Cannibalize Yourself (Before Someone Else Does)

 

Steve Jobs by Walter IsaacsonIf you haven’t read Walter Isaacson’s biography, Steve Jobs,please do. Yes, you will learn that Steve Jobs could be cold, hurtful, mean and completely lacking in empathy. But, you will also see insights into the more attractive aspects of Steve Jobs: that his relentless pursuit of his visions made him one of the most high-impact business leaders of our time. This is an amazing book.

In this article I want to focus on one lesson that Isaacson relates during his telling of the story of the developments of the iPod and the iTunes music store. Isaacson writes:

One of Jobs’s business rules was to never be afraid of cannibalizing yourself. “If you don’t cannibalize yourself, someone else will,” he said. So even though an iPhone might cannibalize the sales of an iPod, or an iPad might cannibalize the sales of a laptop, that did not deter him.

Most businesses don’t heed this rule. They protect existing products, services, business lines or practice areas from the potential dilution that comes from new offerings. I’ve seen hotel companies be cautious as they promote new hotels coming into service, for fear they could cannibalize the sales of the companies’ existing properties. I’ve seen insurance firms be careful about cross-selling additional services to clients for fear that the client might buy less of the first service. I’ve seen companies cancel important promotions because customers “who would have bought anyway” might take advantage of the promotion.

In most cases, this over-caution comes at a great price. Yes, the company avoids cannibalizing its own offerings, but it ends up worse off, on the whole, at the end of the day. Can you imagine if Apple had decided not to include the features of an iPod on the iPhone for fear that it might cause them to sell fewer iPods? What’s any different about that and an insurance firm that avoids bringing health insurance ideas to clients who are already buying property and casualty insurance, for fear that it might damage the existing relationship? (I’ve heard that excuse from every insurance brokerage I’ve ever worked with and analogous excuses from every law firm I’ve ever worked with.)

Jobs wasn’t focused on boosting the sales of any one particular Apple product; he was focused on the customer’s overall experience with Apple.

What about your company? Are you ruled by product-line parochialism, or are you more focused on your customers’ overall relationship with your company? Are you willing to forego a little today for the sake of strong customer relationships tomorrow?

The reality in most companies is that this over-caution happens because certain people in a company protect their own interests. The manager of one product line sabotages another to ensure he makes his forecast … and earns his bonus. A lawyer doesn’t want his clients to meet one of his partners, for fear that the client may give more business to the partner.

In one revealing story from Steve Jobs, Sony, maker of the revolutionary Walkman and Discman, lost the chance to merge digital music players with content because its music division and consumer electronics division couldn’t cooperate. As the New York Times reported, “That internal battle was seen by many as the reason Sony, inventor of the Walkman and the biggest player in the portable audio market, was being trounced by Apple.” In the meantime, Jobs introduced the iPod, created a music division and cut deals with Sony’s competitors to deliver content through the iTunes store.

Jobs’s lesson, “If you don’t cannibalize yourself, someone else will,” is critical to all of us. Don’t protect your products. Protect your customer experience. Protect your customer relationships. And, most of all, don’t let individuals in your company protect themselves at the expense of your customer experience and customer relationships.

Steve Yastrow

 

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Posted in Invent Your Future, Latent Profit, Marketing, Newsletters
6 comments on “Cannibalize Yourself (Before Someone Else Does)
  1. Brad Haan says:

    Hi Steve,
    Your astute article also raises another potent issue. With internal competition rising for a decade, less people are willing to share. Ideas become “owned” by individuals, which result in a perception of “job security”. One of the great harmful side-effects of this bad economy is the threat of one’s job. This has been very detrimental to cooperation and reciprocity in the workplace. As a manager, I have to contend with the phrase “playing it close to the vest” daily, as team members hold secrets and even compromise or sabotage each others’ projects. My only salvation is the resolution that whatever action is taken, the results must be for the good of the company. Personal endeavors, self-aggrandisement and stepping over one’s colleagues can’t have a place in the company if the company as a whole suffers. Wiser managers than I will say that I can’t be aware of half of what behind-the-scenes activities are really taking place. This is true. This is why I “hold to” that policy with such determination, to combat the in-fighting that is being fueled by the heightened competition. We all want that “shark in the tank” to keep the work pool working hard, but not at the cost of quality ideas or opportunities being missed. Or dismissed.

    Steve Jobs had the benefit of his awesome rank (earned by many very hard-fought years). He WAS the company. Infighting, lack of collaboration was personal. I haven’t quite achieved that level in business. For me, I believe the tougher question is, “how do I create a productive environment where I can balance competition and cross-pollination of ideas without encouraging combative co-workers bent on rising above all others at any expense?” What tools do others use to keep the energy high, but the mutual respect and team mentality strong?

  2. Pete says:

    Steve,
    Great reminder. I preached this till I had to leave the last company I was at. They would not introduce a product that their customers were begging for because they feared it would cannibalize their ‘flagship’ product. They had sunk millions of dollars in the development of the flagship only to find that the market was not as interested in the product as the company itself thought they should be.

    The kept at it and kept at it but to date (going on 5 years now) they have only one single customer who had the vision to adopt the flagship product. I can only imagine the market they’ve lost because they refused to consider the discovered needs the marketplace exhibited. It was right under their nose and they would not see it.
    I left and started my own company and I’ve just forwarded your news letter to every employee with instructions to “read, ponder and expound”. Hopefully, we can figure out where we need to work at self cannibalization!

  3. Destrey says:

    That insight’s pefcert for what I need. Thanks!

  4. Free KPI says:

    Excellent, thank you for sharing this insightful idea !

1 Pings/Trackbacks for "Cannibalize Yourself (Before Someone Else Does)"
  1. […] again, Apple is an example of this case, as described in this post that has a positive view of cannibalization.  It brings up the key point, if you avoid cannibalization at all costs, you may find out that you […]

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