Lessons Learned from Digitization Darwinism
As companies go digital, all industries will become survival-of-the-fittest environments. In the past, established organizations could be content with their sacred cash cows and rely on a single source of revenue. But now, digitization is making business leaders realize just how necessary it is to hedge bets and diversify revenue streams.
If you think your cash cows are immune to innovative market newcomers, just look at what happened in these two examples when established companies failed to innovate or cause business disruption:
- Uber—The classic example: Taxi companies most likely never thought they were in any danger of losing business. However, Uber stepped in and extended the transportation value chain by offering a convenient way to request and pay for a ride. By the time San Francisco taxi companies realized they were being disrupted, it was too late.
- Airlines—The wrong approach to extending the value chain: Gas prices are surprisingly manageable right now, but we all remember when they were astronomically high. To hedge against oil prices at the time, airlines stole value from customers by deciding to charge for baggage. By diminishing the customer portion of the value chain, airlines only increased competition in their existing industry. Causing business disruption isn’t about modifying your current business models—it’s all about venturing off into a new, uncharted models.
Cannibalizing your own business is about finding ways to extend the value chain before hungry competitors do it first. For example, New York City cab companies are finally taking the fight to Uber by digitizing their business—but if they had done it sooner, maybe Uberization never would have become a term.
Regardless of how many examples you see of digitization Darwinism across all industries, cannibalizing your own business is still a frightening venture. You need a few strategies for overcoming cannibalization fears to start talking about sacrificing a few cash cows for the sake of digitization.
3 Ways to Overcome the Fear of Cannibalizing Your Own Business
Fear works the same way in every aspect of our lives. There are plenty of ways to overcome those feelings, but here are three approaches to defeating your fear of business cannibalization:
- Admitting you have a problem: Some business leaders choose to ignore the need for digitization. Take a deep breath, step back and admit that it’s time to make a change to create B2B disruption. Acknowledging your business has a challenge makes success far more attainable.
- Slow exposure: No one is saying that you have to quickly abandon your cash cows. Like any business decision, digitization will take time. The sooner you start, the easier it will be to find empty market space. If you take the process one small step at a time, it’s far less daunting.
- Talk it out: The most frightening part of cannibalizing your own business might actually be standing up in front of your boardroom and explaining that a cash cows must be sacrificed. However, overcoming your fears comes down to really discussing the need for change. Someone needs to start the product digitization discussion— so why can’t it be you?
Eliminating your fears of cannibalizing your own business will help you start down the digitization path to innovation. But there’s still another hurdle—what do you do after deciding cannibalization is a good approach to B2B disruption? You might not have time to establish a new business model for your next big idea—but we can help!If you want help creating innovative new products, download our End-to-End Product Development Process White Paper.