Category Archives: Business

Cannibalization, in very simple terms, is losing market share of one product by introduction of a new product by the same producer. Talk about Hulu, and one of the things that come to mind is cannibalization of network airtime by broadcasting television shows online. But then talk about YouTube, DailyMotion et al and one of the things that come to mind is losing airtime to competition on new media channel. Which one sounds better? Losing market share to your own product or losing share to competition?

This is a classic question which every company needs to address to some extent while releasing a new product that in some ways is competing with a current offering.Whether it’s Coke launching Diet Coke or The New York Times investing in nytimes.com, you have to look in the issue of cannibalization. When does cannibalization make sense?

Short answer, when there is competition. Long answer, almost all the time. When you see an opportunity to come up with a new product to tap a new channel or a new way to fulfill some customer needs, you should go for it. Because the possibility is that the same opportunity is being discovered by other players in the industry irrespective of whether they are currently competing with you or not. Like Amazon never competed with Barnes & Noble through brick-and-mortar stores, but as Internet started gaining traction and Barnes & Noble delayed putting together an Internet strategy due to various reasons, including fear of cannibalization, Amazon discovered the Internet as a channel to sell books and took off. Parallels can be drawn, to some extent, in case of Microsoft delaying to put Office Suite online while Google Apps and Zoho tapping that market (though Microsoft Office losing share is not an issue at this time).

The point here is, more often than not, cannibalization is required. It should be seen as a growth engine. When a better channel of delivery emerges, people will notice it just like you will. If you go and tap it, you have an advantage of expertise of delivering product on the traditional channel and brand name over anyone else. You can grow the sum total of your business by using all the channels available. But if you sit and watch the show, someone else will develop the expertise and gain the first mover advantage on the new channel.

Accept the fact that change is constant. One way to grow in this changing environment is by keeping up with the change and if the only way to do that is by cannibalizing your own product, go for that. It’s much better than losing it to the competition.

We live in an atomic world. We buy one song at a time from iTunes, reach to that one editorial piece out of a zillion using Google, buy one mobile application using app store and buy that one electronic accessory or a missing dinner plate in a dining set from Ebay. Apple, Google, Ebay and the likes have done a great job in dicing the world as per their customer’s demands. This piece-by-piece concept has taken over the concept of selling packaged solutions.

How one can survive and thrive in this atomic world? I believe in order to break the code of the atomic world, we need to focus on two things. First, focus on a niche. You cannot provide everything to everyone, but you can fulfill some atomic need of your niche customer set.

Second, everything you put out there should be perfect. You cannot bet on the bundle being attractive because people don’t care about the bundling any more. People choose to make there own collection by choosing one piece at a time. Similarly, when you are creating a website, you cannot just create just an attractive homepage and leave the inside pages mediocre because nine out of ten people reach to any page on your website using a search engine.

In a nutshell, for success in the atomic world, do less, but whatever you do, be the best!

So now that we know KISS is easier said than done, it’s time to take a stab at the more important question: how to strike the appropriate level of simplicity? I believe there are two ways to get it right to a large extent. First is by creating a facade. A lot of simplicity can be obtained by creating a mask to hide the details. A customer does not need to deal with the inner functioning of your system. There is a big difference between knowing the inner functioning exists and dealing with it. Driver of a BMW knows that a great deal of engineering excellence goes in developing that engine for the car, but need not have to deal with it. Knowing that makes them pay for it, and not dealing with that makes it easier for them to use it. Similarly, if you are dealing with marketers in search of sophistication, you need to make sure you explain the system and the wealth of engineering sophistication working behind it, and as a special treat to them, they have got a simple personalized interface to deal with it.

This brings us to the second point – personalization. Having personalization as a required feature in your product or service can make even a highly complex product get the traits of simplicity. You want to serve every customer out there and extend the reach of your product. But every customer does not want everything you have to offer. The customer should know that you have all the check-boxes checked when they are choosing between offerings, but they do have a specific set of requirements that need to be fulfilled at this time. Cater your product to meet those needs. Think of Amazon as an example. Amazon has more than 50 stores selling things varying from books and electronics to bags and shoes. But they personalize the website with focus and recommendations based on your needs and past shopping experience. In a very similar fashion, you got to personalize your offering to meet the needs of the customers and make it easier for them to discover the supplemental offerings if they ever have a need for it.

KISS – Keep It Simple, Stupid –  is easier said than done. It is ironical that to keep something simple is not that simple to do. Though KISS is a software development principle which states that design simplicity should be a key goal and unnecessary complexity should be avoided, it can pretty much be applied to any business in almost any field. 

What comes in way of KISS? I think it is the urge to do it all. We want to do everything and serve everyone. We don’t want to miss a single customer. We keep adding features till our product or service is complex enough to need a simple list of instructions to explain how to traverse through the maze, and often times in the process throw simplicity out of the door.

I believe checkbox features play an equally significant role in killing simplicity. These are the features you got to have to make sure you match your offering with your competitors’. This is something like a necessary evil to retain and attract customers, but the way we do it sometimes kills the simplicity of the offering. 

Another thing that prevents from keeping something simple is the notion of value that thing provides. A general understanding is that the amount of sophistication is directly proportional to the amount you can charge for it. We embrace sophistication. Marketers love the idea of sophistication. Well if something is this simple, why do you expect me to pay so much for it? So we take the easy route, make it look more complex than it’s got to be and attain the goal.

The list of reasons and excuses can go on and on. In a nutshell, KISS is easier said than done!