Why “Gretzky’s Rule” Represents the Past of Product Innovation

By Ken Durand |  March 15, 2017

Most of us have heard the advice that Walter Gretzky gave to his son Wayne, who became perhaps the greatest hockey player of all time: the key to success is to “skate where the puck is going, not to where it has been.”

It’s a wonderful statement about using everything at our disposal to look forward to the future, instead of the past. It has become one of the great PowerPoint clichés of our time. But few have questioned its validity in building out an innovation culture within a large organization. In reality, “skating to where the puck is going” (from now on known as the “Gretzky Rule”) is undermining the high-impact innovation that product organizations want.

We need to first understand the environment that Gretzky worked within — the conditions that made it possible for him to be “where the puck was going.”

  1. The Rules of the Game: The sport of hockey organized its first formal rulemaking in 1917.  All teams that compete agree to be governed by the same set of rules.  Additionally, the various leagues around the world place referees on the ice with the teams to enforce the rules.
  2. The Space of Play: The game of hockey is played in a confined space — the rink.  Only approved players or referees are allowed in the space.  All rinks have the same dimensions, the same line markings, and identical goals in which to score points. The puck is confined to this space — which greatly limits the potential locations where the puck can be now and in the future.
  3. Scoring: There is universal agreement on how score is kept. If there is a question about whether a score has occurred, professional leagues generally employ video replay to assist the referees in making the right call, ensuring fairness to both teams.
  4. Known Opponents: If you read articles about Gretzky’s career, one thing will appear repeatedly: he had the uncanny ability to know not only where his opponents were on the ice, but also to anticipate what they would do next. This ability extended not only to his opponents, but also to his own teammates (this is one reason that Gretzky had more assists in the NHL than any other player had points.)  Gretzky was a student of the game and of the opponents he would face on the ice. He studied their tendencies, their weaknesses, and how to beat them. This allowed Gretzky to achieve a level of preparation that was second to none.

Each of these four factors played significantly into Gretzky’s ability to intuit where the puck was going. Through exhaustive preparation and practice, he applied his immense talent to the circumstances of winning on the ice, and Gretzky did this better than any hockey player who has ever lived. So why should we not apply the Gretzky rule to our product innovation efforts?

Ask yourself these questions about your business:

  • Are we (and our competitors) all agreeing to the same set of rules, and are those rules enforceable?
  • Is the playing field known, and is the puck limited (naturally or artificially) to the confines of our field of play?
  • Does the industry agree on the formula for measuring success and calculating the winners?
  • Are our competitors clearly known? Can we evaluate their tendencies such that they can be studied and beaten?

If these items are true for your business, then congratulations — you’re working in a market where future outcomes are fairly predictable, and victory will be based on your forecasting abilities being greater than that of your opponent. In this situation, you are operating and innovating in a “Horizon 1” business (see McKinsey’s “Three Horizons of Growth“) and the Gretzky Rule certainly applies, but more often than not, the outcomes you can achieve in this horizon are far from transformative. Often, you’re in the position of managing decay and decline, or eking out a percent of growth here and there.

Most people, by contrast, operate in a market where outcomes are not so predictable; where the environment shifts on you regularly; or where you face newly-formed competitors that disrupt your entire business.  Just think for a moment about the following examples…

  • The Rules of the Game: Did Uber feel the need to acquire its own fleet of cars?
  • The Space of Play: Does Airbnb worry about the zoning rules or capital costs of putting up a building in a particular city?
  • Scoring: Is Tesla’s stock value governed by traditional automotive industry production scale and sales objectives?
  • Known Opponents: Does Netflix concern itself with the same local carriage agreements or right-of-way access rights that cable and satellite companies have long dealt with?

In each of these examples, the outsider looked at the “rink,” and then made the determination not to join the game everyone else was playing. Instead, they created entirely new rules, based on a new game, with highly-unpredictable outcomes. As a result, the forecasting and analysis that other companies rely on to “skate where the puck is going” became pointless.

Instead, we must learn the skills of discovery. Energy and resources need to be shifted away from trying to divine the future through traditional market research, and toward building prototypes and using them to gather customer feedback.

Here are some of the changes that happen as part of this transition:

If you’ve worked in or around product innovation, you may notice a similarity to the lean startup methodology.  The echoes are there, but my experience with the lean approach led me to a realization that is critical to success.  Lean startup, as taught by Steve Blank, Eric Ries, and others makes the assumption from the beginning that the people on the team all share the right mindset.  In startups, this is generally true, due to the risky nature of working for a company that needs to find customers and revenues fast— or go out of business. In most large enterprises, there’s much more stability. As a result, many gifted explorers fall out of those organizations (or are chased out), since they never really “fit” the corporate paradigm.

So the fundamental task of any enterprise product transformation program starts with having the correct team matched to the properly identified idea. There are two areas to evaluate and nurture.

  1. Thinking Style – the ability to “reimagine outcomes” in an unpredictable world
  2. Behavioral Style – a bias toward action

In addition, the company needs to offer the right incentives to get these teams to form — and operate — successfully. If it sounds challenging, it can be. It’s one reason many large organizations choose to simply acquire innovation from the outside, via M&A, rather than invest in their own innovation capabilities.

In Conclusion

Executives who are still formulating their innovation and product strategy with guidance from Wayne Gretzky’s dad are skating toward irrelevance. They’re playing hockey, while the rest of the world has moved on to Quidditch, or drone racing — games that don’t take place on a two-dimensional surface, and feature all sorts of new rules.

The brilliant professor Dr. Saras Sarasvathy of the Darden School of Business puts it this way:

“To the extent that the future is shaped by human action, it is not much use trying to predict it. It is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence.”

It’s time to stop forecasting — and start experimenting.