Seeing Big Gaps
Going forward, I think it will be hard for new companies to achieve growth if that growth is dependent on marketing incremental innovations. I also think there are some very lucrative opportunities for those that look hard at areas of so-called under-consumption. Some of the biggest sources of economic growth came from markets where there was previously no real mass adoption of a particular solution, but there was a persistent “Jobs to be done ” and regular triggers reminding people it needed to be done.
People know the garbage needs to be taken out. You can’t realistically avoid it. It is a job to be done and most of us just do it. But if a product magically appeared to make that job go away, everyone would buy it.
According to market economists, non-consumption is the inability of an entity (person or organization) to purchase and use (consume) a product or service required to fulfill an important job to be done. This inability to purchase can arise from the cost, inconvenience, and complexity, along with a host of other factors. The idea here is that there are disproportionally large opportunities available to companies that identify legitimate non-consumption, and crack it with a product. The other idea is that established industry is often (with good reason) unable to perceive or access these opportunities. Well sited examples include the auto industry in the early 1900s and personal computing in the 1980s. Non-consumption theory is also applied to show how investment in products for emerging nations, in some cases, became extremely lucrative despite conventional business model obstacles. The total value generated is usually huge, but the path is never strait forward.
A good example of an industry missing a massive level of unmet need is the conventional camera. About twenty years ago, prior to putting cameras in phones, the camera industry sold equipment at virtually every price range, size, and sophistication level. Most families had at least one camera and growth in the industry was slow and steady with incremental innovations reducing costs and adding features. Despite the maturity the consumer camera market had achieved at the time, and with the benefit of hindsight, we now know that there was a massive level of non-consumption. At the time, the industry was blind to this, possibly because this non-consumption was not about the unmet demand for more cameras; it was about people's desire to simply take more pictures. Once cameras became part of the cell phone, and because people carried phones with them all time, the number of pictures taken globally increased a thousand-fold in less than five years. We now know that people experience triggers to take pictures constantly (certainly more than anyone years ago would have expected). We are driven by the desire to save memories during everyday life. Prior to the camera-phone, people would have to remember to bring a camera to events or run and get one when the moment called for it. Despite incremental innovations, like digital, miniaturization, auto focus etc., the convenience barrier created by the need to have a camera with you, prevented millions of photos from being taken every year. Once people suddenly had cameras with them all day, the pent-up energy was released, and the volume of photos exploded to previously unimaginable levels. The irony was that the cameras that went in the early phones were actually quite bad; but no one cared. The best camera was the one you had with you. As it turns out, having a bad camera with you all the time was better than the inconvenience of carrying a good camera with you part of the time.
Researchers point out that the acceptance of an initially inferior product, and the considerable moat that can follow, are features of a successful non-consumption solution. We all find this idea attractive. If you are thinking about finding growth in a new space, it’s worth it to study some of the ideas in non-consumption theory. As always, the key is to really ask why: Why aren’t people consuming more of what is available today? Why don’t current solutions fit into their lives? What is the actual job-to-be-done and are the triggers real? The concepts are super useful but like any handy market theory, it can also be used to justify a lot of risky blue-sky investment.
"Tres Personajes" (1970) by Rufino Tamayo (1899 – 1991). It was found lying in trash along a street, it is now thought to be worth over $ 1 Million at auction.
