INDEX

acquisitions, 58, 65, 77, 142–143

activity chains, 114–120, 135–136

activity tracking, 152

Adobe, 137

advertising, 7–8

Amelio, Gil, 42

Angels in the Outfield, 203

Ansoff, Igor, 26–27, 28

Ansoff matrix, 26–27, 28

Apple, 4, 23, 29, 42–52

complementary innovations at, 45–48, 56–57, 78–79

connection of innovations at, 139–140

delivery of innovations at, 57

digital hub strategy of, 46–48

iTunes music store, 48–50

key products at, 43–44, 56, 57–58, 71, 88, 90, 96

key product strengthening by, 98

market responses to, 96

OS X, 50–51

promise at, 56, 106

retail stores, 46, 48

sales at, 44–45, 50, 51–52

strengths and values at, 91

Third Way at, 52–54

Apple Stores, 46, 48

authority, 168–169

AutoNation, 17, 61–62, 64–67

acquisitions by, 77

organization at, 79

promise at, 69–70

Ballance, Donal, 163

Bambi, 191

Beyond Competitive Advantage (Zenger), 50n

biases, confirmation of, 130

Big Hero 6, 202, 206

binary thinking, 3–4, 37–40

Bionicle, 40–42

Blockbuster Video, 61

blue ocean strategy, 2–4, 22–23, 25, 29–30

Bolt, 206

Bolt, Usain, 6

Brandeau, Greg, 205–206

brands

at Disney, 187–188

disruptive innovation and, 39–40, 57–58

at Guinness, 160–167

promise to users and, 73, 108

See also complementary innovations

Brick by Brick (Robertson), x

Brown, Tim, 31

Buck, Chris, 200

Bug’s Life, A, 203, 204

business cases, 166

business models, 2–4

innovation matrix and, 174

lean startup, 30–31

business plans, 171, 177–180

business promise. See promise to users

Car America, 61, 64

Car Choice, 61, 62, 64

CarMax, 16–21, 61–62, 63–67, 91

complementary innovation at, 70, 79

consumption chain analysis at, 119

execution by, 63–67

focus on key product at, 97

key product at, 68, 88

key product strengthening by, 98

linking innovations at, 140

management at, 78

promise at, 69, 74–75, 81, 106

Cars, 204

Catmull, Ed, 205–206

Change by Design (Brown), 31

Christensen, Clayton, 12, 26, 28–29

Circuit City, 16, 91, 125

clarity, 82

Cloudy with a Chance of Meatballs, 57

Coca-Cola, 15

Coin Star, 148

Collins, Jim, 95

commitment, 69, 83. See also products:key

communication

about key products, 96–97

innovation matrix and, 176–177

promise to users and, 106

competition, 15

blue ocean strategy and, 29–30

customer touch points and, 122

dating vs. fighting mindset on, 112, 209–210

field research focused on, 129

promise to users and, 73

competitive advantage, 108

Competitive Strategy (Porter), 32

complementary innovations, 14–15, 131–157

at Apple, 47–50, 55–56

business plans for, 171, 177–180

at CarMax, 17–21

challenges of, 62, 75–77

choosing, 76

communication about, 96–97

completing, 144–145

connecting, 77, 139–140

constraining, 77, 138–139

controlling, 77, 140–142

costs of, 78–79

customer activity chain and, 117–118

customer context and, 126

deciding how to develop, 56, 70

delivery of, 78–80, 159–185

at Disney, 192–198

diversity of, 21, 75

documentation of, 123

experimentation for, 145–150

at Gatorade, 8–12

generating a portfolio of ideas for, 135–136

at GoPro, 104–107

groups involved in, 82–83

keeping an open mind for, 149–150

key product changes and, 95–96

Kickbox and, 136–138

leaders and, 164–177

leading delivery of, 164–167

at LEGO, 40–42, 54, 154–156

management of, 19–21, 22, 77

management roles in, 150–153

market responses to, 96

matrix for evaluating, 143–144

minimum viable portfolio of, 144–145

narrowing lists of potential, 138–145

at Novo Nordisk, 13–16

predicting successful, 146–149

process for choosing, 135

project teams and, 181–184

promise-based, 15–16, 108

risk in, 10–11

skill acquisition for, 142–143

at Valve, 131, 132–135

complete filter, 138, 144–145

compliance problems, 13

conflict, 62–63

connect filter, 77, 139–140

constrain filter, 77, 138–139

consumption chain analysis, 34, 114, 118–120, 136

context, customer, 110–113, 126, 151

following the customer and, 114–118

mapping, 114–120

control filter, 77, 140–144

coral reef syndrome, 71–72

core products. See products:key

creativity, 63

crowdsourcing, 146–147

customer activity chain, 114–118, 136

customer-centric design, 31–32

customer innovations, 175

customers, core, 209–210

activity chain for, 114–118

context of, 110–113, 126

extreme users, 112–113, 123

field research on, 124–126, 129–130, 137, 145

at Gatorade, 5–12

identifying for key products, 92–93

needs of, 107

predicting innovation success with, 147–149

promise to, 107

sources of frustration for, 122–123

touch points with, 121–122

understanding needs of, 73–74, 109–110

value chain innovation and, 33–34

at Valve, 132–135

See also promise to users

customers, potential, 113

predicting innovation success with, 147–149

data collection and use, 74

at CarMax, 16–17

dating vs. fighting mindset, 112, 209–210

Day, George, 27

decision 1, 56, 67–68, 87–100

challenges in, 71–73, 98–99

decision 2, 56–57, 69–70, 101–130

customer context and, 110–113

documentation of, 123

finding your business promise, 113

challenges in, 73–75

at GoPro, 101–107

looking for opportunities and, 121–123

mapping customer context and, 114–120

decision 3, 56, 70, 131–157

challenges in, 75–77

documentation for, 123

experimentation for, 145–150

generating a portfolio of ideas and, 135–136

Kickbox and, 136–138

at LEGO, 154–156

management roles in, 150–153

narrowing lists of potential innovations and, 138–145

open minds for, 149–150

at Valve, 131, 132–135

decision 4, 57, 70, 159–185

challenges in, 78–80

leading, 164–167

solution integrators and, 83–84

decision making, open and inclusive, 99

Dell, Michael, 43

design thinking, 31–32

development process, 154–156, 202

differentiation, 124

discipline, 82, 95

Disney, Roy, 24, 189, 207. See also Walt Disney Company, The

Disney, Roy E., 199–200, 201, 205, 207–208. See also Walt Disney Company, The

Disney, Walt, 24, 34, 188–190, 207

complementary innovations by, 192–198

See also Walt Disney Company, The

Disney Channel, 198

Disneyland, 193–194, 195

Disneyland (TV show), 195, 198

Disney Stores, 201, 203

Disney World, 198, 202–203

disruptive innovation, 2–4

at Apple, 4, 53–54

brand damage in, 38–39, 59–60

compared with Third Way, 28–29

definition of, 3n, 11–12

as definition of innovation, 11

at LEGO, 37–40

Third Way compared with, 22–23, 26

distribution, 2

at Gatorade, 5

at Valve, 133

diversification, 203

Dornbusch, Adam, 106

Driver’s Mart, 61, 64

Dumbo, 191

Dunhill, 94

Early Access, 134

Eisner, Michael, 202, 204–205

Ellen DeGeneres Show, 175

Enduring War Dog with Ethereal Flame particle effect, 133n

Euro Disney, 202, 203

execution challenges, 62–67

expectations, 183

experimentation, 80–82

management roles in, 152–153

with potential innovations, 145–150

extreme users, 112–113, 123

failure rates

of disruptive innovation, 38–39

from revolutionary vs. incremental innovation, 3

FairPlay, 49

fake-door test, 148–149

Family Channel, 203

Fantasia, 191

field research, 124–126, 129–130, 137, 145

Finding Nemo, 204

FireWire, 140

flexibility, 75

focus, 95

at CarMax, 66, 70

in field research, 129

on key products, 96–97

narrowing lists of potential innovations and, 138–145

in promise to users, 108

follow the customer, 114–118, 136

follow the money, 114–116, 136

follow the product, 114–116, 136

Frankenstein pretotypes, 148

Frankenstein test, 149

Frederick’s of Hollywood, 106–107, 126–128

Frozen, 206

full-spectrum innovation, 32–33

Gates, Bill, 43

Gatorade, 1–2, 4–12

complementary innovation at, 14–15

core customers for, 92–93

management at, 20

promise to users of, 15–16, 106

sales of, 8–10

Sports Science Institute, 8

Genentech, 12–13

global profit targets, 178–180

GoPro, 29–30, 101–107, 168

App, 103–104

Channel, 104–106

customer needs and, 117–118

sales at, 105–106

Studio, 104

Greenlight, 134, 150

Guinness, 160–167

Half-Life, 132

Hall, Don, 202

Harrington, Mike, 132

Harry Potter movies, 38

HIPPO decision-making, 76, 210

hiring, 19, 58, 182–183

Hong Kong Disneyland, 205

Huizenga, Wayne, 61–62, 65, 66

human growth hormone (HGH), 12–16

humility, 210

iApps, 47

ideas, generating, 135–136

Iger, Bob, 205–206, 208

iMovie, 47

imposter test, 149

income and expenses, 171, 177–180

Incredibles, The, 204

incremental innovations, 2n, 3

innovation, x–xi

acquisitions and partnerships in, 76–77

big vs. small, 2–4

binary thinking about, 3–4

business functions involved in, 62–63, 67, 75

categories of, 174–176

choosing how to pursue, 131–157

complementary (see complementary innovations)

conventional thinking about, 2–4

customer context and, 110–113

dating vs. fighting mindset for, 112

definitions of, 11

delivery of, 57, 70, 78–80

failure rates in, 3

groups involved in, 66–67, 82–83

incremental, 2n

investment decisions, 89

other approaches to, 22–23, 25–34

predicting successful, 146–149

promise-based, 108

radical, 3–4

to revive brand and restart growth, 1–2

strategic approaches to, 25–31

success rates of, 4

sustaining, 2n

techniques for, 31–34

Third Way process for, 80–82

through more products, 1–2

at Valve, 132–135

See also decision 3

innovation matrix, 171, 172–177

Innovation Navigation (podcast), xi

interview guides, 129

iPhone, 51, 96

iPod, 45–51, 57, 76

Irish Pub Concept, 160–167

IronPigs, 87–88

iterative approaches, 80–82

management and, 152–153

iTunes, 45–51, 57, 76, 90

market responses to, 96

for Windows, 49

job loss/change, 71, 72

Jobs, Steve, 4, 29, 42–51

key products and, 57, 71, 97

leadership of, 52–53

Pixar and, 205

jobs-to-be-done approach, 26, 33–34, 116–118

Katzenberg, Jeffrey, 201, 202

Keeley, Larry, 120

key products, 87–100

at Apple, 43, 53–54, 57

changes in over time, 95–96

choosing, 56, 67–68, 89–96

choosing, challenges in, 71–73

at Disney, 187–188

don’ts in choosing, 93–94

evolution of, 53–54, 57–58

identifying key customers for, 92–93

importance of maintaining, 206–208

innovation around, 14–15, 40–41

lean and trim, 97–98

at LEGO, 53–54, 57–58

linking innovations to, 139–140

multiple, 94–95

preparing for success, 96–98

promise for, 69–70, 125–126

qualifications for, 89–91

requirements for, 68

rethinking, 81–82

stability of, 68, 72–73

strengthening, 98

tests for choosing, 90–91

Kickbox, 136–138

Kim, W. Chan, 29

Knudstorp, Jørgen Vig, 39, 52, 58

Kodak, 23

Lasseter, John, 205–206

L Brands, 127

leaders and leadership

in innovation delivery, 70

in innovation selection, 76

mandate for project leaders, 168–171

predicting innovation success and, 146–149

for Third Way approach, 164–177, 168–171, 180–184

lean startup approach, 22–23, 25, 30–31

learning curve, 184

LEGO, x–xi, 36–41

binary thinking at, 37–39

Bionicle, 40–42

complementary innovations at, 56–57, 154–156

decision 3 at, 154–156

delivery of innovations at, 57

development process at, 154–156

innovation matrix for, 172–176

key product at, 56–58, 69, 88–89

key product strengthening at, 98

lean approach at, 97

legacy products at, 93

LEGO Movie, The, 55, 58, 79, 172–180, 182

outsourcing at, 72

profit negotiations at, 178–180

promise at, 56–27, 69, 74, 106

reorganization at, 79

sales at, 37, 38, 41, 42

Third Way at, 52–55

LEGO Movie, The, 55, 58, 59, 79, 172–180, 182

innovation matrix for, 172–176

profit negotiations on, 178–180

Lehigh Valley IronPigs, 87–88

Levitt, Theodore, 117

licensed merchandise, 40, 179, 192–193

Ligon, Austin, 64, 66

local investment budgets, 178–180

Logitech, 94

Lucasfilm, 39

MacMillan, Ian, 119–120

management, 19–21, 22

at Apple, 54–55

challenges in, 23, 32–33, 66–67

of complementary innovations, 77, 140–144

in decision 3, 150–153

at Disney, 205–206

in innovation delivery, 159

of innovation delivery, 78–80

innovation matrix and, 171, 172–177

at LEGO, 54–55

predicting innovation success and, 146–149

product manager role and, 83–84

profit negotiations and, 180

senior, in Third Way projects, 182–183

Third Way process for, 80–82

marketing, 178–179

to core customers, 5–12

at Gatorade, 5–12

“Marketing Myopia” (Levitt), 117

Mauborgne, Renée, 29

McGrath, Rita, 119–120

Meet the Robinsons, 206

metrics, 164–167, 182–183

Mickey Mouse, 189

Mickey Mouse Club, 192–193, 195, 201

Mickey Mouse Club, 195

Microsoft, 42, 43

Mighty Ducks, The, 203

Miller, Ron, 198, 200

minimum viable portfolio of complements, 144–145

money, following the, 114, 118–120

Monsters, Inc., 204

Moviemaker, 134, 150

National Football League, 5

Newell, Gabe, 132

Newton PDA, 42, 43

NeXT, 43

Nichols, Grace, 127

Ninjago, 154–156

Nintendo, 36

Nordicare, 13–14

Norditropin, 12–16. See also Novo Nordisk

Novo Nordisk, 12–16

key products at, 21, 68, 94

management at, 20

promise at, 69

Nutropin, 12–13. See also Genentech

one-night-stand test, 149

open-mindedness, 149–150

opportunities, looking for, 121–123

organizational issues, 23, 32–33, 80

delivery and, 168–171

groups involved in innovation and, 82–83

in innovation delivery, 70

key products and, 94–95

Oswald the Lucky Rabbit, 189

outsourcing, 43, 98

Oveson, Jesper, 39

Pampers, 109–110

partnerships, 57, 77, 79, 142–143

PepsiCo, 2, 5, 92, 125

Pinocchio, 191

Pinocchio test, 149

Pippin, 43

Pixar, 203, 204–207

Pixo, 55

PlayStation, 36

PortalPlayer, 55

Porter, Michael, 32–33, 120

Powerade, 6, 8, 15

Precision Hawk, 143–144

pretotypes, 147–149

pricing, 19

Princess and the Frog, The, 206

processes, 164–167

process innovations, 175

Procter & Gamble, 109–110

product development approach to innovation, 27–28

product innovations, 174–175

product managers, 83–84, 92, 168–171

products

commodities, 16–21

culling, 99

customer context and, 110–113

following the, 114–116, 120

at Gatorade, 6–12

innovation through creating more, 1–2, 37–39, 95

key (see key products)

legacy, 93

profitability of, 93

promise to the user of, 15–16

rehabilitation of potential key, 72

profitability

at Disney, 191

expectations for, 183

of key products, 93

of potential innovations, 138–139, 177–180

progress tracking, 152

project leaders, 168–171, 180–184

project plans, 166–167, 171

project specifications, 171

project teams, 180–184

promise to users, 15–16, 21–22, 210

at Apple, 54

at CarMax, 19, 66

challenges in choosing, 73–75

choosing, 56–57, 69–70, 124–126

as commitment, 107

consumption chain analysis and, 114, 118–120

customer context and, 110–113

customer need as basis for, 107

danger of skipping, 75

focus on, 66, 70

at GoPro, 101–107

ideal characteristics of, 73

innovations focused around, 76–77, 139

iterative process with, 81–82

key product role in, 125–126

Kickbox and, 136–138

at LEGO, 54

looking for opportunities and, 121–123

mapping customer context and, 114–120

at Procter & Gamble, 109–110

qualities of good, 107–108, 124–126

risks to delivery of, 140–142

vague or abstract, 74–75

at Valve, 132–133

of Victoria’s Secret vs. Frederick’s of Hollywood, 126–128

Quaker Oats, 125

QuickTake, 42, 43

Quirky, 146–147

radical innovations, 3–4, 39–40

radio frequency identification (RFID) tags, 16–17

redesign, 5–6

resource allocation, 83, 169–170

revenues, 91

risk

in big innovation, 3

of complementary innovations, 10–11

innovation development and, 181–182

innovation management and, 140–142

innovation matrix and, 172–176

Robb O’Hagan, Sarah, 1–2, 4–12. See also Gatorade

core customer selection by, 92–93

focus by, 97

Roffman, Howard, 39

Saarinen, Eero, 111

sales

at Apple, 44, 45, 50, 51–52

at CarMax, 19

at Gatorade, 8–10

at GoPro, 105–106

at LEGO, 37, 38, 41

service innovations, 174–175

Sherwin-Williams, vii–x, 112, 114–116

skills, for innovation, 82–83, 142–143

Ski the Piste, 88

Snow White and the Seven Dwarfs, 191, 193

solution integrators, 83–84, 168–171, 180–181

expectations for, 183

Sony, 104–105, 168, 170

SoundJam, 55

Source, 134

Spinjitsu, 155–156

stability

of key products, 68, 72–73

of promise to users, 107, 108, 125

stage-gate process, 27–28, 151–152

startups, 16–21

Star Wars movies, 38

Steam, 133

Steamboat Willie, 189

Steam Workshop, 134

Stengel, Jim, 109–110

strategic approaches to innovation, 25–31

strategic risk, 11

“Strategies for Diversification” (Ansoff), 27

strategy

key product selection and, 89

promise to users and, 108

strengths, building on, 125

success rates, 4

key products and, 96–98

poor prediction of, 146–147

supply chain, 98

sustaining innovations, 2n, 4

Tangled, 206

Third Way, xii–xiii

compared with other innovation approaches, 22–23, 25–34

complementary innovations in (see complementary innovations)

definition of, 4

distinguishing features of, 21–22

execution challenges in, 62–67

the four decisions in, 55–57, 67–85

at Gatorade, 4–12

history of, 22

key products in, 14–15, 21, 53–54

leaders in, 164–177

at LEGO, 36–42

management in, 19–21, 22, 80–82

process for, 55–57

project leaders, 168–171, 180–184

promise to users in, 21–22

starting small and local with, 184

in startups, 16–21

when/when not to use, 23–24, 34

time commitment, 83

touch points, 121–122

Toys “R” Us, 39

Toy Story, 203, 204

training, 19, 182–183

transfer pricing, 177

TT Games, 55

Turney, Sharen, 127

Ulwick, Anthony W., 26

UNICEF, 110

urinal-based video games, 88

USAA, 140–142, 143–144

value chain innovation, 32–33

value chain mapping, 114, 120, 122, 136

value innovation, 29–30

values, key products that reflect, 91

Valve Corporation, 131, 132–135, 150

Victoria’s Secret, 106–107, 126–128

vuja de, 113

Walker, Card, 198, 199, 200

Walt Disney Company, The, 24, 187–208

animated feature films, 190–191, 201, 202–203, 204–207

complementary innovations at, 192–195

core product at, 199–200, 204–207, 206–208

Disneyland and, 193–194, 195

diversification at, 202–205

early history of, 188–190

leadership changes at, 198–200

return to the core by, 201

television and, 194–195

Warby Parker, 148

Warner Brothers, 178–179

Waste Management International, 61

Watson, Raymond, 200

Wells, Bob, 112

Wilhite, Thomas, 200

Windows, 43, 49, 50–51, 57

Wizard of Oz test, 148

Woodman, Nick, 102

Wreck-It Ralph, 206

Yenser, Adam, 175

YouTube, 104–105

Zenger, Todd, 50n