Assignment: Strategy of Cannibalizing

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Assignment: Strategy of Cannibalizing

Assignment: Strategy of Cannibalizing

firms value agility and focus on quickly adjusting their organizational resources to gain competitive advantage. Successful concepts in hypercompetitive markets include dynamic capabilities, creative destruction, and blue ocean strategy.10

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Dynamic capabilities are means of orchestrating a firm’s resources in the face of turbulent environments. In particular, the dynamic capabilities framework focuses on the ways a firm can integrate, build, and reconfigure internal and external capabilities, or abilities, to address rapidly changing environments. These capabilities are built rather than bought. They are embedded in firm‐specific routines, processes, and asset positions. Thus, they are difficult for rivals to imitate. In sum, they help determine the speed and degree to which the firm can marshal and align its resources and competences to match the opportunities and requirements of the business environment.11

Since the 1990s, a competitive practice, called creative destruction, has emerged. First predicted over 60 years ago by the economist Joseph Schumpeter, it was made popular more recently by Harvard Professor Clay Christensen. Coincidentally (or maybe not), the accelerated competition has occurred concomitantly with sharp increases in the quality and quantity of information technology (IT) investment. The changes in competitive dynamics are particu- larly striking in sectors that spend the most on IT.12

One example of using dynamic models was implemented by leadership guru Jack Welch at General Electric (GE). Often nicknamed “Neutron Jack” because of the way businesses were radically changed, Welch’s approach to creative destruction was termed destroy your business (DYB). Welch recognized that GE could sustain its com- petitive advantage only for a limited time as competitors attempted to outmaneuver the company. He knew that if GE did not identify its weaknesses, its competitors would relish doing so. DYB is an approach that places GE employees in the shoes of their competitors.13 Through the DYB lenses, GE employees develop strategies to destroy the company’s competitive advantage. Then, in light of their revelations, they apply the grow your business (GYB) strategy to find fresh ways to reach new customers and better serve existing ones. This allows GE to protect its business from its competitors and sustain its position in the marketplace over the long run.

A similar strategy of cannibalizing its own products was used by Apple. Steve Jobs, Apple’s founder and former CEO, felt strongly that if a company was not willing to cannibalize its own products, someone else would come along and do it for them. That was evident in the way Apple introduced the iPhone while iPod sales were brisk and the iPad while its Macintosh sales were strong.14 Apple continues to exhibit this strategy with subsequent releases of new models of all of its products.

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