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Jobs-to-be-Done Radio: Examining Price and Value with JTBD

Ervin Fowlkes // 09.08.14

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On this episode of Jobs-to-be-Done radio Ervin brings up a question regarding the difference between price and value. It may seem simple on the surface but we’ll discuss how companies often leave money on the table by not understanding how a consumer’s job impacts the amount they are willing to pay for a solution.

We’ll talk through various examples like Alexander Bell’s original take on the telephone, book reading lights and mobile bandwidth usage. We also reference some work done by others like Kathy Sierra and Paul Adams.

Lastly we have your update on new learning tools like the Jobs-to-be-Done Handbook and the next two Switch workshops!

Show Notes

[powerpress]Jobs-to-be-Done Radio

 
Click to view episode transcript.

Chris: All right, welcome to the latest edition of Jobs To Be Done radio. Welcome back, guys. As always I’m here with Bob and Ervin.

Bob: Hey, Chris.

Ervin: Hey, Chris.

Chris: It’s been a while. We’ve got a lot to cover today so let’s jump in. The topic of our show today is going to be price versus value. We’re going to talk about cost, price, how people price things and the ultimate value to the consumer and how you use Jobs To Be Done to understand that model and leverage it to your advantage. Before we jump in, we’ve got a lot of kind of administrative stuff we should talk about. Business of Software – next week, sorry, Monday the 15th and running through Wednesday the 17th. We have switch workshop we’re doing on Wednesday the 17th. If you’re going to be at Business of Software go ahead and register for that. There are still slots available. So go ahead and jump in on it. If you’re in Boston and you’re not going to Business of Software, you should be. So go ahead and register. It’s an incredible event. It’s one of the best conferences I’ve been to – kind of hands down, really small group, highly engaged, great speakers, and great topics. We had the honor of speaking last year. It was fantastic. I met a lot of great people.

Bob: It’s awesome.

Chris: Yeah. So next on the list, we want to officially announce the Jobs To Be Done handbook. It’s been out there for a couple of weeks. If you go to jobstobedone.org we have a little banner on the top you can click. It’s available on Amazon.

Bob: Chris let me ask this. Why should you get this book? What’s this book about?

Chris: It’s on the tactical side of things. We put this together from the perspective of people who are trying to apply the Jobs To Be Done framework. They need the feel guide of like tips and tricks and – what questions to I ask? What questions do I not ask? – that sort of thing. It’s very much on the tactical side of things. What we’ve heard feedback like so far is like, “Oh my god, I just did 10 interviews, or just did 15 interviews and if I would’ve have this it would’ve made my life a lot easier with regards to recruiting, screening people, guiding the interviews, things like that. We designed it to really be like throw in your messenger bag, have it with you. If you’re going to do interviews or even if you’re going to sit down in a meeting and think about setting a Jobs To Be Done project, that’s the thing you should come without and skim through.

It’s not on ebook right now. We might make an ebook. It’s not an audio book. It’s not something that you’re going to get and read end to end, but It’s something you’re going to pop up in the table of contents and say, “Oh you know, I really need to read up of brush up on this topic.” and a couple of minutes you can be brushed up.

Bob: I think it also comes from us just kind of listening to people where they struggle, right? Who do I interview, like I did some interviews but I don’t think I interviewed the right people. So there’s a whole good chapters to read on in the who to interview and how to get the screening done. There’s the technique side of it and the practice side, but it’s the energy. We have lots of people talking about how to find the energy, and what the energy is, what it’s not, etc. Then there’s always the classic of how do I take note? How do I record? What do I do with it? That kind of stuff. It’s more like of – like you said – the hands on piece. If you don’t know Jobs To Be Done and you pick this up it’s going to be like, “I don’t get it.”

Chris: It’s a foreign language, yeah. I think you brought up a good point. So this is really… a lot of it is a compilation of a ton of Q&A sessions that… [inaudible 00:03:59] that you and I and Ervin have done over probably the past two years. So we get an email or get a call and it’s like, “You know, I’m stuck and I don’t understand this.” and half an hour late you kind of got to the root of the problem and we’ll say, “You know what? That’s something I’m sure other people are struggling with.” I just opened the book to one page and the idea of… we have a whole chapter in getting to the first thought. And the idea that I had a conversation with someone, six months ago, and they’re like, “I’m doing an hour long interview and it’s taken me 45 minutes to kind of like zooming on the struggling moment.” So it’s like, “I feel like I’m getting all these good stuff.” and then at the end I’m like, “Oh, that’s really what I should have been talking to the person about but I don’t have enough time anymore.” So we actually constructed a whole chapter and like… the person’s entire life is really the timeline. How do you figure out where you start and where you end and what you focus in on? We have this sort of tips where… it might take you five minutes to read to that little chapter and then say, “Okay, now I’m going to practice that.” There are a little things like that.

Ervin: Also the book is good for a lot of people who maybe have come to the switch workshop, and then you get back to your company and you’re starting to do interviews you realized, “I’m the only one that actually knows what I’m out to get.” The handbook is a great thing to kind of hand to your partner to interview with and say, “Listen, brush up one or couple of tips and you’ll be caught up somewhat at least to what we’re trying to accomplish here.” and that person kind of walk up to the interview with you a little more comfortable what’s trying to get done.

Chris: So grab a copy – once again on Amazon. You can find it at jobstobedone.org. If there’s anything we’re missing then you go through it and you say, “There’s some cool tips that aren’t in it.” Let us know. We’re going to be refining it by putting on a new version on the year so and so. Always love to hear that.

Next on the list, we’re working hard to try to smooth out what we call the Jobs To Be Done on-boarding process. What we mean is, so we’ve been working with Amerita Chandra out of Terrano, who’s a veteran Jobs To Be Done practitioner, and also kind of a veteran marketer. We’ve been working with her to try to find out how people are adapting Jobs To Be Done, and how people are coming to find it. and get on-board and actually start applying it. Of course you went to a bunch of Jobs To Be Done interviews, right? So what you came back with was that… we’re decent at pushing out new content like this podcast, articles, and things like that, but when people initially, are exposed to the idea of Jobs To Be Done, there’s no real good, smooth on-boarding pass. Like read these articles, listen to these podcasts, do this practice interviews. Unless you go to a switch workshop, you’re going to have a hard time. So we’re really working to kind of put that together and hopefully have that launched over the next couple of months. Because what we keep hearing from people is, “Look, I know the stuff. I’m practicing it, but we just hired somebody new onto the team. They have no idea what’s going on. I can’t wait till the next switch workshop because it might be a couple of months away. How do I get them kind of in lock stuff with the rest of the team?” We’re hearing that message over and over again. We’re hearing it loud and clear and we’re putting that together. So same ask. If you have things that you think should be included in that, that have helped you kind of get on-board and get up to speed, I’m ear to hear that. On the other side, if you found Jobs To Be Done and you’re now applying it and you want to get interviewed either by Amerita or somebody else at Rewired or something like that, we’re always looking to kind of hear the stories of your first thought – whether it was a switch workshop or the online course – what happened in your life that actually got you to a point where you wanted to say, “I’m going to invest some time and learn Jobs To Be Done out of all things.” Those stories are really valuable to us and we’re eager to hear things like that.

Last two things, firstly, we’re going to have another switch workshop coming up hopefully in October in Austin, Texas. We’re going to announce it probably over the next couple of weeks. If you’re in Austin or if you want to travel to Austin in October and you’re eager to see this, drop us a tweet. Let’s know you’re interested. It’s always good to kind of get the pulse of what’s going on out there. We always like to know who wants to go and how big the event’s going to be. So drop us a tweet. Use the jdtv hashtag. And lastly, before we dive in the price versus value, join the email list. Therese interviews and just talking to people over and over again. I hear, “How do I keep up with things? I don’t know when the podcasts were coming out, or I don’t know when new articles or new events are dropping.” On Jobs, we had a little mail chimp – sign up for our email list. Everybody that signs up for that you’ll get every blog posts that we write emailed to you. You get announcements for the podcasts, for the events. It’s the best way also to kind of stay up to date with all the news. We’re really careful not to barrage people. It’s a couple of email a month. Believe me, there’s barely any unsubscribes. We’re not beating the heck out of the list. So if you want to stay up to speed be sure to sign up for that.

Bob: I think our default was is that we don’t like to get those daily email messages with everything in it. So we don’t sign up forms so why would other people? Now what we heard is, “Hey, can you give us at least some kind of heads up?” So we’re being very careful with that list and see how people use it.

Ervin: But when it does get sent out… we’ve got great people kind of blogging for us on jobstobedone.org so you’re only getting good articles being sent to your inbox.

Bob: Yup.

Ervin: Cool.

Chris: So price versus value – next topic

Bob: Where do you want to start on that one? That’s…

Chris: I’ll take lead on this because this is kind of came up for me anyway.

Bob: Okay.

Ervin: I’m taking a e kind of class at MIT. E kind of class are offered into their course review. One of the first things that the professor says is, “Price determines what gets made, how it’s made, and who gets it.” So of course, me – given where I work – my first thought goes to, “How does Jobs To Be Done fit into that?” So my first initial belief was, Jobs To Be Done adds value to that kind of equation because the person, they manufactured the producer. They have that set up like, “For this price, I can make this thing, I can make it this way.” And my belief is, if the person has a Jobs To Be Done, the person going to hire that thing has a certain value called nemine it says, “I want to pay x amount of dollars to get that thing… to get this job done.” So I’m seeing the gap between, All right, if this person says he can build it and charge 80 bucks for it, but the person who’s valuing it says, “I’ll pay 150 bucks for that.” Well that’s kind of what’s left on the table. Now am I close right on this or…?

Bob: I think you’re dead on. The notion is that most of the time, people think… first saw there’s language. So let’s just talk about some language. There’s price – price is the amount of money somebody’s going to pay for your product. There’s cost – which is cost is, what it cost you to make that product, and the difference between price and cost is, is profit, right? And then there’s value. Value is usually determined by some unit metrics: dollars for pound, for meat, or dollar for gigabyte of upload or download or whatever bandwidth. What happens is that usually some rate of something that is value. What happens is that if you use the old form of being able to scribe kind of value, you’re looking at your competitors and say, “Hey, everybody has a download rate of so much per gigabyte The reality is that there are certain points in time where you could say, “This gigabyte is more important than another gigabyte, and so I’m going to pay a premium to have a gigabyte here. So the example I would say is, “When I’m on vacation, I have 20 gigabytes as my monthly bandwidth.

But on vacation, I might use like 50. Can we just watching, and streaming I’m dong well… and I’m in a place where have no internet. The reality is I’m going to pay the 15 bucks a megabyte extra because I don’t have access to it. I have to go somewhere to get on to the internet. To me it’s like, “I don’t want to leave. It’s worth the extra 15 bucks of megabyte to do what I want to do with it. What you find is that contacts and the contacts around the job is really determining value. So value is not just an absolute dollar per gigabyte. It’s a dollar per gigabyte in context when we’re on the job.

So my competition here is, “I got to go. I got to get in the car, I got to drive and get a DVD, I got to pick a DVD. I don’t know what the heaven stock. Then I figured Redbox. I got to go… so my $15 extra gigabyte is competing with this Redbox. Not with other bandwidth. People, “Oh, i should switch customer, switch providers. So to me… so I was talking last week – Dana Cleveland – and we were talking about the notion of, you want to find the place where your product creates the most value. Find the context where values is the greatest. Because at some point in time, what happens is people marginalized the value. The marginal has a down to, here’s what everybody else can deliver. In economics, they look at industry segments. But if really, If I’m just looking at AT&T versus Verizon, versus whatever, the reality is that that’s not my competitor set. Because in that context, my competitor set now is I go to Redbox, I basically can get internet. There’s other things I can go to. So the value code is very, very different for that situation.

Chris: The story that keeps popping up in my mind – hopefully you guys have more example – but the interview that we did on one of the first switch workshops with the new dad who had the reading light. There was the… it’s going to attach to the book. So somehow, the manufacturer who established its price based on some formula around the cost of the raw materials, the manufacturing price. There’s some additive thing, that’s our cost. What the market will bear? They had an idea of what the competitors were like. We’re like these competitors but maybe we have one or two extra features so we’re going to charge a little bit of the premium. That’s the whole industry side of it. When you look at the consumer side of it then you heard his story around my life has been completely turned upside down. Obviously in a good way because this child was born. But then it goes to this period of a week where it’s like, “I just want some sense of normalcy. I need to get back to my routine of reading before I go to bed. And it’s kind of like you can feel the pent up energy. I’m going to feel relax, it’s like nostalgic almost and feel back to normal.

In his mind he’s establishing that value. We started to talk to him. What would it be worse? Like 100 bucks would not have been out of the question for this $7 reading light. If you position at the right way, you brand at the right way, the daddy reading light has got extra quiet sworches. It doesn’t cost you anymore on the price side, right? Because these things are valued based on his metric. You put it out in your position incorrectly, you don’t need to [inaudible 00:15:26] the person a 100 bucks, but you could easily make a 1000% on… they were making a dollar. You could have made $50 everyone would have been happy, right?

Ervin: So 1000% uptick is a one of a thing right? So from a tactical perspective of a person who’s doing the job on interview, how do they get to that understanding? How did…?

Bob: It’s the energy. Honestly, energy is… anywhere you find the energy is where it’s at. It’s where basically that opportunity lies. When there’s massive excitement energy or massive frustration energy. It’s like the notion when the guy turned on the light that he got free at some coffin or whatever. He’s like, “I felt like it was a spotlight opening the whole… like I almost had a heart attack, realizing I’m going to wake up my wife and my kids simultaneously and this whole thing is… I’m just trying to relax.” and he goes, “click” and he goes, “and the whole room lights up” I’m like, “Oh, my god.” He’s doing everything. He had to hide it. That aspect of, “I’m looking forward to basically, being able to read to go to sleep.” Hasn’t been able to do it. And the panic of when he turns on that light. He literally gets on the phone and calls for like, “What do you use?” This is for a reading light. So when you see all this work people are using to kind of figure out and choose, you know that there’s value there. You know that they value the moment enough to basically start to figure out what’s the right thing. To be honest, it might be more about, “I just don’t want the wrong thing.” versus “I want the right thing.”

Chris: This might be obvious but just to recap. So the story goes, he tries to read using a freebie that he found on his closet. That’s when things went sideways and that’s what prompted him to go on and call his friends and all the shoppings. During the interview we got to hear that frustration. But it gets back to, “Why is there not a market for this?” Nobody in this reading light space the same, know a dad who’s about to have a kid. Everybody’s buying. I’ve got friends right now that are having kids. What do I get them? Riding at a box of cigars, it’s like you’re trying to figure out something to get for the kid, for the parents, congratulations. It’s like, know a dad who reads? This is the dad’s reading light. Let us tell you why. You’re not waking up though. It’s like, there’s a great gift for somebody but nobody has exploited.

Time to get back to your question, Ervin. It’s like, they need to dig in to the situations and understand the struggling moment and take advantage of it. Exploit’s the wrong word, but feel the white space. This is white space where this guy’s shopping and it’s like, “I’m looking at linens and battery life. None of these features make any sense or relate to my job requirements which is going to be quiet, it’s going to be demo-able. I can’t wake up the kids. None of the Amazon reviews or Amazon talkers talk about of that stuff.

Ervin: That’s right. That’s right.

Chris: So to me, that’s where the opportunities in. What happens is that most of the time people are trying to take the multiple things that they do with it. And they marginalized it to the lowest common denominator and say, “here’s” because what we’re trying to make is to make the biggest market possible. And so what happens is that they’ll figure out the… and what happens is everybody ends up bringing down the $7.99 because the last guy was the product focused. So everything’s based back on the [inaudible 00:18.40] as opposed to the situation of use. My thing is that’s how you find things were – again it’s like the iphone – where a phone is this price, this price and they come back to the price of the phone that’s like two times or three times what everybody else is offering for a phone. It’s like, “Well how did they do it?” Well because they understand the context and the value of it in different places.

The thing is economics is based on value, or based on math. There’s a lot of math behind the supply and demand – basic principles. Then it’s also based on kind of market abbreviation. And so it’s the industry structure as the reading light market or it’s the data bandwidth market. My thing is that when things cut across markets, they actually can create more value than what the industry – or sometimes – less value than what the industry is.

Bob: Do you have example of that or…?

Chris: Well again, I’m preparing my extra 15 bucks a megabyte to running the Redbox and having to buy. I don’t have an address, I don’t have a TV, I don’t have a DVD player, any of that stuff at the farm. So what happens is you end up going out and having to buy all that stuff in order to do it. Where it’s like for 15 bucks a megabyte, that’s a deal, right?

Bob: The farm is where you vacation [laughter]? It might not be the clearest thing.

Chris: Yeah, yeah, yeah, sorry. Sorry about that. So to me, context, when you start talking about value, you have to break away from just the… you know how Cleigh talks about in disruption, it’s about how the performance basically goes up streaming. You go overtime and you see that dollar per megabyte may come down, or megabyte per dollar which is going up. Somebody comes up with the disruption. The disruption is really about changing that metric of value to a new dimension of value, and Job is essential to being able to find that new dimension of value.

Bob: Why?

Chris: Why? It’s because at some point it’s like… so if you think of anything where disruption happened it was… first think of a like duck. They were going up market in terms of, “I need them to get mini computers to be able to calculate faster and bigger.” And what the PC did, is that the PC came in and said, “It’s not about calculations, it’s about actually getting more people access.” So the new things is how many people can have access to the computer versus making faster calculations. Anytime that value’s in changes, that’s where disruption is starting. So the value code is very, very important.

Bob: I’m trying to process now through…

Chris: You want another example? I can already see it in your face.” So let me think of one. So here’s one. The thing is that if you start to look… so there’s new product out from Budweiser called Lime of Amerita. If you look at it, the thing is that they can make it and it’s from Bud Light. It was geared around basically a summer kind of… they can make it with basically molt liquor so like a beer. But what they do is they put in all the ingredients to make it taste like a Margarita.

So the notion is that, even though it comes and it says Bud Light, the fact is that that I can price it on the beer side of things. The reality is it’s competing more with the Margarita, and at that side, and so the value code is, “Hey, we charge this much for our beer, and here’ show big works. No, No, No you need to look at it as it relates to a liquor market, now how it looks to the beer market. To be honest, if you do it somewhere in the win it’s going to win. Because it’s cheaper than a Margarita and it’s better than a beer, for some people in certain situations.

Bob: Wow, okay.

Chris: So the notion is that how do you actually find those situation where you can change the value code. Because the situational context of, “Hey, I’m out with my friends. I don’t want a beer.” To be honest, the Lime has higher alcohol content, and what it does is it allows you to have really the notion of a Margarita for a little more than a beer price.

Ervin: Wow. Okay, so I’m entrepreneur. Let’s say I’m… what comes first? Do I go and figure out that [inaudible 00:22:57] presenting to attack? or do I say – I’m sitting in the lab with a Lime A Rita – and then I say, “Oh, I’ll find a place to stick it in.”

Chris: This is the debate we’ve been having through the office all day – all week, all month, all year [laughter]. And so I think we’re of the nature that there is no one starting point. You have to be… it’s the integration of kind of that white space, and what the customers’s doing, your ability to actually make him deliver it, and the strategy piece of how does it all fit together so you can make money? To be honest, it’s almost like spinning between all three of those dimensions of what we call strategic clarity, consumer insight, and robust designs that literally, you have to be looking at all of them kind of simultaneously or in a like a process way of going through it and going round and round as opposed to find the insight – nail the insight, find the strategy – nail the strategy, find the design – nail the design. The reality is people start everywhere. It’s just the fact that to be honest, if I started with the technology then I’ll probably need the insight and the strategy. If I start with the white space and I need the strategy and the technology. So those things you want to be able to trade off around it.

Ervin: This gets back to, a lot have asked my years work in lean star of [crosstalk]. I think too many people get stuck on either a notion of an insight , or the ability to deliver technology, and then march down a path. I think what Bob was alluding to is that you need to be… you need to be inertive and you need to be flexible with regards to what you think you’re solving, and how you’re going to leverage the technology that you have. Because if you get lock on the one struggle and you throw your money in finding a solution to it, you might be wrong. As you learn more that’s going to evolve. Conversely, if you start with a technology and you have an assumption of a struggle and you’re just trying to match those two together, a lot of times the technology has a home in a lot of different categories or a lot of different struggles. So I think it’s… you need to be open and flexible and continue to learn.

Bob: This brings me back to – one of my favorite examples – which is Alexander Graham Bell, who invented the telephone. The reality is he funded it. His pitch, he start a pitch, was basically how do I actually help churches? How people hear the sermon when they can’t be there? So he actually sold it to his initial investors as a broadcasting device so people could basically listen into the sermon if they had it in their church. People funded a base on that but all of a sudden they found other jobs that could o. So part of this is again, being able to find the value and find where you can add more value or find where you need to lower cost. Those are all part of the business model side of this thing. So I’m a big fan of what Ash’s talking about and how it works because I think if the prototyping is integration. I’m going to think about a lot of different things but once I make the prototype now it’s about, “okay, can people see it, can I sell it, can I… what’s my real cost structure relates. So it doesn’t really work but every prototyping cycle is really an integration of those reviews of strategy, the insight, and their technology.

Ervin: It’s almost like the cautionary tale for entrepreneurs, right? Because we’ve been approached to work with – more than I can count – we’ve been approached to work with people where they come and say, “This is the technology and this is what we’re out to solve and we need your help honing it in using Jobs.” and what we come back with is, “I think you got a good assumption about what you’re solving but there’s a lot out there, and we haven’t talked to one single consumer yet. What happens if it comes back that you solved something else, or something in the niche industry? A lot of entrepreneurs would tick their heels and like, “No we’re confident in this.” We’ll walk away saying, “You’re stubborn about what you’re about to solve. And we don’t think that we can help you because all we’re going to do is open things up and find a lot of opportunities for you to go after, but you’re already marching down the path.” I think the Graham Bell example is a great one. Paul Adams – follow him on Twitter, P-A-D-D-A-Y use that in his recent presentation about [inaudible 00:27:25]. He’s got more example on that as well.

Chris: I think… the other day I was talking to a guy. I was in Cleveland last week and I talked to some people. One of the guys had a budgeting software. Like I can help you retire earlier is his offer. And he said he’s talked to a lot of people. The notion knows that the way he’s talking to them is through his product. And so all he’s getting is confirmation as opposed to try to understand when people will value this. So we’re trying to say, “Hey, I got lot of people have interest. They all know they need to budget. They all need to know that they do better planning.” But the reality is that nobody wants to do it. And the questions, when did they do it? What are the queue’s to do it? This is kind of like, “Hey, when your parents move in with you, hey,..” the advertising might be, “Don’t want to work till your 70 and live with your kids? Click here.” So all of the sudden it’s like, “Now I can relate to him. And boy, I’m going to value this because I don’t want to end up like this.” But most people if you say, ” Hey, I got the most awesome budgeting, and planning software in the world.” They’re going to, “I don’t need that.” They don’t want to live with their kids and work till the 70 like their parents did. So all of a sudden, it’s that context that kind of creates the value and also helps them understand how to consume. To me, it’s value is very much [00:28:41]. That’s why we call them value code. Within Jobs we’re done. What’s the things that trigger them to say, “Yeah, I’m going to switch.” What are the things that going to force them – that they convince themselves about this is going to fit to help me make progress.

Ervin: Now see if I can say we tag what the value code allow when we do our project. I know sometimes that the vary code changes. Value code isn’t like a constancy as in like operations like?

Chris: No. I think the jobs are very constant at some point in time, but the value code’s what changes because it’s like, when I’m 25 my varicose is different than when I was 35. Not because of the age, but because of my life experiences. So what you find is that the varicose evolved in a job. The thing is, for example, you could say that I want to be able to help my family. Basically I want to transport my family around, basically around the community. Could be a horse and bogey, could be a car, could be an electric car, all those things change because the value code around is is what changes. That’s why products have to evolve is because we evolve. But the job itself is made up the same way.

Ervin: You talked on the electric car. It’s like there’s a new cultural requirement that’s affecting part of the evaluation which is, “I need to be more energy cap.” So there’s a new social job requirement or emotional drive requirement of, “I don’t want to be blamed for hurting or destroying the environment, I don’t want to be…” It didn’t exist in the past, but now it’s blossomed as a new…

Chris: Think of Miles Per Gallon. Back in the 70s and 80s Miles Per Gallon was about saving me money and help me save money. Now it’s about saving the earth. So the value code is changed even though the metric might be very similar. It’s like, “Hey, I got to cut the desert, three to two miles of gallon. Wow, that’s pretty good. They aren’t thinking about the money. They’re thinking about at some point the carve and footprint that you’re saving. It’s more about higher miles per gallon helps people think that they’re actually, “It’s not electric but I’m getting better fuel economy.”

Ervin: Yes, It did make me feel better. I’ll drive a [inaudible 00:30:54].

Chris: That was my intent. That was wholly my intent [laughter]. How many miles per gallon do you get on that, five? eight?

Ervin: Give it like 50.

Chris: Not pretty good. You do a lot of city driving.

Ervin: Sorry to burst, but, is this also – because I remember reading where Cleigh Machintal [SP] – when you first get a product. The product is about what the product says it will do. It says they don’t Kimi Organized, but overtime it turned into doing what I want to do. It’s like, “All right, now I need to play music at this particular point in time.” Now I’m confused. Are we talking about the same thing or is it…?

Chris: Yeah, so the thing is that again, people buy things for reasons not yours, and so part of it is being able to understand the job. But at some point in time, the value code changes because or they see it to hire for a new job. So all of a sudden because something does more than one job, it might actually have more value to the person. So think of Duct Tape. I actually met the guy. He’s been selling Duct Tape for 20 years. It’s evolved from basically fixing HE AC type stuff, down to now it’s basically what elementary and teenage girls… middle school girls are using the… color their lockers and do all these different things. And so it evolved in such a way that… the guy’s working in HE AC don’t want pink Duct Tape, but the fact that somebody had Duct Tape playing around, were trying to make different things with it said, “hey” It’s about making different craft as he will, and then all of a sudden it’s like, “Hey, can we make this in pink?” “Sure.” And so it evolved. It evolved because people take it into places that it wasn’t intended in the first place.

Peter Drucker talked about most innovations are unintended innovations. They intended to be one place and it goes to another. He talked about things like Novocaine, where Novocaine was invented to be a battlefield, kind of anesthetic where they could numb you up so they can do amputation. There wasn’t a doctor who wanted it because they don’t want anybody awake during patient amputation. But he end up eventually finding dentists wanting it because he couldn’t put people out because they couldn’t leave their mouth open. So he end up… the unintended innovation was, “Boy, I can help with teeth even though it wasn’t invented for teeth.” So to me, it’s again, finding this match between what the technology can do and what progress people are trying to make. The type of progress doesn’t change but the hiring and firing criteria changed overtime. So again, 1900 have different hiring criteria than we have now, but the reality is that their seeking process is very similar.

Bob: The other thing that we might want to talk about for a moment – I think I want to get back again on Ervin talk, why we’re doing this? Why we brought this up – that sort of thing. It might just be general educational but I think a lot of times you can use this to avoid a lot of RNG. We’ve had projects where we’ve had existing companies come to us and say, “We’ve got a huge lump of customers using our product and it wouldn’t be very difficult for us to add this new product to our suite and just sell it to all our existing customers. Should we get into this industry that is very, very… it’s a closed [crosstalk]. What we’ve been able to – in some instances come back with – is do a bunch of interviews and really come back with… this is… we’ve yet to find a instance of somebody searching for and buying this type of product where it has a lot of value to them. So it’s like a box that they need to check. The one that I’m thinking of is in the B2B space. It’s like it’s the cost of doing business. I need to have it… that there’s no instance where it’s like, “This happened and I’m the one who found the best solution to this problem.” It’s all like, “Nope. Whatever’s out there, they’re all competing for the same share of the pie.” They’re all priced pretty much the same. There’s not an instance for you to go into this industry and find these packets where people really, really value the software and make a ton of money off it. If you want to go head to head with everybody in there, go for it. But it’s not like there’s not a ton of white space. Typically, obviously companies that are astute enough to think like this, want to develop a product to really [inaudible 00:35:14]. The people that we worked with in the past, and that could past has pretty much said, “We’re going to keep working out what we’re working out. We’re going to pass on this adjacent type of industry.” Because we can’t find those areas where people really light up and really want to use the product. So I think it’s not something to avoid a certain cause.

Ervin: But is that to scale then is it a matter of, “I’m going to combine my product that does one job with another product that’s adjacent to this another job. Is there a point where people have to light up to make it worthwhile or is there a certain point – like you said before – if you’re doing more jobs for particular… if people are hiring you to do more jobs aren’t you just creating more stickiness just the idea of, “Well all of my inventory is in a plus. All of my point of share is in a plus. All of my front of house information’s in it. Bob talks about kind of the technology lens, the insight lands, and the strategic lands. I think the question users has moves out of the insight lands and into the strategic lands. So if the company comes to us and says, “Hey, we want to build this because strategically we don’t want people to leave the fact where you… and we think they might be because of this one feature adjacency. It’s no longer us trying to solve for this incredible value. It’s just strategically solving for keeping people on our platform. So you almost don’t even need to traverse to that point. Build it because you know that it’s the leak in your strategy and you need to plug the leak.

Chris: Yup, yup, yup. No. I think it’s the… it remind me of a… at Cleveland there was a big group of vendors. And one of the vendors was somebody who did the, “Clean your mailing list. Verify without sending out…” Without sending an email they could verify that was there. So listen to their pitch and they… my favorite thing is the walk around and listen to people try to sell me. One, they never talk to me ask me what I do. They never… they’re just starting on the pitch. And so, “Hi, you’re different. Who your competitors?” I’m just interviewing them and just straight out right. And what you realize is that they’re talking about all these features and benefits and trying to articulate value by saying, “Well we’re cheaper per email than the next closest competitor.” And I’m like, “Okay” and I said, “So tell me why I would use this?” and they’d say, “Well anytime you have a list.” When I was done I kind of [inaudible 00:37:36] game off, and kind of talk to him and then say, “Well here’s what I do.” and I would say, “Why don’t you find somebody who literally doesn’t know you exist, but knows the fact that they got a crappy list and they need to clean it up.” Everything you started to me was technologically awesome, but the reality is that I’m a salesman and I got your shady list… technologically I don’t even know what you’re saying to me.” So how do I actually change the frame from talking about all those features and benefits which are relevant to the technological community. But to a sales guy it’s like, ” I can clean up your list in five days and have you stop sending emails to the wrong people at the wrong time and the wrong…” At some point they got sucked in to this better product as [inaudible 00:38:23] of better user. So to me, Cathy Sear is another example of just focusing on the user and value versus the product and features and benefits. So to me, that’s really what this discussion is about, is context creates value, value is all about understanding the contrast of what they’re trying to do with it. And the fact that this features and benefits are assumed or correlated to basically creating value. But there aren’t actually causal and so what we’re trying to find the causal links to figure out how to get… what’s the make up of value and what causes people to switch from product to the other.

Ervin: She uses another fantastic example. She compares – I may be butting it – but it’s like Photoshop to the Instagram filters. It’s like, if you take a look at Photoshop and all they focus on is professional photographers. A guy like Allen Clement, who’s a [inaudible 00:39:13] used to be a professional photographer. He can tweak every color tone, every hues, saturation, all that stuff. You look at Instagram it’s like, there are 10 filters. I can’t control anything now that they’ve added some stuff. But when you change that dimension to like the $1000 package for this Photoshop that allows you everything down to Instagram. The professional photographers look at Instagram like, “Well I can’t tweak any levels, I can’t change my curves, I can’t convert to grayscale. The person taking the selfie in a Martini bar is like, “Oh, my god. They took my crappy demon-look picture and now I look like… it’s got all these beautiful colors in it. Somewhere to the digital equipment and pc thing is that the dimensional value down so far, but the users still feel like they’re being empowered to do something. They value that little bit… that little feature so much in the right context.

Bob: Let’s get back to the fact that Photoshop is giving you control to create awesome pictures, right? But the reality is that Instagram allows you be just an awesome photographer, in your mind. So the notion is that the value of it is very different. So the thing is that again, nobody is going to be willing to pay let’s say $1000 – we’re not saying people will be paying $1000 for instagram – but the reality is that people might be willing to pay 5 bucks, or 6, 10 bucks to basically have access to those kind of things. And at the same time, the fact is, the people who are a thousand are over paying. How many of those features do you really use when it’s like, “I just want some basic control of the photographs. I think she uses also eye photo. The difference between Eye Photo and Photoshop is like, Eye Photo has enough that for 39 bucks, I look a pretty damn good to photographer though I’m not. Now, are we a photographer may differ but at some point it’s worth 39 bucks for me. But I’m not willing to pay a thousand for Photoshop.

Chris: Well guys, thank you so much. That really helped me with the whole value thing.

Bob: Good

Ervin: Fantastic. Be sure to sign up for the email list. If you liked the show, do us another huge favor, and go to iTunes and give us a five star rating and a nice reviews. That always helps us out. We’ll be back in a couple of weeks with another episode. Thank you. See you. Bye.