The Power of Little Ideas: A Low-Risk, High-Reward Approach to Innovation
David Robertson with Kent Lineback
Harvard Business Review Press (May 2017)

Do innovators have only two choices: innovate small incrementally or innovate big disruptively? “There is another option.”

At least a few business books share insights that have greater value now than they did when first published. For example, The Power of Little Ideas.

As you may already know, in Brick by Brick, written with Bill Breen, David Robertson explains how “a new leadership team pulled off one of the most successful business transformations in recent memory. One by one, LEGO reinvented those academic prescriptions for innovation, synthesized them into a world-class management system, and reemerged as a powerful, serial innovator. LEGO built the world’s first line of buildable action figures, fueled by a riveting story line that played out over a nine-year span. It launched a line that included an `intelligent brick,’ allowing kids (as well as many skilled adults) to build programmable LEGO robots. In another first, LEGO rolled out a series of board games that could be built, broken apart, and rebuilt.”

As Robertson explains in his latest book, The Power of Little Ideas, written with Kent Lineback, “The purpose of this book is to show you, the reader, how you can learn and adopt the approach that LEGO and others have used so successfully, without the crisis that precipitated LEGO’s turnaround. The other companies that have adopted the LEGO strategy followed a sequence of decisions, a process that is the focus of this book. This book lays out the steps you should follow and the challenges you’ll face if you decide to adopt this approach.” (Page xiii)

Robertson recommends what he characterizes as the “Third Way” to innovate – an approach that is not bound by the binary thinking that says innovators have only two choices: “innovate small [incrementally] or innovate big [disruptively]. There is another option.” This approach has three distinctive characteristics:

1. Companies pursuing the Third Way “create multiple complementary innovations around a core product that make that product more appealing and competitive.”

2. The next is that “the complementary innovations operate together and with the key product as a system to carry out a single strategy or purpose – what we call the [begin italics] promise [end italics] to the user.”

3. The third distinctive characteristic is that “the complementary innovations – even those delivered by outside partners –are closely and centrally managed internally. Though this may seem like a small point, it’s crucial for Third Way success.”

He rigorously examines several companies whose leaders took the Third Way approach, notably Apple Computer, CarMax, Disney, Gatorade, Novo Nordisk, USAA, and Victoria’s Secret. Each of their “stories” serves as a mini-case study.

Robertson poses four critically important questions that must be answered correctly when considering adoption of the Third Way approach. Here they are:

1. What is our key product?
2. What is our business promise?
3. How will we innovate?
4. How will we deliver our innovations?

In this context, I presume to insert an observation that one of the co-founders of The Home Depot, Bernie Marcus, is reported to have shared during the company’s first meeting of store managers. “Remember, when someone comes through the door, they’re not buying a 1/16th of an inch drill bit; they’re buying a 1/16th of an inch hole.” It is imperative to understand what the customer wants/needs and then innovate around that.

In my opinion, some of the material in the book’s final chapter is of greatest interest and value as David Robertson and Kent Lineback suggest a number of lessons that can be learned from an American icon, The Walt Disney Company. What we have is a mini-case study of how successful application of the Third Way “can lead to internal dysfunction, separation of the different types of innovation, and ultimately – in Disney’s case – an erosion of capability to the core.”

This really is quite a story of how a once-great company lost its way and then recaptured its “magic” and became an even greater success. Without calling it that, Walt Disney envisioned a “third Way organization with films, especially animated films, as its creative center where they provided the stories and characters that nourished everything else.”

As this story illustrates, “The success of the Third Way project depends on maintaining a strong and vibrant core, even if the core doesn’t generate the most revenue. When Disney nurtured its core by producing a stream of animated feature films, its core and complementary businesses all thrived. When it neglected the core, when it tried to live on the legacy of past success, both its core and complementary businesses suffered.”

The details are best revealed within the chapter’s narrative, in context, but I will reveal one lesson that would not be a spoiler: A company’s success begins with and depends on the right key product at the core of operations. For Disney, as indicated, that would be “the stories and characters that continue to nourish everything else.”