When it comes to business strategy, it is essential to learn from past examples and great strategists. For example, we all know that business cannibalization is a hard task that entails obstacles of many types. Not only it means giving up on known success in exchange of unknown future, but it also creates competition within a company, as it entails winners and losers. And yet, successful masters embraced it and brought it to the next level, accelerating the process.
Steve Jobs once said: “If you don’t cannibalize yourself, someone else will”.
This simple and powerful sentence well explains his approach to a subject matter that he overemphasized by thinking, developing and selling Apple’s new products as substitutes of the old ones, without being afraid of the risks that this entailed.
For example, in 2005, even though sales of the iPod were satisfactory and steady, Steve Jobs started fearing that such a product could soon be cannibalized. In fact, smartphones at the time were presenting more and more features. If the iPod was to be replaced by a phone, Steve Jobs wanted to guide the company in charge of creating and commercializing such a device.
This became his priority and, only two years and a half later, he presented the “the best iPod ever made”. The iPhone was the combination of three different things:
- A widescreen iPod with touch controls
- A revolutionary mobile phone
- A breakthrough communication device
and it was priced accordingly, as it was sold for the sum of the prices of the bestselling iPod and of an average smartphone. It was, of course, a revolutionary product. One of those unique products that change the entire industry they belong to.
As we know, it was an innovation miracle. The revenues boomed and, although the sales of the iPod were shrinking, the company was surfing the wave of success.
In 2010, with the launch of the first iPad, the story repeated itself. When asked what effect it had over Macintosh sales, Tim Cook simply replied: “Some customers chose to purchase an iPad instead of a Mac. Even more decided to buy an iPad over a Windows PC.”
As exemplified, cannibalizing your own business is never easy but can deliver unexpected and incredible results, therefore, it is undoubtedly worth the risk.
References:
Yoffie, David B., and Cusumano, Michael A. Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs. New York: HarperBusiness, 2015.
