INNOVATION
Cannibalization: The Big
Innovation Question
By Senorine Wasike
I
’d rather Apple cannibalize Apple than
somebody else cannibalize Apple.”
These were the words of Apple CEO
Tim Cooks in an interview a few years
ago. Cook had been asked if the many new
product launches by Apple would ‘kill’
other existing Apple products.
According to Cook, Apple would rather
cannibalize its existing products with new
products than risk a competitor eating
into their business. Cannibalization was
not a threat, but an opportunity to grow
Apple.
Many businesses exist in the space of, ‘If it
isn’t broken, why fix it?’ This is particularly
true for companies’ core brands that
account for the bulk of the business
revenue. These brands are usually mature
and enjoy heritage. They look very healthy,
but if nothing is done, two things are
probable; decline or re-birth. It’s never a
matter of ‘if ’ but ‘when’.
It is therefore critical that companies
innovate to give these brands a new
lease of life. But with innovation comes
cannibalization!
What is cannibalization? How do
you determine the acceptable level of
cannibalization and how can organizations
view this as an opportunity rather than a
threat to their own businesses?
Innovation Cannibalization
The concept of cannibalization is
anchored on Schumpeter’s theory of
creative destruction, the process in which
technology and innovation create new ways
of doing things and, in the process, leave
the old ways behind. When businesses
The concept of cannibalization is anchored on
Schumpeter’s theory of creative destruction,
the process in which technology and innovation
create new ways of doing things and, in the pro-
cess, leave the old ways behind. When businesses
launch new products and the sales from the new
brand cut into existing product sales, cannibaliza-
tion happens. This explains why most businesses
would not rock the boat in the name of innova-
tion.
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launch new products and the sales from
the new brand cut into existing product
sales, cannibalization happens. This
explains why most businesses would not
rock the boat in the name of innovation.
Self-Cannibalization
The big question then is, how do
businesses balance between innovation
and cannibalization? The truth is if you
are afraid of changing (innovation) you
will learn the hard way. And as Jack Welch
put it, you are better off changing before
you are forced to.
Think Kodak for instance, the once world’s
biggest film company that was beaten
by the digital evolution. They invented
the digital camera but its leaders felt
that going digital meant killing film, the
company’s golden egg. Fuji its competitor
innovated beyond film and introduced
other products such as video tapes and
copiers. Over time Kodak’s shares fell
80 per cent and it eventually filed for
bankruptcy in 2012 (the Independent
UK). Kodak failed to self-preserve itself
by avoiding to cannibalize itself.
Determining The Right Level
Of Cannibalization
Every business must accept that with
innovation
comes
cannibalization.
Establishing the right level of self-
cannibalization is critical for self-
preservation. An organization can do