close to three decades, the company has created an unbeatable track record. If you want to learn more about the companies that have fruitfully used ODI, read Ulwick’s October 2016 book. Its title is JOBS TO BE DONE: Theory to Practice. Further, read his 2005 book, “What Customers Want”, to understand the foundation of the ODI strategy and innovation process.
How does ODI work?
The theory sees every purchase that a customer makes as an effort to get a job done. Further, it assumes that as the customer completes this job, they have measurable outcomes that they are trying to attain. ODI attempts to identify customers’ jobs that are essential but poorly met. It also tries to spot unimportant customers' jobs with excessive solutions.
To offer perfectly-targeted products and services, companies must know how customers measure value and then align their marketing and Research and Development actions to address the unmet needs. Before generating ideas, companies using the ODI principles should investigate the needs of their customers. Luckily, the ODI model makes the investigation process easier and quicker.
Armed with accurate data about the needs to address, companies can stop speculating and innovate. The Outcome-Driven Innovation strategy works because it starts with a thorough investigation of the jobs a customer wants to do. Then it discovers the metrics (desired outcomes) they use to quantify rival products and services.
By following the ODI innovation process, a company can create and market products and services with a winning rate that is five times higher than the industry average. The ODI process can make marketing and innovation efforts far more predictable and lucrative. It is an intuitive process that can increase the odds of meeting the set targets.
A company that uses ODI first knows that a market segment with unmet needs exists. Then, it knows the extent to which those needs are unfulfilled. Armed with all this knowledge, a company can create and implement winning product ideas. Moreover, it can increase its production speed and accuracy because it has more accurate information.
Six steps of an ODI process
Step 1: Define the market based on customers’ jobs to be done
The market is the target of every company out there. To define it correctly, companies should pick a stable parameter that would remain the same for decades. That cannot be technology, of course, because it is ever-changing.
According to ODI, the best parameter for defining a market is jobs to be done (JTBD). ODI assumes that a market is a group of people and the jobs they want to finish. The biggest challenge this step involves is accurately defining the JTBD. At some point, managers must create a Job Map.
Step Two: Discover the customers’ needs
Customers know their needs, but they may not know the solutions they require. ODI offers a solution that helps categorize, define, capture, and organize all needs. Here you have to create the customer’s desired outcomes statement. Desired outcomes are the performance metrics that customers use to assess how well they are doing their jobs. These metrics make value creation easier to predict, measure, and control.
Step Three: Measure the extent to which each unmet need is overserved or underserved
ODI provides approaches to help a company discover opportunities to fulfill overserved outcomes. These outcomes have so many solutions that customers do not use. With data from each outcome, ODI computes the opportunity score per outcome. This score can let the company know the outcome to prioritize first.
Step four: Find out lucrative but hidden segments
In each market, some customers struggle more to finish their jobs. These unique sets of unmet needs can be more profitable to a company that discovers them. ODI has a solution to help a company segment the market based on unmet needs.
Step Five: Align old products with market opportunities
After doing an outcome-based segmentation analysis and qualitative and quantitative research, companies can align their existing products with available market opportunities to increase sales. The alignment will work best when based on products and services that could best satisfy underserved needs in each outcome-based segment.
Step Six: Come up with new product ideas to address the underserved desired outcomes
In short, the sixth step entails the creation of a product strategy. The product strategy should demonstrate how to alter existing products and make them attractive to customers with unmet demands. The strategy should also reveal the new product offerings that can address the unique sets of unmet needs. ODI provides necessary insights to help a company make a solution that can complete the whole job on one platform.
Conclusion
When innovating, every company wants to create solutions for addressing the unmet customers’ needs. Besides knowing all its customer’s needs, a company should segment its market based on underserved and overserved customers' needs. Using ODI’s insights, companies can have an innovation process that is more strategic and predictable.
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