If you're hungry for meaty success, try cannibalism

Remember the old cartoon of a tiny fish swimming along about to be devoured by a slightly larger fish about to be devoured by a very large fish about to be devoured by a giant fish?

In a similar manner, many large companies that manufacture high- technology products perceive themselves to be devouring their smaller competitors' market share. This strategy may have worked in the past, but it doesn't anymore.

Today's most productive business strategy could be represented by a cartoon of the tiny fish about to devour all the others, provided that you perceive the tiny fish to represent a new product and the larger fish to represent successful existing products.

Companies with a successful product become complacent with their cash cow, wanting to milk it for all it's worth. These same businesses then wonder what went wrong when some upstart company introduces something new, a product that consumers really want. There's an old saying that "if you don't give your customers what they want, someone else will."

If your company has been experiencing relatively flat growth even though you have a successful product and sales are still on the rise, cannibalism may be your answer.

Hewlett-Packard has long been a successful practitioner of the "eat your own young" strategy. A Wall Street Journal article quoted an H-P executive defining its philosophy as follows: "When you are on top with a great product, you have to have the courage to stop investing in that great product and use the capital instead to generate a new product that will kill it."

If you don't do it, someone else will.

We are no longer in a marketplace that will tolerate high prices, so technology companies must generate increasing profits from volume sales and manufacturing efficiency rather than from high profit margins.

Giants like Motorola, Intel and H-P are proficient cannibals. The strategy works like this: first you introduce a product that achieves smashing success, like the 486 processor or the laser printer. While its sales are still growing, you cut prices. Next, you roll out a new product, and slash prices on the old product even more.

To succeed with this strategy, companies must find new markets and reinvent marketing strategies. Above all, companies must constantly listen to the needs of their customers. Determine not just what they want today, but also the pattern of their changing needs. In this manner you can ascertain what they will want tomorrow and give it to them in spades.

This strategy also demands that you maintain a lean, mean, corporate machine, so you can react rapidly to the marketplace. Put your customers first, and they will continue to put you first. When your customers know you will continually come up with better and better products, they will reward you with better and better sales.

And the little fish will continue to grow rapidly after devouring the bigger ones.

Scott A. Clark welcomes your comments and contributions. You may send him your ideas for column topics by e-mail at mail

2000Copyright
Provided by ProQuest Information and Learning Company. All rights Reserved.