Pets: Spectacular Digital Failure or Model for Strategic Innovation

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While Pets.com was busy soaking up all the oxygen in the room as a dot.com failure, another pets business was busily doing everything right on the internet and gaining traction on its way to becoming a massive success and a proving ground for innovation.
That business had started four years earlier. Six months after Yahoo! and two years before Google. That business has been the leading web property in the pets sector worldwide for over sixteen years. That business is one of the 250 largest websites in the US and is still growing at a double-digit rate. It has leapt from web 1.0, through web 2.0 and is still growing on the social and mobile web. That business has a 20% share of all new consumers entering the $52 B pet market, and is a (quietly spoken) household name. Astonishingly, if you go into a room with more than 10 people in the United States, statistically at least one of them has been a customer of this business.
That business is Petfinder.

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Pets: Spectacular Digital Failure or Model for Strategic Innovation

  1. 1. PETS. SPECTACULAR DIGITAL FAILURE ORMODEL FOR STRATEGIC INNOVATION?Iain Langridge,General Manager, PetfinderVP, Digital Media, Discovery Communications
  2. 2. $0$2$4$6$8$10$12Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec JanIPET Stock Price (From IPO (02/2000) to Delist (01/2001)
  3. 3. Obviously, everyonewants to be successful,but I want to be lookedback on as beinginnovative,..
  4. 4. Innovation is the specificinstrument of entrepreneurship.The act that endows resourceswith a new capacity to createwealth““
  5. 5. Petfinder-Proven Rules for Innovation1.  Purpose is key (and money is not a purpose)2.  Break-through by surrendering3.  Finding the Win-Win-Win drives innovation4.  Bring innovation back to the model5.  Dont build your organization around aninnovation. Build it to innovate
  6. 6. got purpose?
  7. 7. TABLE A-1Investment performance of Firms of Endearment* companies versusthe S&P 500, 1996 to 2011Fifteen-year Ten-year Five-yearReturnCumula-tiveAnnual-izedCumula-tiveAnnual-izedCumula-tiveAnnual-izedFoEa 1,646.1% 21.0% 254.4% 13.5% 56.4% 9.4%S&P 500b 157.0% 6.5% 30.7% 2.7% 15.6% 2.9%Note: company returns are total returns with dividends reinvested and compoundeda.  Companies from Firms of Endearment, updated by authorsb.  Standard & Poor’s index of five hundred U.S. companies*The eighteen Firms of Endearment companies are Amazon.com, BMW, CarMax, Caterpillar, Commerce Bank,Costco, eBay, Google, Harley-Davidson, Honda, JetBlue, Johnson & Johnson, Southwest Airlines, Starbucks,Timberland, Toyota, UPS, and Wholefoods Market.Source: Sisodia, Wolfe and Sheth, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, Pearson Prentice Hall, 2007, updated 2011
  8. 8. Creating responsible pet ownersfrom adoption throughout a pets life
  9. 9. SURRENDERSuccess, however unlikely, requiring however much innovation is inevitable !if you give in to what your purpose is telling you to do
  10. 10. Adoption Options
  11. 11. BeforeAfter
  12. 12. Generate as many ideasas possible about:•  Who to target•  What to offer•  How to organize todo all this efficientlyEvaluate these ideasand decide what todo and what not to doImplement thechoice(s) selectedwhile remainingflexible enough toadjust to changes inthe environmentExhibit 10-1 The Process of Crafting Breakthrough StrategyQuestion the organization’s mental models. Facilitate thisquestioning by creating a positive crisisCreate a questioning cultureCreate variety in the thinking processesused during formal strategic planningsessionsExperiment with new definitions of who,what, and howFind ways to make the strategy development processdemocratic and participativeReplicated from ‘All the Right Moves, by Constantinos Markides, HBS Press
  13. 13. Petfinder-Proven Rules for Innovation1.  Purpose is key (and money is not a purpose)2.  Break-through by surrendering3.  Finding the Win-Win-Win drives innovation4.  Bring innovation back to the model5.  Dont build your organization around an innovation.Build it to innovate
  14. 14. Purpose + Surrender + Win-Win-Win + (Expectation of Change + Stakeholder focus)= Business that is always innovating

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