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.

1. PETS. SPECTACULAR DIGITAL FAILURE OR
MODEL FOR STRATEGIC INNOVATION?
Iain Langridge,
General Manager, Petfinder
VP, Digital Media, Discovery Communications

12. $0
$2
$4
$6
$8
$10
$12
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
IPET Stock Price (From IPO (02/2000) to Delist (01/2001)

14. Obviously, everyone
wants to be successful,
but I want to be looked
back on as being
innovative,..

15. Innovation is the specific
instrument of entrepreneurship.
The act that endows resources
with a new capacity to create
wealth
“
“

16. Petfinder-Proven Rules for Innovation
1. Purpose is key (and money is not a purpose)
2. Break-through by surrendering
3. Finding the Win-Win-Win drives innovation
4. Bring innovation back to the model
5. Don't build your organization around an
innovation. Build it to innovate

17. got purpose?

19. TABLE A-1
Investment performance of Firms of Endearment* companies versus
the S&P 500, 1996 to 2011
Fifteen-year Ten-year Five-year
Return
Cumula-
tive
Annual-
ized
Cumula-
tive
Annual-
ized
Cumula-
tive
Annual-
ized
FoEa 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 compounded
a. Companies from Firms of Endearment, updated by authors
b. 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

21. Creating responsible pet owners
from adoption throughout a pets life

24. SURRENDER
Success, however unlikely, requiring however much innovation is inevitable !
if you give in to what your purpose is telling you to do

28. Adoption Options

30. Before
After

36. Generate as many ideas
as possible about:
• Who to target
• What to offer
• How to organize to
do all this efficiently
Evaluate these ideas
and decide what to
do and what not to do
Implement the
choice(s) selected
while remaining
flexible enough to
adjust to changes in
the environment
Exhibit 10-1 The Process of Crafting Breakthrough Strategy
Question the organization’s mental models. Facilitate this
questioning by creating a positive crisis
Create a questioning culture
Create variety in the thinking processes
used during formal strategic planning
sessions
Experiment with new definitions of who,
what, and how
Find ways to make the strategy development process
democratic and participative
Replicated from ‘All the Right Moves, by Constantinos Markides, HBS Press

37. Petfinder-Proven Rules for Innovation
1. Purpose is key (and money is not a purpose)
2. Break-through by surrendering
3. Finding the Win-Win-Win drives innovation
4. Bring innovation back to the model
5. Don't build your organization around an innovation.
Build it to innovate

39. Purpose + Surrender + Win-Win-Win + (Expectation of Change + Stakeholder focus)
= Business that is always innovating