CHAPTER 20Innovation Story: Carmax

Marty's Note: CarMax had already been seeing the benefits of their transformation to the product model when the pandemic put the organization to a true test. It required the company to use all its new muscles—product strategy, product discovery, and product delivery. Sometimes it takes a crisis to see what an organization is truly capable of.

Company Background

CarMax, founded in 1993 and based in Richmond, Virginia, is the largest retailer of used cars in the United States. The company has built a strong business over the past 30 years by bringing trust and integrity to buying and selling used cars.

CarMax was initially created as a spin-off of electronics retailer Circuit City and quickly grew to become a leader in used car sales. Over time, the company's leaders saw consumer expectations beginning to change, especially around the desire for an online shopping and buying experience, as well as the emergence of digital-native competitors, and they realized that they would need to disrupt themselves to maintain their leadership position.

The company's initial efforts in moving to the product model were focused on the consumer-facing digital experience, which was led by Ann Yauger. Ann instigated and led the initial transformation to the product model with the team. The initiative quickly proved its value—starting several years of organizational growth to build out product competencies at scale.

By the start of 2020, the company ...

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