Keep The Cannibals In The Family
It's natural to fall in love with your product.
We spend a lot of time developing and nurturing them, cultivating them to the point where we are ready to put them in the market.
And when customers are receptive to what we have to offer, once the uptake is there and the product is generating profitable margins, we double down.
We invest in marketing, in distribution, in refining and improving the core product so that they appeal more deeply to customers, so that those customers will readily spend more on our services, tell others about them and expand our share.
That's natural, and that makes sense. But only for a while.
Because every successful product breeds competition.
Some of that competition is direct - there are other companies that are setting up their stall in much the same way you are. Your products and services compete head on. They may offer the customer similar benefits. They may even look, feel and operate in the same way. We know how to handle these competitors. We can "see" a path to success, because this is the devil we know.
But there are many times where the competition isn't quite to so clear cut. They emerge from tangential, or what some may consider to be completely different sectors. There may be buzz around them or there may not (because no one covering your space has figured them out yet).
But there is always a commonality: they are servicing the same customer need. They are fulfilling a fundamental promise that is (explicitly or implicitly) being made to every customer buying your product. And often, they're doing it better (even if it's at a smaller scale).
They may (likely will) be doing it in completely different ways than you and your direct competitors are doing it today. But thats likely the point.
And when the buzz reaches a crescendo, it's usually too late. The market has been disrupted, customers have made their choice and the disruptor has emerged triumphant.
We've seen this time and again.
Kodak and digital imaging. Bausch & Lomb and the soft contact lenses. Blackberry and the smartphone. Sony and the digital music player. Blockbuster and digital streaming.
In all of these situations, there was an innate fear of upsetting the status quo. A concern that introducing a competing product will upset the core business and destroy 'the good thing we have'. The dilemma of cannibalizing our own profit source, for the unknown.
The truth is, if you're going to get cannibalized, then it's important to keep the cannibals in the family.
Easier said than done, sure, but essential to do.
Cannibalizing yourself requires four important traits: awareness, flexibility, boldness and commitment.
Awareness of the impending threat - which other companies out there are servicing your customer need? How are they doing it? What are they offering that is unique? Does that uniqueness service the customer in a way that they value?
Flexibility to change - If the competing threat is founded on a fundamentally different go to market approach, can you flex (or augment or displace) your model to counter that approach? Can you adapt - strategically, operationally - to meet the threat either head on, or in an equally unique/innovative way?
Boldness to make the change - this is executive commitment. Political support against the naysayers, because they will always be there. It demands the courage to proceed, especially when the environment, the path is fraught with uncertainty.
Commitment to follow through - not just in name, but in spirit. In resources. In time. In money. Commitment to get things done and to truly test the response.
There are plenty of examples of companies that recognized this shift, adapted and prospered.
Netflix - which invested in streaming when its core business was built on DVD by mail.
Any number of airlines introducing low cost options, either through separate brands or as pricing options within their own core brands.
And, of course, Apple which accepted the impact the iPhone would have on the iPod, or the iPad would have on its Mac business.
Of course, it's easy to point to visionary founders or particularly strong executive leaders as the driving force, and yes, they play a key role. But thats not enough.
It's about awareness, flexibility, boldness and commitment to make it happen.
And a firm, underlying belief to keep the cannibals in the family.