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Description

Your customers aren’t coming to you because they actually want a loan. They’re coming to you because they want what the loan will help them do – maybe it’s to start a business or even keep their existing business running smoothly. Understanding the “why” behind your customers’ desires is key to better serving them. And, knowing this is the difference between maintaining strong, lasting relationships and watching them walk out the door.

In this session, Bob Moesta and Chris Spiek, pioneers and now educators of the “Jobs-To-Be-Done” framework, share how to dig deeper to understand why your customers hire and why they fire. Learn how to uncover what it is your customers actually need – the job – and how you can help them – the solution. These insights will give you the tools to treat the loans you produce less like a commodity and more like a service.

No One Wants a Loan – Bob Moesta & Chris Spiek

Presented By:

Bob Moesta and Chris Spiek, Partners at The Re-Wired Group

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Transcription

Chris Spiek: Hey guys. How are you? I’m Chris Spiek. This is Bob Moesta . We help companies develop products that consumers want to buy using a method called Jobs To Be Done. We’re gonna run through some examples here. We’re gonna talk about the basics of the theory and the foundation. What we’ve found is that the best way to teach this is showing you some examples and the examples will be more about things that you can imagine yourself buying as opposed to things that you work on. We’re gonna go through things like houses and cars and different things like that and your first reaction will be “Well I don’t sell houses. I don’t build cars or sell cars.” Right? But the whole tone of this is in order to get your mind into the eye of the consumer so that you can start to fold that back into the work you do and say, “How do I craft solutions that ultimately people want to take advantage of?”

We’re here to essentially break the news to you that nobody wants a loan. If you can come to terms with that, then what we’re gonna do is say, if you understand that, how do you use that knowledge to go build better products and services and things like that that ultimately help people make progress in their lives?

The disclaimer here is we’re from Detroit. This will be more gritty than it is polished. We’re gonna really try our best not to swear. Bob’s made a promise. No F-bombs.

Bob Moesta : I have a swear jar. I put $20 in it already, so I’ve got a few coming.

Chris Spiek: Yeah.

Bob Moesta : Chris, tell them about you.

Chris Spiek: Yeah, after we get through the theories and examples and that sort of thing, we’re gonna bring somebody up and essentially the way we get to insights and the way we discover knowledge that helps us develop products is by talking to consumers about decisions that they’ve made and it’s a little bit different because everybody wants to do focus groups and say, “What do you like and what do you don’t like and what could we build that would make you spend money?” And that sort of thing. We go the opposite way. We basically interrogate people about decisions that they’ve already gone through and all we want to understand is what happened in your life that caused you to want to make a change? We’re gonna do that on stage live with somebody who switched banks.

My background is software. About 15 years ago, I was running a software development company in Detroit and I was struggling basically with success. I looked at the products that I was working on and my team was working on and things that we were doing for our clients and also just out across the entire world of software and basically said, “There’s not as many successes as there should be and people are really struggling to define what it takes to build a great software product that ultimately sells.” I did the software thing and I went into web analytics and paid views and clicks and all that data that we have on the web side and it never amounted to anything. I couldn’t make any decisions based on it. And then I went into personas and I did customer journey mapping and all this sort of research.

Along this journey, Bob came into my life as a client and he basically had a completely different way of describing how to develop products. He and I started talking, this is 15 years ago, and developing language and basically what came out of that is Jobs To Be Done. About 10 years ago, we formed a company called The Rewired Group, where we basically work with product teams and help them develop products.

A little bit about you?

Bob Moesta : I actually have been working on this since about 1993, a long time. The first thing you need to understand is I’m an engineer. I’m a geek at heart. I was taking things apart at three, four years old. Yeah, one of those kids. And then I figured out how to put things back together by six because I had to, otherwise I got in so much trouble, right? From Detroit, so mechanically-minded, if you will, but I’ve actually had my fingers in and helped develop and launch over 3,500 products and services and businesses. Things from, I worked on basically the stealth material that’s on the B-2 Bomber. I basically helped create radar-absorbing materials for making things stealth. I’ve worked on guidance systems for the patriot missile and the tomahawk missile. I’ve worked on Five gum, so those flavors that you have, those are part of what I’ve done, as well as Pokemon mac and cheese, and pretty much everything in between. The one thing I have not worked on is insurance because I don’t understand it and I really don’t care about it.

But Chris and I have basically, in the last 10 years, have probably worked on a thousand products and a thousand different things, and it ranges. People always ask, “How do you have the breadth?” The beauty is that I was given a gift when I … basically I’ve had three close head brain injuries and I’m dyslexic so I can’t read and I can’t write or I struggle very hard to do it. It forced me to really think differently about how to basically see things and do things, and my mom was a teacher and she taught me. Back in the day, I always thought it was cheating, but today we call it collaboration. She taught me all these different methods and tools for being able to see patterns and do different things.

My first break really came when I was 18 years old. I met this gentleman. Does anybody know who this guy is? Who is he?

Audience Member: Six Sigma guy.

Bob Moesta : Six Sigma Guy. This is Dr. Deming. In 1952, he went over to Japan. He’s a statistician. He went over to Japan and he helped basically rebuild Japan and he’s the reason why Toyota and all these people in Japan have such great quality systems, if you will. He’s the father of quality, as I would say. I happened to meet him when I was 18 years old. I was at Michigan State. My girlfriend happened to be at Miami of Ohio. That first freshman semester, we all know, long distance relationships don’t work. I was there to break up with her. She said, “Meet me at my uncle’s house.” I go to her uncle’s house and there’s all these people. I know nobody. I sit down on the couch. I sit down next to him.

And I end up having a conversation with him and by the end, he basically says, “How would you like to be my summer intern?” I ended up being his intern for two summers. He takes me to Japan and I learn all these different methods and tools. At the time, they had gone through manufacturing and now it was about product development. I actually learned how to develop product. Like at Ford … I end up working for Ford. I end up helping them go from 72 months to develop a car to 36 months, learning all these different methods and tools to do so. Frontline, real technical stuff.

The other part about that is that asking all my questions. I’d ask a ton of questions. The thing is what Deming really helped me realize is my questions had a purpose to them. The purpose was is to figure out how shit worked. Oop, there’s one. How stuff worked, right? And so, to me, it’s all about building a theory of how things work. To me, it’s always about asking lots of questions from different angles to figure out how something works.

And then I met this gentleman, Clay Christensen and Clay basically, he’s a very profound man. He’s a Harvard Business School professor on disruption, and I’m lucky enough to have spent almost 25 years with him. He gives me four hours a quarter for 25 years. We have no agenda and we just talk. At one point in time, he made this statement of “Questions create spaces in the brain for solutions to fall into.” I went, holy crap. The fact this is if people aren’t asking themselves the question, there’s no way they can buy my solution. What are the questions that people are asking themselves? And that’s part of the birth of Jobs To Be Done.

Clay basically made a pact, after he had cancer, a heart attack, and stroke, to say, “We need to turn what you do into a theory.” Chris and I are like the practitioners. We just do it. In some cases, we actually don’t know what we do, we just do it. Clay actually had people interview us and slow things down and built it into a theory and it’s now in a book called Competing Against Luck and it’s in Harvard Business Review. We’re the ones who basically love to do it because we’re both geeks and both engineers, right?

In developing new products, new services, the thing is is that there’s three important things that we found out over the years. One is that you have to have strategic clarity. Why are you doing this? What’s the purpose behind the business? The second is what do customers want? And the last is how are we gonna do it? What I’ve found is that you need all three of these and they’re interdependent. I can have great technology and a great insight, but the reality is a crappy strategy, the business fails. I have a great strategy, great insight, shitty technology … There’s number two. Shitty technology, and then, all of a sudden, it’s like it doesn’t work. You need all three of these. They all work with each other.

For me, the hardest part was this insight part because I couldn’t understand demographic, psychographic, because at the end of the day, because I’m 52, and because I live in this area, I live in Detroit, and I have this income, it doesn’t cause me to buy what I’m buying. What’s the causal mechanisms? Marketing is based mostly on correlation and triangulation, which is radar systems, which is things I’m special at. I realize okay, this is not gonna work. How do we actually understand what causes people to get where today’s the day I need a loan, and this is how I choose. If we can understand causality, we can get there.

I need to explain the trap for a minute. This is Michael, very good friend of mine. He has his third kid. How many people have three or more children in this room? What’s the difference between two and three children? You’re outnumbered, and I call it man-on-man to zone defense. Right? So, Michael has his third kid, oblivious to the world, beautiful Josh. My wife and I go over to his house and in the driveway, sits his 2009 Acura MDX with 79,000 miles on it. I have three teenage drivers and I need a car. And I see the three car seats lined up in the backseat. That’s just funny, right? We go in, we meet Josh. Josh is cute. All that kind of fun stuff. And finally, I go, “Hey Michael, what are you gonna do with that car in the driveway?” He’s like, “Yeah I know. We gotta get something else because it’s just, the kids are hitting each other. It’s just a mess.” I’m like, “So what are you gonna do?” And literally, I finished the statement and two rooms away, his wife, Tracy, shouts out, “Anything but a minivan.” I’m not even sure how she heard us, but it was clearly, “I don’t want a minivan.” I’m like, “Okay.” I literally dropped it.

We get down, we sit down to dinner. We get there. I say, “Tracy, what do you want?” She goes, “Oh I’d love the Honda Pilot.” “Why do you want the Pilot?” “It’s got a third row seat. It’s a Honda. It’s very similar to Acura. The dealer’s nice. My friend has it.” All this, I’ll say, crap. “But Michael, what do you want?” Michael goes, “Oh, I want the BMW X5.” I’m like, “Michael, it’s the same thing as the MDX.” He’s like, “Yeah, yeah, but it’s a BMW.” I’m like, “Michael, Michael, you’ve got three children now. You can’t think about that.” I literally go to him. I was in Boston. And me, being from Detroit, what do I do? I push the Escalade, man, the GMC, right? Hey, come on. You can do this. And they’re like, “I can’t park it. It won’t fit in the garage.” They have all these objections. And so, let it go. I go back home.

I come back three months later and what the heck’s sitting in the driveway but a freaking minivan. And oh, by the way, they love it. It’s not like oh … “Oh my God, did you know it has two sliding doors?” You’re like, “Really?” The thing, to me, is that, as an engineer, I was taught to basically ask people what they wanted, listen to what they said, and design to what they say. And I was wrong almost always.

What I realized is the craziest part, to me, is this is a 29 billion dollar market that nobody wants. The reality is what happens between them saying they want the BMW and the Pilot to getting to the minivan? And anybody who has a minivan, we all know there’s these trade-offs you make. “Well, you know, the next car will be the BMW.” “Oh, you know, the kids can buckle themselves in.” There’s all these little things it does that eventually wear you down and say, “You know what? We can get a minivan this time, but not next.” All of a sudden, you buy the minivan. Part of this is this is the process of understanding what the hell happened between saying, “I don’t want a minivan.” and saying, “I’m gonna buy a minivan.”?

Chris Spiek: We’ve taken the doom and gloom out of this. Nobody wants a loan. Nobody wants a minivan. 500,000 units sold in 2015. There’s light at the end of this tunnel. What we want to talk about here is this is not a newer, novel idea. We’ve developed it over the years. We’ve made it applicable and consumable for product developers. But this basically dates back to, in 1975, Ted Levitt at Harvard Business School said, “People don’t want a drill with a quarter inch drill bit. They want a quarter inch hole.” It was profound because ultimately, what he was telling us is we can’t get caught up in just thinking about our features and our competitor’s features and how we’re gonna improve these things, we need to change this lens and think about the consumers and what they’re trying to accomplish.

The way this plays out is if you go into Home Depot or Lowes or any of these department stores, and you go into the drill aisle, you will see drills in every color of the rainbow with all kinds of different torques and battery lifes and different accessories and things like that, and what we call this is hand-to-hand combat. You’ve got the guys at Milwaukee looking at the guys at DeWalt, saying, “They just increased their battery life by 3%. We need to get the engineers on them. We need to beat it.” And what we end up with are these side-by-side products. What we say is, how do we break out of this mold and say, “If they’re not really even shopping for the drill, how do I understand the progress that they’re trying to make?” If we think about the hole in the wall as if they want to hang a picture, now I can go to 3M and I could say, “I could put something that I stick on the wall that’s removable, that doesn’t even create the hole, that hangs the picture.” That’s innovation. Right now, I’ve really understood the consumer’s need and I can break out of the cycle of just more amperage, more torque, more battery life, more, more, more, more, more, and switch my thinking.

Bob Moesta : You end up adding a bunch of features that don’t add any value. In Japan, the way they described it to me was this, is I need a drill. Why do you need a drill? I need a hole. Why do you need a hole? I need a plug. Why do we need a plug? I need a lamp. Why do I need a lamp? Because I want to read better. Then rent the freaking Kindle. Right? The thing is what happens is we get so myopic on the little things that we don’t realize the bigger purpose of what people are trying to do and by taking a step back, you start to realize you can make the trade-offs, but if you don’t see it, you literally end up in hand-to-hand combat and you will be nuked. All right?

Chris Spiek: This is Peter Drucker’s quote. This is building on the fact that this is not a new, novel thing that we just came up with recently. His quote was “Consumers rarely buy what the company thinks it sells.”

Bob Moesta : Yep. So what is a job? A job is really about … and it’s a job to be done, right? It’s this notion of somebody’s in a specific circumstance where they want to do something new. What they’re doing now doesn’t work. Here’s the thing is if you talk about people who do things that are habitual … Let’s say you buy Tide every week. It’s like, okay, I want to go talk to Tide users and understand exactly why you buy Tide. I literally get you in a room and I talk to you about Tide. To be honest, you don’t have a freaking clue why you buy Tide. Right? It’s like “Oh it smells good. It gets my clothes clean.” “Well how do you know it does that?” “Well it smells good.”

Well, it’s just this circular logic, but if I talk to somebody who has switched and said, “I used to use Cheer and now I use Tide.” “Okay, why didn’t Cheer work? Why did you fire Cheer? How did you figure out what was next? How did you choose? What was the hiring criteria?” The key part to this is we understand the causality of what causes people to make progress. What causes them to say, “Today’s the day. I’m stopping this and starting that.” By understanding that, I actually can see, so instead of an interview where we’ve got a thousand people who buy Tide, I can actually interview 10 people who’ve switched and learn way more because it’s that DNA of what causes them to switch that tells us where progress is and I actually don’t have to worry about the technology because I can figure out what’s next.

The other part is the notion of progress. Instead of focusing on the product that they buy, what’s the progress they’re trying to make? What’s the situation they’re in, what’s the outcome they seek? Deming. A lot of this roots back to Deming because Deming … First of all, Deming was hard of hearing, but at 18 years old, you don’t understand that. When somebody screams at you, the entire time you think they’re just mad at you. One of the things he kept saying is, “Causation is not correlation.” Don’t ever confuse the two. The other thing he said is, “Value is basically where do people start and where do people want to go?” It’s not just the outcome people want or the need state that they’re in, it’s the fact of they value something this way, but if I actually start down here, they’re gonna value it more. If I want this up here, they’re gonna value that more. It’s about the relationship between where they start and where they go that’s most important. All right? That reference point is really, really important. We always talk about where are people and where do they want to go?

For me, if you leave here with just one thing, this should be it, is that the struggling moment is the seed for all innovation. The moment that somebody says, “You know, I don’t think that’s working” where they care enough that they want to do something about it and that they actually figure out how to … If they don’t struggle, that means they don’t care. If you struggle, you care about it and you want to be better at it. Struggling moments is the place where we start with everything. People will say, “Oh, I have this technology, can you go find me a job for it?” If we can’t find struggling moments to aim it at, we’ll say, “Nope. We can’t help you.” The struggling moment is the seed by which we can actually see all innovation.

Business school. Business school taught me a couple things. One is that we have great brands. Brands, products, indistinguishable to me because I’m an engineer, but Jack and Coke and all these people, and the way they taught us to innovate was to think about things. If I’m Jack Daniels, I gotta know what Jim’s doing, right? If I’m Coke, I should know what Pepsi’s doing. If I’m Nike, I should know what Reebok’s doing. The reality is, let me tell you a story about Cindy. We talked to Cindy about her diet and where she struggled on her diet. What were the struggling moments where she cheated on her diet so we could actually figure out how to design better products?

Let me tell you a little bit about Cindy. Cindy is a paralegal for a bankruptcy judge. She lives in LA. She has an hour commute and people scream at her all day because in bankruptcy, nobody’s happy and everybody wants their money. I said, “So tell me about the last time you cheated?” She goes, “Oh, that was last Thursday.” “Okay. Tell me about last Thursday.” She goes, “Ugh. First of all, there was an accident. I was 30 minutes late. The line was out the door. I was always behind and people screaming at me. I missed lunch. I ate my low-fat string cheese snack at two o’clock and literally couldn’t eat it all because I was so disgusted. Basically, I had to leave late. On my way home, I got a ticket.” I’m like, “That sounds like a horrible day.”

She goes, “Yep.” I said, “So what’d you do?” She goes, “Came home. Went to the bedroom, changed into sweats. Went to the refrigerator, opened the freezer, pulled out the Ben & Jerry’s Moose Tracks, texted my friends, sat down at Xbox, put in Call of Duty Black Ops, and obliterated a million punks while I pounded down that pint of Ben & Jerry’s. And then you say, “Okay. So tell me this. Do you feel guilty?” “Nope. Not at all. I earned it.” “Wait, what?” “I had a crappy day.” I’m like, “Okay. So tell me another day.” She goes, “Oh, that would be two weeks ago, Friday. This happened, this happened, this happened.” “What’d you do?” “I went to the bar.” “You did?” “I had Jack and diet Coke.” “Really?” “I had two of those, three of those, hanging with my friends, talked the day away, felt a lot better.” “Okay.”

And talked about another one, she goes, I said, “Tell me about a time when you were thinking of cheating, but you didn’t.” She goes, “Oh. That was last Tuesday. I went to yoga. Yeah, I came home, put on my Nike wear, put on my shoes, went to yoga. Oh, breathed everything through.” I said, “Tell me about another time where …” She goes, “Well, I went to church.”

So all of a sudden, you start to realize, when she has a horrible, stressful day, her competitive set is all of them. It’s not just any one of them. You say, “Well what do you do with that?” What you do is you start to see that there’s a key element in everything she does. A social element. If she can’t do it with people, she can’t recover from a horrible stressful day. How do we actually figure out how to create something where, for example, she can cook dinner with people, at home, in the fridge, she calls somebody on the way home, “Hey I had a bad day, can we make dinner together?” All of a sudden, she doesn’t have to cheat on her diet. How do we get her to go to yoga more? The whole thing is by understanding the true competitive set and not the attributes, but the outcomes she sees, and the things about those services, we can actually figure out how to design way better solutions for her. This whole notion of thinking vertically really, really hinders us.

Chris Spiek: One of the methods that we use to unpack causality is this diagram that we call the Forces of Progress. When we talk to a consumer about a decision we’ve made, what we found is that there are four forces ultimately acting on them to make progress. In the top left, we have what’s called the push of the situation. This is solution agnostic. If you think about Cindy’s story, this is her with people screaming at her, her blood sugar’s dropping, she doesn’t know what she’s gonna go do at this point, but there’s pressure building. If she’s going to make a change, and she’s gonna shop for something new, we call that push.

On the top right, we call this magnetism of the new solution. The moment that you start to realize that something might work, there might be something that actually helps you make progress, that solution will create magnetism and you start thinking, “This is the situation I’m in. This is the push. This product might have features that will actually help me move forward.” and it starts to draw you forward in time.

What we think about is if those were the only two forces in the equation, people would constantly be switching and making all kinds of progress, right? But the reality is there are two forces that act against change or against progress. The first one is at the bottom right, and we call it anxiety of the new solution. For all of the pull that an option creates and all of the magnetism, there’s also anxiety. Will it deliver on the promises that it made? Can I actually figure it out? Can I use it to its full capability? Am I actually capable of this? It’s holding me back from making that switch.

And then finally, on the bottom left, we call it the habit of the present. Anytime you have an ingrained solution … Bob talked about Tide earlier. If you’re a Tide user and you’re just used to going to the grocery store and throwing that in the cart every time, when somebody presents a new detergent to you, even though they could say, “It lifts stains out and it smells better” and all these things, man I’ve been a Tide user for a long time, there’s energy in that incumbent solution that keeps you from making progress and keeps you from switching.

Any time we talk to consumers about a switch that they made, we’re constantly probing for these forces and understanding what levers can we pull to get them to switch to our product? What I always say is I envision a water line across the center of this diagram horizontally. As product developers and marketers, we think about everything on the top half. We think about needs and struggles and what situations our consumers are in, and we think about the next whizz bang feature that we’re gonna bolt onto our product that everyone’s gonna love because nobody’s seen before. We ignore everything below the water line. All we think about is man, when we launch this, everyone’s gonna love it. What experience has taught us is that the money is made on the anxiety side of the equation. If you can figure out what’s holding people back, you can shortcut the sales process and really increase profits. I’ve seen it time and time again.

Bob Moesta : Let me make it real for you. One of the things I did in Detroit, I built a thousand homes from 2004 to 2007 until you guys stopped my loans, just so we’re clear. I’m here for revenge, just so we’re clear. What we did is we … So think of this. [inaudible 00:25:08] First time home buyers, divorced families with kids, and I would say, down-sizers. Think of your parents, right? Tell me this. What are the pushes of why your parents have to move? Why in the world do your parents have to move? House is too big. God, we got all these rooms. Again, being from Detroit, it’s like we’ve gotta heat these rooms. It’s so much to clean. What else? Taxes. Hey, we’re not sending kids to school, these taxes are outrageous. This is expensive. All of a sudden, you have to realize, the pushes have nothing to do with the solution. It has everything to do with their situation.

Here’s the thing. If there’s just push and no idea of what to do next, I call it bitching ain’t switching. This is where they bitch about everything. The moment they see my 1,654 square foot ranch condo, two bedrooms, two and a half bath, first floor laundry. Oh my God, your mother loves it. First floor laundry, she doesn’t realize oh my God, my knees hurt because the laundry’s in the basement, I go up and down the stairs. More push. There’s these things that they love about the condo, but all of a sudden, they need to move, they love my condo, they should be buying it. Nobody’s buying it. Why? Because of below the water line.

Let’s talk about below. What are the anxieties your parents have about moving into my condo? Packing. Holy crap, I got 40 years of this, I’m gonna use one here, shit in the basement that I gotta move. What am I gonna do with all that stuff? How do we get rid of that stuff because this isn’t as big as the house? What else? Memories. That’s a habit, right? This is where we raised our children. This is where our friends are. I know where the grocery store is. Anxiety. Where the hell’s the grocery store? How can we sell the house? What you realize, if the top two forces are not bigger than the bottom two forces, they will never move. I’m gonna say that one more time. If the top forces are not bigger than the bottom forces, your parents will never move.

We did interviews. One of the things we found was basically the whole idea of moving and storage. What did we do? What we realized is we’d have this cancellation that people would come in and cancel, say, “Yeah, we bought the condo. God, we love it, but we spent last weekend unpacking one closet. We went through three boxes of Kleenex and we have 21 closets. We’re not moving.” You’re like, “Holy crap. What do I do about this?” You start to think about it. If I actually, what I did is raise the price, basically make sure that I understand what’s there. Of course, the appraisals will meet and I’m not doing anything illegal. I was investigated before, I understand.

But what we ended up doing is I [inaudible 00:27:59], but I basically said, “Look. Moving and storage is standard, part of the deal. Everybody who buys from this community, we actually have a place across the street that will store your stuff. And in the clubhouse, I built a sorting room, kinda like Harry Potter, but the notion is like bring the boxes in, you come visit, they’ll sort the stuff, you take it away. Moving and two years of storage cost me about $1,500, 17% increase in sales.” What I was taught as a marketer and as a businessperson is add more and more features. Give discounts. Do these things to create magnetism. The reality is more and more features just create more and more anxiety. The reality is if you actually figure out how to reduce anxiety and not add features that don’t add value, you can actually lower your cost and increase your value.

Second framework. First thing is we think about people this way, but the other thing is this method actually is not built on what I call traditional market research method or tools. We’re both technical, we’re both engineers, in some cases we’re a little too blunt, and we’re from Detroit. The reality is this … Oh I’m in the wrong slide. No. Yeah, that slide. What slide’s up? Yeah. Sorry, I got a little confused there. Being from Detroit, this method is actually built on criminal and intelligence interrogation methods because the thing I’ve realized is consumers lie to us every day. They actually lie to themselves. They literally make shit up to say, “Oh yeah, I bought this because of that and that and that.” You get the story and you’re like, “You didn’t buy it for that. That’s ridiculous.”

All of a sudden, you start to realize because they lied, it has a timeline. What we do is we interview people through what we call, there’s a first thought. “Oh I think it’s time to move. We should move.” And then there’s passive looking. They don’t really invest time, but if stuff comes in front of them, they look. And then there’s an event. And then they go from not really looking to oh my gosh, I got a real estate agent. How does that happen? It’s not random. Nothing is random. Deming. Nothing is random, everything is caused. Error is just those things we can’t explain. Oh so everything’s causal. All right, fine. Active looking. That’s where they look. “Oh my God, I love this condo.” “Oh my God, I love that condo.”

By the way, active looking is where they told me to go look for what people wanted. It’s the worst place because we show them everything. Which would you like? The answer is “All of it for free.” every time. Oh my God, they’d like their loans to be faster. Of course they would. They’d like the rate to be lower. Of course they would. But they don’t know the trade-offs. They key is the event two, that puts you into a mindset of I gotta make trade-offs. Do I take this loan for this amount with that payment term today even though it’s literally a little bit not as good as the other one, but the fact is I don’t have to put as much money down? There’s trade-offs that we make. There are no ideal solutions. Where the money is is in deciding and knowing where people make trade-offs. The worst thing I can do is, as I learned, is to interview people and innovate off of active looking. It is literally like the Wizard of Oz. It is horrible. If I innovate around where people decide, I can win almost every time. We’ll demonstrate this when [inaudible 00:31:28] comes up.

Here’s the best part. Mom and dad think about moving, 92% of them have the first thought between Thanksgiving and New Years. Why? Yeah, it’s the holidays. They gotta set up for Thanksgiving or Christmas. Somebody’s coming over. “Oh my God, this is too much work. You know what? We don’t have to do this.” They just have that thought, right? They passively look. The house down the street goes for sale, they turn through the paper, they’re not investing any time, they’re just half-assing it, if you will.

But then, all of a sudden, I have [inaudible 00:32:01] “Oh yeah, in February, we got our real estate agent, what’s her name? Sarah, yeah, Sarah.” “Who’s Sarah?” We start getting into all this detail around who Sarah is, I’m like, “Why February?” “I don’t know, it just was a good time.” You know your mom. She just halfway answers. Like, “No. Why February?” And you start, “What was going on? Do you remember the day? Do you remember what was going on?” The next thing you know, there’s “Oh my gosh. That’s when Jim died.” “Wait, what?” “Well, you know, our good friend, Jim, died and we realized we’re turning through the obituaries that morning, and we saw the obituary, and we went oh my God, like holy crap. If you die or I die, we’re gonna have to move alone. Julie’s gonna have to move to that house alone. We need a real estate agent.” Next day, they found Sarah. What did I do? Yes, I did it. I moved my real estate ads to the obituaries. Yep.

Look, let’s be clear. They want help. I didn’t say, “Buy my condo.” I said, “Time to move? Need some help to figure it out? Let us sit down and talk to you and help you figure out how to move.” Best part, 70% reduction in advertising. 70% reduction in advertising. 37% increase in traffic. Right? The whole notion is that’s when they want help. It’s so counterintuitive, but at the same time, by understanding causality, you can find these little trick places.

Chris Spiek: Essentially, if you think about that timeline, when we conduct an interview, the way to imagine it is that there are huge dominoes that fall. When Bob was talking about harassing that poor mom, what he’s trying to figure out is what happened in February that caused you to take one step forward? Until we can get that information at a very granular level to understand what happened in her life that made her say, “Okay, it’s time to stop just looking around my home and saying man, we need to move,” take one step forward to say, “Let’s go find a realtor.” we don’t really understand causality. One of our colleagues came up with this method of when I’m interviewing, I don’t stop probing until I can picture this huge domino tipping over to the next one, and then it’s time to move forward in the timeline and say, “Okay. I understand why she took that one step. Now we can take a step forward and understand the next stage of the journey.”

The only other thing I want to add to your story is that when you think back to the timeline and you think back to when they’re struggling and when Jim dies, the focus groups that we were doing around home-building were all features and benefits. All they told us were if this place had granite countertops, we’d love it even more. If you put stainless steel appliances in, we’d love it even more. Right? All they’re doing is telling us to add, add, add, and man, we’re waiting to buy and we’re shopping. If you made a three car garage instead of the two, and all they do is pile features on, and they truly believe that they’re helping you and they’re not lying because they’ve never made the trade-off. All they’re doing is telling you what they think you want to hear to improve your product and all you’re doing is increasing cost and cutting into your margins.

Bob Moesta : My favorite is in active looking, I had people tell me Energy Star compliance is huge. We gotta have an Energy Star. Energy Star. Okay, if anybody understands how hard it is to get Energy Star for a house, it’s a bitch. That’s number five.

Chris Spiek: I’m not gonna say we’re not gonna swear anymore.

Bob Moesta : That’s fine. The reality is everybody said they wanted it, but when it came down to it, it was about the same price as a finished basement. I sold zero. Zero Energy Star compliance. I sold probably two thirds of my condos with finished basements. As much as it is they say they want it, doesn’t mean they’re gonna buy it. That’s part of the lie. Oh yeah, you do-

Chris Spiek: Go for it.

Bob Moesta : You want me?

Chris Spiek: Yeah, yeah.

Bob Moesta : Got it. The other part is, again, being an engineer, the thing is it’s not just the functional things they do, but there’s emotional and social things. You start to realize that there are other … These elements are not just very, very tactical, but they’re also, in terms of emotions and in terms of functional, and we’ll talk about, as we get into the interview, we’ll show you, but it’s multidimensional in terms of how we think about it.

Little hire, big hire.

Chris Spiek: Yeah, we need to move to Chad.

Bob Moesta : We got three minutes.

Chris Spiek: Okay, keep going.

Bob Moesta : All right.

Chris Spiek: Gritty. I’m sorry, I told you.

Bob Moesta : That’s fine. Here it is. What we do is analysis. The way we do analysis, we do interviews. We look backwards. We find out those dominoes. We then look forward and we can actually tell you the value code, what people want, how to make the trade-offs, and what to design. What we do is by seeing this causality, it’s really, really important. All right. Quick story. This one?

Chris Spiek: Yeah, go for it.

Bob Moesta : Got it. I’m gonna go through it quickly though. ’93, I was actually designing weapons systems and guidance systems and that kind of stuff. I tried to buy the firm and I got fired. Non-compete basically said I couldn’t work in anything and somebody said CPG and I had no idea what that meant. That meant consumer packaged goods. I went to Michigan State. Roommate happened to be a packaging engineer at Mars. Called him up, “Hey dude. I’ve been doing all this stuff. Anything I can help with?” He goes, “Yeah I got a project on Snickers.” I’m like, “Sure.” He goes, “Come on out. We can talk about it, but we’re doing a redesign or a refresh of the whole brand.” I’m like, “Okay.” I go out there, and I start to basically understand the product. He goes, “The first thing we have to realize is we need to beat Milky Way.” “Huh? Same company.” He goes, “Yeah. Those are the guys down the hall. We gotta get our sales up over them.” I’m like, “Okay.”

As an engineer, you go and you start to look at it, and you realize they’re made on the same lines. They have the same ingredients. They are sold right next to each other. I’m like, “Holy crap.” I spend hours trying to do this. Dove into the marketing data, couldn’t find anything really that made any sense. The best way to describe it is this ad that they had at the time. Here’s the ad that they were running.

Video: Can I help you enjoy that Snickers? (singing) That’s right.

Bob Moesta : What the hell? The week before, I’m literally designing guidance systems for the Patriot missile. I’m like, okay I’m trying to save the world this way, but through Snickers? I don’t get it. Friend basically says … I don’t know how to help. I really have no idea how to help. He says, “Look. You’re a smart guy. Get some distance. Think about it over the weekend. Call me.” I’m like, “Sure.” So I go, go to the airport, mistake of flying in and out of Newark. Anybody who knows Newark, you’re always five hours delayed. Why? I don’t know, but you are. And so one of the tools my mom taught me was this thing called the three foot rule. If I’m within three feet of somebody, I’m supposed to talk to them because my mom was so sick of me asking her a thousand questions. I’m standing at the kiosk, right? The person in front of me has a water and a Snickers and he’s within three feet. I get to talk to him. I follow him back. He actually happened to be on my flight. He literally sits down, opens his laptop, basically whoosh, you know? Opens the Snickers bar, four bites, it’s gone. I literally went and looked down, looked back, I’m like, where the hell did that thing go?

Sitting there and I start the conversation with, “Did you have a Snickers?” He goes, “Oh yeah, I had a Snickers.” I’m like, “Dude, what’s up with the Snickers?” He goes, “I’m trying to get this done. If I get this done by the time I get on the plane, I can sleep all the way home because my son has a baseball tournament this weekend and I don’t want to work this weekend.” Got it. I’m like, “But why a Snickers?” He goes, “Well, look, my stomach’s bothering me. My blood sugar’s dropping. I’m starting to do this and I need to just finish this thing.” I’m like, “Got it. If you had the time or …” He goes, “I could have a sandwich, I could have all these other things,” and you start to realize, he’s talking about food things. I go back, finally he just says, “Leave me alone.” And I go back to the kiosk. I find five or six people I talk to, all very similar. Okay.

Then I decided to sit back and wait for somebody to buy a Milky Way. Not one Milky Way. I couldn’t find one person buying a Milky Way. I’m like, “What’s up with that?” So, I go home. My wife, who’s pregnant at the time, basically I sit down with her, she’s very anxious because she’s pregnant and I don’t have a job and she wants to know everything about it. I tell her about it. I’m like, “Ugh. I couldn’t find anybody buy a Milky Way.” She goes, “Oh I have a Milky Way.” “You have what?” She goes, “Oh yeah I have one.” I’m like, “Where is it?” She gets up, goes into the dining room, goes into the [server 00:40:51], opens the cabinet door, reaches up to the top shelf to a bowl I’ve never seen before, and pulls out a full-size Milky Way. I’m like, “What the hell is that?” She goes, “You know. For one of those days.” I’m like, “No, I don’t know one of those days.” She goes, “Well, I can’t have my wine. I can’t have this. When I need a minute, and I want to relax, I actually have a Milky Way.” I’m like, “Really? Really? Of all the things?” She goes, “Yep. That’s what I have.” I’m like, “Okay.”

Eventually I’m like, who else does this? I interview some people and I realize, over time, that when you think of a Snickers, you actually never ever think of a Milky Way. You think of food, you think of Red Bull, you think of an apple. You think of all this other stuff. When you think of a Milky Way, you think of ice cream and all these other things. You’re like, “Holy crap.” My favorite was somebody like, “Yeah, I had a really crappy day and I was gonna go for a run, and then I ate a Milky Way.” You’re like, “Wait, what?”

But when you look at the pattern, it’s all about the emotion. It’s all about … What do we do? We end up changing the way it’s done. We actually made Snickers more food-like. Think of the first bite. You bite into it, it’s hard, it masticates in your mouth like a ball. You swallow it like real food. It sits in your stomach and it stops it from growling. You do a Milky Way. First bite, hard or soft? Soft. What happens is it’s literally sloshing around like it’s liquid. You’re literally going, “Mm.” Milky Way, eaten in four bites in less than two minutes. Milky Way, eaten over a 20 minute period. Literally, you bite it. You set it down. And you just go to heaven for a while. Crazy.

The reality is this is the ad that they were able to derive from the work. I did those few interviews, but then they went off and did more interviews, obviously, and did more work, but this was the seed.

Video: Hut. Mike, come on. Mike, what is your deal man?

Oh come on, man, you’ve been riding me all day.

Mike, you’re playing like Betty White out there.

That’s not what your girlfriend says.

Baby, eat a Snickers. Better?

Better.

Hike. I’m open.

That hurt.

You’re not you when you’re hungry. Snickers satisfies.

Bob Moesta : Here’s the thing. You notice there’s no features and benefits. It talks about the situation they’re in, the outcome they seek, and it basically says when you’re in this situation and you want this kind of outcome, eat Snickers. All right.

Interesting, but the reality is this, in 2012, it became a $3.5 billion candy bar. Everything else is a brand, Snickers is a candy bar. There aren’t 15 versions of it. Literally, it’s a bar. What happens is when something does the job, my favorite is when you talk to people who are these really, really healthy people, “Oh I eat kale all the time. I work out all the time.” It’s like, “Yeah, when my blood sugar’s dropping, I get a Snickers.” It’s the condition and the situation they’re in, and the outcome they seek that tells you why, in every Silicon Valley start-up, the Snickers are always gone and not the Milky Ways.