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Is Self-Cannibalization and Disruptive Innovation the Way to Sustainability?

Ask any emerging entrepreneur how they expect to compete against a well-established marketer and you usually get an answer akin to, “we will do it better”. Some answers may be stated more fluently or effervescently, but the translation generally comes around to something like, “We’re going to copy what the best competitor is doing well and then disrupt the status quo by doing what they’re yet unwilling or unable to do.” While it appears on the surface to be far too simple a plan, more times than not, a culture of internal complacency among industry leaders is opening the door to new entrants who will threaten the status quo.

Internal disruption or disruptive innovation originated in the 1990s. It is a process where a new product or service is introduced that becomes popular enough to displace an existing, dominate product or service. The past few decades have seen extreme advancements in technology at an unparalleled pace. Is anyone old enough to remember the eight-track tape? Consumers’ marvel at the convenience and portability of the product had hardly peaked until it was replaced by a cartridge that not only played a recording, but one that allowed the user to create a recording. Soon the Phelps cartridge became the standard, at least until it was pushed into extinction by the CD and ultimately the digitized memory chip. Product lifespans have clearly entered the realm of warp speed.

Today, even the most market-leading companies are facing a new reality that can be described as eat or be eaten. The concept of self-cannibalism is when a company introduces a new product or service that causes the demise of an existing and often very profitable product. It’s a concept that traditional product lifecycle followers find disturbing. The strategy is to replace a profitable product in the cash-cow stage with a new competing item. This premature act of product euthanasia has created more than a little consternation in the C-Suites across several industries who traditionally expect to milk an effort for every last drop of revenue before moving on to the new shiny thing coming out of the research and development department.

The hesitancy is well-deserved. Successfully navigating internal disruptive innovation requires close attention to the competitive marketplace, consumer readiness and timing. Miss on any one factor and survival may be threatened. But getting it right can lead a company to achieve continued iconic status in an industry segment.

Perhaps the most successful and notable practitioner of internal self-cannibalism is Apple. With impeccable timing, Apple has established an amazing track record of new product introductions that are revealed at the very peak of existing products’ popularity and profitability. An aura of secrecy surrounds each new intro, creating hyper-interest among the established loyal fan base who literally line up around the block to eagerly replace a not-yet-completely-used device. Amazingly, Apple’s willingness to kill-off its best products before the end of their best time has the brand in the lead and less vulnerable to competitors’ innovations. The company is demonstrating the ability to remain ahead of industry curves by improving the technology and delivering what consumers want; often before they even know they want it.

The success of internal innovation is creating debate over who and what current industry mega-stars will remain market leaders and who will succumb to extinction. Automakers have long resisted being lured away from the profitable gas combustion engine. Tepid forays into the production of electric vehicles by the big-three have opened the door to competing technologies and competitors who are now in the position to control the evolution of the industry. Question: Are the once iconic General Motors and Ford about to experience their own Kodak moment?