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Table of Contents
Figures and Tables xi
Foreword xiii
1 Why Incumbents Fail 1
Why Incumbents Fail to Innovate Unrelentingly 3
The Preeminence of Culture 7
Culture as a Primary Explanation 15
Basis for the Book 17
Conclusion 19
2 Willingness to Cannibalize Successful Products 23
Why Incumbents Are Reluctant to Cannibalize Products 24
Why Willingness to Cannibalize Is Important 28
Understanding Technological Evolution 33
Blinded to an Opportunity: Microsoft Keywords? 39
Crippled by Fear of Piracy: Sony MP3 Player 41
Decline of an Innovator: Eastman Kodak 45
A Cycle of Cannibalization: Gillette's Innovations in Wet Shaving 49
Late Move: HP Tablet 53
Conclusion 54
3 Embracing Risk 59
Sources of Risk: Innovation’s High Failure Rate 59
The Reflection Effect: Asymmetry in Perceived Risk 63
The Hot-Stove Effect: Learning from Failure 65
The Expectations Effect: Hope Versus Reality 68
Innovation’s Gain-Loss Function: Type 1 and 2 Errors 69
Case Histories 75
Gambling on an Embryonic Market: Toyota’s Prius 75
Gambling on Growth: Amazon.com 84
Gambling on Vision: Facebook 90
Gambling on Scale: Federal Express 103
Conclusion 106
4 Focusing on the Future 109
Why Future Focus Is Tough 111
Availability Bias 114
Paradigmatic Bias 116
Commitment Bias 119
Planning for the Future 121
Predicting and Managing Takeoff 122
Targeting Future Mass Markets 126
Predicting Technological Evolution 129
Analyzing Emergent Consumers 134
Conclusion 138
5 Incentives for Enterprise 141
Traditional Incentives: Winning Loyalty 142
Asymmetric Incentives: Turning Failure into Success 143
Making Incentives Work: Economics and Psychology of Incentives 148
Power of Incentives: IBM's Transformation 155
Incentives for Enterprise: Google 157
Incentives for Loyalty: General Motors 163
Incentives for Innovation: 3M 168
Structuring Team Incentives: IBM's Learning from Online Gamers 171
Conclusion 173
6 Fostering Internal Markets 177
Characteristics of Markets 181
Implementing Internal Markets 192
Managing Internal Markets 199
Conclusion 203
7 Empowering Innovation Champions 205
Luck Versus Innovation Champions 206
Characteristics of Champions 208
Testing Luck 210
Champions Versus Teams 212
Champions at the Top Versus the Bottom 214
Distributed Champions: Google’s "Young Turks" Program 216
Serial Champion: Roger Newton 218
Championing Mass Market of the Future: Tata Nano 222
Championing a Music Revolution: Apple iPod 227
Mobilizing an Organization for Innovation: Sony Walkman 231
Steps in Empowering Champions 235
Conclusion 236
8 Culture Versus Alternate Theories: Arguments and Evidence 237
Micro-Theories 238
Macro-Theories 250
Conclusion 260
Notes 263
Bibliography 289
Acknowledgments 307
The Author 309
Index 311
