Table of Contents
Part 2: The Novel Strategy: Mapping Real Options to the JTBD Journey
Part 3: Elevating the Level of Abstraction - The "Disruption Option"
Introduction: The Flaw of Averages in Innovation Funding
You’ve been there before. A genuinely brilliant innovation project—the kind that could redefine a market—is killed in a committee meeting. Why? Because the spreadsheet jockeys demanded a five-year forecast with a precise ROI. They asked you to predict the future, and you couldn't. The business case, built for a world of certainty, couldn't handle the ambiguity inherent in creating something new.
This is the fatal flaw in how most companies fund innovation. Traditional business cases force a single, massive, upfront "go/no-go" decision. They are rigid, demanding that you know all the answers before you've even had a chance to ask the right questions. This approach is fundamentally opposed to the very nature of innovation, which is a journey of discovery, not a predictable assembly line.
But what if you could fix this? What if you could build a business case that thrives on uncertainty and values learning?
There is a way. The solution lies in reframing your entire innovation process. Instead of seeing it as a single project to be funded, you should see it as a portfolio of real options that you purchase over time. You increase your investment only as you systematically reduce risk and uncertainty.
In this article, I’ll give you a step-by-step method for merging the deep customer insights of Jobs-to-be-Done (JTBD) with the strategic flexibility of Real Options Analysis (ROA). You will learn how to build a dynamic business case that transforms innovation funding from a high-stakes gamble into a smart, staged investment.
Part 1: Deconstructing the Two Methodologies
To build our new framework, we first need to understand the two core components. You might be familiar with one or both, but their true power is unleashed when they are combined.
A Quick Refresher on Jobs-to-be-Done (JTBD)
Jobs-to-be-Done is a simple but profound idea: customers don't buy products; they "hire" them to get a job done. People don't want a quarter-inch drill bit; they want a quarter-inch hole. This shift in perspective is everything. It moves your focus from the product and your competitors to the customer and their underlying goal.
The JTBD innovation process is about making innovation predictable. It involves three key stages:
Defining the Job: Clearly articulating the functional goal the customer is trying to achieve, independent of any solution.
Mapping the Job: Breaking that core job down into its discrete steps to understand the entire process the customer goes through.
Uncovering Desired Outcomes: Identifying the metrics—the specific, measurable outcomes—that customers use to judge how well the job is getting done at every step.
The ultimate goal of JTBD is to pinpoint exactly where customers are struggling. The unmet needs you discover become your precise targets for innovation.
Introducing Real Options Analysis (ROA): Your Strategic Toolkit for Uncertainty
While JTBD gives you a map of customer needs, Real Options Analysis gives you a smarter way to navigate the journey of creating a solution. In finance, an option gives you the right, but not the obligation, to buy or sell an asset at a future date. A "real option" applies this same logic to tangible business decisions.
Think of it as assigning a tangible value to flexibility and learning. The most common and useful real options for innovators are:
The Option to Defer: To delay an investment until you have more information.
The Option to Expand: To scale up a project if early results are promising.
The Option to Contract: To shrink the scope of an initiative if it's not gaining traction.
The Option to Abandon: To kill a project with minimal losses if it proves unviable.
The Option to Switch: To pivot your approach or technology based on new learnings.
ROA is the perfect complement to JTBD because it provides a financial and strategic language for managing the uncertainties that JTBD research uncovers.
Part 2: The Novel Strategy: Mapping Real Options to the JTBD Journey
Here is the core of the strategy: you stop writing monolithic business cases. Instead, you align your investment stages directly with your JTBD research stages. Each stage-gate isn't a simple "go/no-go"; it's a decision to purchase the next option in the sequence.
Phase 1: Purchasing the "Option to Explore"
JTBD Activity: You begin with initial qualitative research. You conduct just enough interviews to properly define the core Job-to-be-Done and confirm that it's a meaningful struggle for a specific group of people.
The Investment: This is a small, targeted investment. You are funding a handful of interviews and the time to synthesize them, not a research department.
The Business Case Question: At this stage, you are only trying to answer one question: "Is this a valuable job with enough observable struggle to justify a deeper look?"
The Option Value: Your small investment buys you the "Option to Explore." You gain the right to proceed to deep-dive quantitative research if the initial signals are strong. If not, you can abandon the idea, having spent very little capital and time. You've made an intelligent decision, not a failure.
Phase 2: Purchasing the "Option to Validate"
JTBD Activity: If you exercise your option to proceed, you now conduct your full Job Mapping and quantitative research. You interview a larger set of customers to map every step of their job and build a comprehensive list of their desired outcomes. You then survey a statistically significant audience to quantify which of those outcomes are both important and underserved.
The Investment: This is a more significant investment, but it's still contained and focused purely on research. You are not building anything yet.
The Business Case Question: The question has evolved: "Where is the greatest, most quantifiable opportunity for value creation?"
The Option Value: Your investment here buys you the "Option to Validate." The data you acquire gives you the right to invest in a specific solution concept because you now know exactly where to focus. Your data gives you further options: the option to expand and target a large, underserved segment or the option to contract and focus on a small but highly profitable niche. You might even switch focus to a different step in the job that presents a better opportunity.
Phase 3: Purchasing the "Option to Build & Test"
JTBD Activity: Armed with quantitative data about the biggest opportunities, you finally develop a Minimum Viable Product (MVP). Crucially, this MVP is not a smaller version of your dream product. It is a targeted experiment designed exclusively to test if your solution concept can get the job done better against those top unmet needs.
The Investment: This is your first real product development capital. It's larger than the research phases, but it is a fraction of the cost of a full-scale commercial launch.
The Business Case Question: Your question is now one of proof: "Does our solution concept actually get the job done better for the customer in a real-world context?"
The Option Value: This investment buys you the "Option to Build & Test." The results of your MVP test give you the ultimate set of options based on hard evidence. You now have the right to expand and confidently scale the solution with a business case backed by validation. You can defer the launch if the market isn't ready. Or, you can abandon the project if the solution fails the test, saving you from the catastrophic cost of a failed market launch.
Part 3: Elevating the Level of Abstraction - The "Disruption Option"
The Future, Today
This staged approach isn't just a theoretical model. The most effective innovation teams in the world already operate this way, even if they don't use this exact terminology. They intuitively stage their funding based on what they learn. The framework I've outlined simply makes this process explicit, repeatable, and, most importantly, defensible to the rest of the business.
But there’s another layer to this. Following these phases will help you create successful sustaining innovations. But if you want to find true disruption, you need to activate one more option.
Novel Concept: The Disruption Option
This is the real game-changer. The "Disruption Option" is a strategic choice you consider at every single phase. You don't just ask, "Should we proceed?" You must also ask, "Is there a higher-level job we could be doing that would make this entire job obsolete?"
This is about elevating the level of abstraction. The job you are mapping is likely bound by today's technology and workflows. A truly disruptive solution doesn't just improve a step in the process—it obliterates the need for the process itself.
Example: Imagine you are making tools for homebuilders in the early 2000s. Your JTBD research might focus on the job of
obtaining the right materials to build a house. Your staged research could lead you to create a fantastic online ordering and delivery service for lumber and supplies. This would be a successful sustaining innovation.However, activating the Disruption Option means asking a different question: "What is the higher-level job?" The job isn't really
obtaining materials; it'screating a human shelter.Asking this question opens up a completely different solution space. You stop thinking about saws and lumber and start thinking about 3D-printed houses, where the "materials" and the "building" are combined into a single process. This new solution gets a much bigger job done with far fewer visible features and an entirely different cost structure. It's a new, single solution for a job that used to require many tools, services, and experts.
Using Creativity Triggers to Find the Disruption Option
How do you train yourself to see these higher-level jobs? By systematically challenging your assumptions. You can use creativity triggers to break your thinking out of its current paradigm.
Here is a table showing how you can apply specific triggers to our homebuilding example to discover the "Disruption Option."
By using these triggers, you force yourself to think about how to get the job done in a completely different way, often by eliminating steps, integrating functions, and changing the very nature of the inputs and outputs.
Conclusion: From Gamble to Strategic Investment
You must stop letting your best ideas be judged by a system designed for predictable outcomes. True innovation is an exploration of the unknown, and it demands a funding model that reflects that reality.
By merging the customer-centric focus of Jobs-to-be-Done with the financial and strategic discipline of Real Options Analysis, you can completely transform your innovation pipeline. You'll no longer be forced to make massive gambles on unproven ideas. Instead, you will build a portfolio of options, allowing you to make a series of smaller, smarter, evidence-based decisions at each step of the journey.
This staged approach de-risks your projects, makes your process defensible, and, by including the "Disruption Option," gives you a systematic way to look for the game-changing ideas that will define the future of your market.
What's the biggest source of friction in your company's innovation funding process? Share your experience in the comments below.
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Mike Boysen - www.pjtbd.com
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