Organization Survival: Be able to cannibalize your own?


Tim Cook has purportedly said that Apple is not afraid to cannibalize its own products with the introduction of new ones. The argument being that if you are not prepared to, someone else will do it for you. I must admit, I detest the expression “cannibalize”, I am not sure who first said it (probably a management consultant trying to show how macho he was before a group of executives) but it is incorrect in fact.

Cannibalization has been observed in two contexts I believe: ritualistically in some cultures; and in cases of dire circumstances where survival of “any” was a real issue. In the context of  Apple, the notion is that we are prepared to see some aspects of our business drop off sooner/faster because we are offering a better solution to our customers.

The act of intentionally introducing products that will knowingly have a negative impact on current offerings is an act of courage apparently. It seems many organizations are unprepared to do it. Microsoft has purportedly been used as an example of such reluctance.

Looking at this issue from a personal perspective, I have observed that I am much more reluctant to forego something in my life when it is more important to me. Why is it important, that is the nub of the issue. Walking away, or doing something else that makes something else i your life less attractive is always a matter of context.

What I have observed in my case I am most resistant when the item up for grabs is very near and dear to how I identify myself. That which chips away at who and how I think about myself I am most loathe to entertain let alone act upon.

For the next bit I am going to rightly/wrongly assume that Apple is more predisposed to disrupt its business offerings thanMicrosoft is.

Both organizations are organized around a product focus, though with significant differences. Microsoft has established separate semi-autonomous business units, and Apple has not. For example, Apple has only one P&L statement.

Product focus is an excellent way to enhance performance around what you take to market. The key though is where do you draw the line in distinct focusing. Microsoft as I understand has established separateness within itself such that these business units are operated as fiefdoms. The siloing issue very likely to be a matter of concern in such circumstances. Allegiance, engagement, motivation and the like are encouraged to be directed towards the distinct business unit.

Apple purportedly has strong product focus, but, there is only one company – Apple.

So what? What does any of this have do with the propensity towards cannibalization?

In a Microsoft like context, more dimensions of who and what you are in the organization are connected to the business unit/silo. In an Apple like context the connections are more fragmented (product and firm). So people being people, in which organizational scenario would we speculate that people have the harder time in considering a cannibalizing future?

There is an important organizational design and behaviour principle here. How important is it to install both a high performance ethos along with an enabling capacity to moderate the desire to hold on to what you are doing at all costs? I have observed over the years that this balance between commitment and capacity to disconnect is rarely discussed and even acknowledged.

High performance always involves an emotional connection to what is being done! The ability to do something that destroys (probably too harsh) means we can disconnect this emotional attachment in some ways and at some level.

Organizations that want to be considered great at what they do (in terms of serving customers) and yet agile and light in their response to changing competitive contexts need to deal with these issues of connection/disconnection that are close to the core of who and what we are. The dark side of unlimited and unwitting engagement is the price on flexibility and agility.

So what are some principle to keep in mind if we want the best of both worlds?

* Be careful how you organize within. Where do you put the day-to-day focus? How is it on the product? How is it on the business unit performance? How is it on the corporation? Be wary of the unintended consequence of any internally focused process (finance, human resources, etc.), where do they direct attention, energy and connectedness towards?

* Place the focus of rewarding performance on the outside, that is, the customers’ experience with what you offer. If customers are at least satisfied (hopefully better than that) and you are reasonably cost effective internally, you will succeed. This principle is most difficult to apply to internally focused processes such as finance and human resources. At the very least they can be assessed on how what they do better enables those who have a clearer line of sight on the customer experience succeed at that. In my experience, this would have a major impact on most HR sponsored performance management schemes.

* Ensure your values reflect need to properly balance the duality of focus (customer experience and the connectedness to the organization) and the advantage of being better by discarding and adopting.

* Manage brutally any situation where a manager in effect says: “My interests are more important than the customer’s!” Make heroes of those who have shown the wherewithal to find bridging options where the two (customer experience and organizational need) conflict.

* Honor what has been done and those who made it possible.

* Create excitement around how the customer experience will be even better with the change and how that will make us proud.

* Ignore the competition. Find your own path (find and serve an unmet customer experience need/want) and do it very well. The competition will be forced to change from what they were comfortable doing. Let them pay the total cost of cannibalization.

* Remember, we are more than our things and what we do. We show who and what we are by doing and achieving things. But these are just evidence examples of our greatness. “Let me show you what else I can do!”

I have always thought that: To be alive is to be different tomorrow than I am today. I know this because I am different today than yesterday. And, I am glad that this is true.

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
This entry was posted in Decison Making, Performance Management, Risk & Uncertainty, Strategy, Talent Manangement, Values and tagged , , , . Bookmark the permalink.

One Response to Organization Survival: Be able to cannibalize your own?

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