Make Your Own Products Obsolete

The fear of 'cannibalisation' has prevented many a promising idea. And yet it seems clear that if you do not cannibalise your own product line with better, cheaper, faster, more effective or more appealing products then your competitors surely will.

American radio manufacturers dominated the radio market in the early 1950s. They knew about transistor technology but did not develop it as they did not want to threaten their high quality and high value valve based radios. They disdained transistors as cheap and tinny with low power and low quality. The Japanese radio makers took advantage of this oversight to build better and better transistor radios and they eventually took the full market and wiped out the incumbent suppliers.

Encyclopedia Britannica had a very successful business model built on expensive sets of hardback encyclopedias. The company knew that this information could be produced in electronic form on CD or other media but refused to bring out a cheaper product line which would threaten its main products. Unfortunately Microsoft Encarta and subsequently Wikipedia replaced it completely.

Nowadays things are different. A cross-disciplinary team of scientists at General Electric's global research facility in Niskayuna, New York was set the challenge of developing a new kind of electric lamp using an emerging technology called organic light-emitting diodes (OLEDs), most easily thought of as light-up plastic. Why? Call it creative destruction. That is what might be needed to save the iconic but struggling GE Lighting business. In a commodity business it was losing share to low-cost rivals. CEO Jeffrey Immelt responded by pushing to foster innovations that let GE widen its margins with hard-to-copy products rather than competing on incremental improvements and price. (Fast Company August 2004)

If GE can cannibalise its light bulb business then you can do the same with your products. Try new, lower cost and more appealing versions of your products or services. Experiment with new technologies and routes to market. Above all, instil an attitude that allows you to compete with, threaten and even obsolete your leading lines - before somebody else does.

Paul Sloane writes and speaks on innovation and lateral thinking. He is the author of The Innovative Leader.