At our 3rd installment of the Intrapreneur Alliance Meetup, our guest speaker, Jeff Goldenberg, was asked about the importance of why companies must keep innovating. In his candid response, he responded that it seemed that many organizations were too afraid to actually do so. His answer rang really true to us…
Jeff said “Companies that are making money don’t innovate too much because they’re afraid that they might cannibalize their existing business. But the fact of the matter is, if they don’t cannibalize their own business, someone else is going to.”
We couldn’t agree more. Innovation is the art of finding new and better ways to get things done. Consumers are always on the look out for the latest innovations; things that make their life easier, or faster, or less expensive, and so on. Companies need to be thinking about all of these factors and anticipating what consumers will want or need next, because if they don’t, someone else will and take customers with them.
One of the best real-life, in our generation examples of this happening, is the demise of Blockbuster and the rise of Netflix. When Netflix first started as a business, it wasn’t the streaming giant we all know today, it was a service that allowed people to rent DVDs online and have them delivered right to their door. Blockbuster didn’t think that people were going to want to wait for DVDs to come by mail, so they continued to operate their stores as usual. They didn’t try to compete with Netflix at first because offering their DVD’s by mail would take away from the solid business they had going with their brick and mortar stores.
As time went on, the idea of ordering your movies online was gaining steam. Finally, Blockbuster decided that they should set up their own DVDs by mail service, which would cannibalize some of their store sales, but also hopefully win back some customers they had lost to Netflix. Meanwhile, while Blockbuster was scrambling to set up their new service, technology advanced. Specifically broadband internet got a whole lot better and cheaper. Blockbuster was only now thinking about how it could keep up with their new rival, and Netflix was thinking about how it could take advantage of new technologies. Netflix ended up using this new and better broadband and figured out how to take advantage of it to get movies directly to their customers via their computer. Netflix was cannibalizing their own business of providing movies by mail by offering the newer and better way of delivering movies and utilizing something that consumers were adopting more and more everyday; online streaming.
Blockbuster had a good business going and they didn’t see a reason to ‘mess up’ a model that they believe was working fine. Netflix, however, never wanted to settle and always saw opportunities to move forward. We can still see this today as they’ve now moved from just streaming other production companies’ movies and TV show content to creating their own, which has significantly changed the way people watch programs (and who doesn’t enjoy a good binge session?). Now Netflix is being enjoyed by millions of people around the world on a daily basis and Blockbuster just doesn’t exist.
This is why fostering an intrapreneurial spirit is so important. People are always thinking of new and better ways to do things. There’s a good chance that there is an individual or individuals in your company right now thinking of a ways the company, product or the service you offer could be using new technology to be better or how you can expand into a new market by slightly altering your offerings. Unless companies are willing to listen to these ideas and take innovation seriously by trying new things, there’s a good chance that a great idea is going to come from someone on the outside. And they will gladly cannibalize your business.
Now wouldn’t you rather cannibalize your own business before someone else does?
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As well, we’re always looking for more intrapreneurs to feature in the journal. If you know one, please nominate them here.