Self-Cannibalism Matched with Innovation: A recipe for Sustainability?

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January 7, 2012; Source: Wall Street Journal | We are nerdy enough here at NPQ to read all sorts of management literature, and we thought that this Wall Street Journal article about innovation held some real lessons for philanthropy and nonprofits. Looking at corporations that have been built upon innovation, the author points out that many of them have significantly shorter life spans at forty years than the average American. The question posed is, “How are some large corporations able to innovate quickly enough in an age of rapid disruption?”

The answer according to this article is that some of the more fluidly innovative corporations survive through making small acquisitions of other innovative companies while retaining the passionate leaders that founded them, and through cannibalizing their own products—even those that are big revenue generators—in favor of newer approaches. The article contrasts Apple and IBM to Hewlett Packard in terms of their acquisition strategies and willingness to dump old products quickly in favor of new ones. Companies that hang on too tight to past and even current successes, are bureaucratic, play too much defense, and try to catch up too late by “lurching into huge acquisitions” fail, while companies like IBM, which made a concerted effort to pick up dozens of small businesses on spec to ensure that it could meet the market where it was going rather than where it was at, tend to be more successful. An interesting article well worth reading for nonprofits that need to consider their own innovation development capacities.—Ruth McCambridge