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Insight — Corporate Innovation

In 2011, Redbox made video-game rentals available at each of its thousands of kiosks. The games were a success in their own right: games like “Call of Duty” often rented as well as blockbuster movies.

The innovation also had a profound effect on the performance of other products the company offered. Customers rented more frequently, increased the size of their rentals (selecting both a movie and a game, perhaps), and kept rentals out longer because games take longer to play than movies—all of which made a direct difference to a company that charges per night for rentals.

“We blew away our numbers on video games, but it also had a financial impact on our core business,” says Mark Achler, an adjunct lecturer of management and organizations at the Kellogg School and former senior vice president of new business, strategy, and innovation at Redbox. “When we started, we didn’t know that would happen. It was an unintended consequence.”

Innovations like this are critical if a company is to remain competitive. But for many larger firms, this may not necessarily align with past practices.

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