How (and why) to disrupt your own business before your competitors or upstarts have a chance to.
EAT OR BE EATEN? If your company wants to survive and disrupt, it's going to have to not be afraid to innovate faster than might be good for its existing products and services. Because if you don't disrupt them yourself, someone else will.
Many years ago, I was lucky enough to work on a project with one of the original Apollo 13 mission-control engineers. One day, while he was patiently answering questions from his wide-eyed colleagues about how NASA got the astronauts safely home via their Lunar Escape Module, he paused, looked down at a gadget in his hands and cracked a wry smile. "You know, this little device has more computing capacity—by a large order of magnitude—than we had to work with in the entire LEM."
No lie, that tiny anecdote still pops into my head about once a month. It reminds me how fast the world is changing. Which, oddly, brings me to the topic of cannibalism. No, I'm not speculating on what would have happened had the astronauts run out of Tang and space food packets, but rather I'm talking about product cycles and innovation. More specifically, how more businesses should be the ones to kill their own products through disruptive use of technology, rather than waiting for competitors to do the job and push them out of business.
As Clay Christensen captured so well in his classic book, The Innovator's Dilemma, it's almost unheard of for companies of any size to accomplish this. Once a product is launched, inertia sets in so hard and fast, that challenging the underlying technology, value proposition or even marketing of that product becomes counter-cultural. Native cannibals, those employees who see the potential to reinvent their businesses via new technologies, are ignored, marginalized and eventually rejected by the corporate organism's immune system perfectly designed to protect its status quo.
A very successful Silicon Valley angel investor is my favorite example of this immune system response. He worked for an industry leader in the Valley for a decade before leaving in frustration. He's since funded and sold two start-ups to his previous employer at a total price of more than $300 million. Think of how much less expensive it would have been for that company to retain him, fund his ideas internally and reap the benefits without having to compete for them in the acquisition market.
And the large and growing importance of technology, software design, physics, and statistics to all industries has introduced new potential disruptors, the foreign cannibals. These are the brilliant engineers, mathematicians, and scientists who are successfully reinventing entire industries from outside the status quo. It's not just that they have no sacred cows, it's that they are willing and able to disprove the very existence of cows. Example? I think PayPal and Square are the two most important financial innovations of the last decade. You know how many collective years of financial services experience the five co-founders behind these two companies have? Three. (Peter Thiel's years trading derivatives for Credit Suisse). Makes you wonder if American Express, Visa, and MasterCard spent the last decade playing video games and updating their Facebook pages.
Makes you wonder if American Express, Visa, and MasterCard spent the last decade playing video games and updating their Facebook pages.
So, how can you ensure that your business is a continuing source of innovation in your industry? That you remain cannibal and not cuisine? Co-opting the native cannibal can be accomplished by giving those wonderfully disruptive individuals money, space, and people to try out their ideas. But, most importantly, they need the unyielding support of a senior sponsor that will take the inevitable heat when the corporate missionaries start demanding their heads.
Leveraging the foreign cannibals is harder. You have to find them, get them interested in the problems your product is trying to solve, and then be able to identify and implement the quality ideas from among the many questionable ones they may throw out to you. Quirky, the crowd-sourced product design community, is a really intriguing example of this approach, in my opinion. I'd love to hear from others of other on- or off-line examples of collecting and leveraging foreign cannibals.
This is all top of mind for me because my company, Mindflash.com, is about to undertake its second, self-cannibalization experience. We're on a path to reinvent our technology and product experience in a dramatic way over the next year. I'm not sure whether Christensen would label our work as "sustaining technological changes" or "disruptive innovations," but we're aiming for the latter. And be sure that we've started the fire under the huge cast iron pot for inspiration.