Competing Against Luck: The Story of Innovation and Customer Choice

by Clayton M. Christensen

New products succeed not because of the features and functionality they offer but because of the experiences they enable. If you don’t have a preteen girl in your life, you may not understand how anyone can consider paying more than a hundred dollars for a doll. But I’ve done it. Multiple times. That doesn’t even count what we’ve spent on extra clothing and accessories. I think it would have been cheaper for me to buy clothing for myself. My daughter Katie, and many of her friends, coveted pricey American Girl dolls when they were growing up. Check out Craigslist ads right after the holidays—you’ll find a shocking number of parents eager to purchase secondhand or homemade American Girl clothing to supplement their daughter’s Christmas present. By one estimate, the typical American Girl Doll purchaser will spend more than six hundred dollars in total. To date, the company has sold 29 million dolls and racks up more than $500 million in sales annually. What’s so special about an American Girl doll? Well, it’s not the doll itself. They come in a variety of styles and ethnicities and they’re lovely, sturdy dolls. But to my eye, they look similar to dolls that children have played with for generations. American Girl dolls are nice. But they aren’t amazing. In recent years Toys“R”Us, Walmart, and even Disney have all tried to challenge American Girl’s success with similar dolls (Journey Girls, My Life, and Princess & Me)—at a fraction of the price—but to date, no one has made a ...