Competing against yourself
“The only competition we have is ourselves.” Those words came from an entrepreneur many years ago.
He had every right to be confident. His product was an all-purpose liquid cleaner which removed anything from ink stains on clothes to metal rust.
As it turned out, the business failed for many reasons, not least of which was the door-to-door selling model used to market his miracle cleaner. Too many steps. Too little revenue.
Competition seems to be imprinted in our genes and psyche.
Not always appealing, yet it’s how humans operate.
Competition is endemic, especially in commerce, academia and in the sports arena.
Even communist societies which supposedly operate on principles of egalitarianism, experience intense competition – probably for status, influence or resources. As George Orwell famously wrote in his novel Animal Farm, "All animals are equal, but some animals are more equal than others."
So can we really compete against ourselves?
Surely the human organism is best suited to use resources in competition with others?
Competing against ourselves in business is termed cannibalisation – a phrase used when a product competes with a similar product in the same enterprise. It is sometimes the only way to remain sustainable.
The reason companies cannibalise their own products or services vary. It is a difficult decision to make, especially when one is in a comfort zone of predictability and brand loyalty.
The iconic Coca-Cola Company had a single product strategy for 60 years. It was only when Pepsi, their main competitor, captured market share in the 1950s with flavoured soda drinks that they grudgingly introduced the Fanta soft drink brand.
It turned out to be a great decision, even if it was taken under threat. Instead of Coke sales dropping, overall revenue increased by offering more choice to consumers.
Today, the Coca-Cola Company is well versed in cannibalising their products. From diet soft drinks to multi-flavoured brand variations and even bottled water which at 2 000 times the cost of tap water used to be considered wasteful and extravagant.
One of the best examples of a missed opportunity to cannibalise was Kodak, a trusted international brand and the world’s largest supplier of photographic film for over a century.
Kodak’s management misunderstood the transition to the digital camera era and concentrated on selling consumables such as chemicals and photographic paper.
Had they used their brand loyalty and established marketing channels to cannibalise their business, perhaps they would have become the world’s largest supplier of great cameras on mobile phones.
But In 2012, they filed for bankruptcy.
In South Africa, one of the least known cannibalisation strategies is that of Naspers’ MultiChoice, an African media giant serving some 10 million subscribers with satellitebased TV.
At the pinnacle of market prominence in 2015, MultiChoice launched ShowMax, a video on demand service available at a fraction of the satellite TV cost. A Smartphone and data connection is all you need to stream video content 24/7.
It is only a matter of time before web-based entertainment overtakes satellite TV.
MultiChoice knows this and their strategy is to be the first on the block offering a local content product.
It’s a huge gamble for MultiChoice because web-based media streaming is a comparatively low barrier to entry business compared to encoded satellite TV.
Some enterprises have no need to cannibalise and can just adapt to changing market conditions - but it takes courage and humility to engage with the question.
Grahamstown is littered with questions around past business adaptation competencies.
Where trains once transported people and goods, a derelict railway station remains.
Value added glass and ceramic factories and specialised education colleges providing livelihoods to many, have closed.
Could they have adapted new technologies and products?
Grahamstonians should be mindful. World-class schooling and higher education are the community’s largest economic contributor.
In a decade, current school leavers and university graduates may be starting their own families and considering education and geographical options. These are the Millennials who have embraced the information and electronic age.
Will the traditional education sector be competing with web-based A-Levels, Montessori and Waldorf tuition options?
Will undergraduates be receiving online tuition from top academics or Skyping from home offices in tax-friendly jurisdictions?
Will students Uber to localised sport and communal facilities after completing assignments?
Or despite their minimal cost overheads, perhaps it is the online internet-based businesses which should be mindful.
In the future, humans may seek rural lifestyles, or prefer Grahamstown’s traditional education models and greater community interaction.
Either way, consider the cannibalisation possibilities: if you are not cannibalising your business, someone else inevitably will. • Ron Weissenberg is a Grahamstown resident who started his first business at age 7. He is a Certified Director (SA) and mentors people and their enterprises. www.weissenberg.co.za
Grahamstown is littered with questions around past business adaptation competencies. Where trains once transported people and goods, a derelict railway station remains.