“Cannibalise or die”

Source: Tijdschrift voor Marketing magazine, September 2013. Text: Kari-Anne Fygi.

Your clients have a deadly impact on your innovations, and it's your own fault”, is what professor Marion Debruyne tells her audience. She means that it is essential to innovate not only on the basis of your current clients, but on the basis of the market. Outside-in innovation. Debruyne has developed a model for this, with three main components: connect, convert and collaborate.

What does this outside-in approach involve?

“Successful companies remain in constant contact with the market in order to anticipate changes, identify new trends and satisfy the unfulfilled requirements of consumers (‘connect’). Based on these insights, they quickly come up with a useful service or product (‘convert’). They also join forces with other companies (‘collaborate’). You can't do everything yourself, so collaboration is good. Innovation is the only way to survive in the long term. Even if cannibalisation is lurking just around the corner.”

How new is your model?

“In themselves, the individual components of this model are not new. However, the model does show that we should not consider these three steps in isolation. The three steps are three competences which ambitious companies will have to use and which enhance each other. Companies which get their innovation ideas from the market perform better than companies which come up with innovations themselves on the basis of metrics such as growth, market share and profitability.”

You quite often tend to see 'connect' and 'convert' in companies. But this third competence, 'collaborate', is not yet particularly common.

“If we innovate on a client-oriented basis, we quickly come up against the limits of what we can do ourselves. How can we solve consumers' problems, also in the B2B sector? The solution often goes beyond just the product you are offering. Take Johnson & Johnson, for example: they were looking at children with ADHD. A simple solution is to produce pills to treat ADHD. That's the product-oriented approach. However, Johnson & Johnson looked at it from a wider perspective: how can we help to teach patients, our consumers, cope with their disorder? Not just by providing drugs, but also by giving them information about ADHD. The company came up with the idea of a game to help children cope with their limitations. This game teaches them various skills, for example by introducing a routine into their daily life. Johnson & Johnson is a pharmaceutical company with no prior experience of games, so the company worked with a game developer. A patient organisation and a behavioural centre provided the information input. Together, they came up with a solution which involved more than just knocking back pills.”

You say that, above all, companies must not be afraid of cannibalisation.

“Cannibalisation is argument number one for not going down the innovation route. People are afraid of losing what they have: how will the new product affect our old product? I encounter this tendency in companies every day, above all when it comes to cheaper solutions for clients. But you just have to cannibalise in order to come up with radical innovation. Just look at Apple, the brand never stops cannibalising. The tablet might endanger PC sales, the iPad mini might adversely affect sales of the normal iPad, the cheaper iPhone might pose a risk to the current iPhone. Well then, we'll just sell fewer PCs, thought Apple. After all, it is precisely this which allows you to generate more turnover because you are covering a larger part of the market. As the CEO of Netflix also says: “Companies don't generally go under because they are innovating too quickly, but because they are innovating too slowly.” This also illustrates the success of Netflix, which is constantly cannibalising. They used to rent out DVDs by post, but quickly switched to online streaming. If Netflix had not done so, a competitor certainly would have. Cannibalisation makes you a moving target.”

Dos

  • Cannibalise. You will only survive if you innovate.
  • Listen to the market and don't innovate based on what your company thinks. The market often knows better.
  • Work with companies in different sectors from your own.
Don’ts
  • Don't focus on your product but on what it does for the client.
  • Don't listen too much to the clients you already have; take a look over the fence and chart latent requirements.

Want to read more? In the spring of 2014 a new book by Marion Debruyne called ‘Customer Innovation’ will be published on the model for outside-in innovation.

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