A Cautionary Quote - Illustrating Why You Should Have Product Development Trying to Destroy Your Core Business Today...

Was in a board meeting yesterday and the topic of Kodak came up - mainly centered around how hard it is to change a strategic course after your main product line has switched from cash cow to commodity albatross (my paraphrase/words, no one elses).

Then I saw the following quote over at TechCrunch:

"In 1997, when asked what he would do if he were in charge of Apple, Michael Dell famously said, “What would I do? I’d shut it down and give the money back to the shareholders.”

Think about that quote for a second.  Here's some more context from TechCrunch:

"At that time, Apple’s market cap had fallen to about $2.3 billion. By 1999, it had risen to $9 billion — still just a 10th the size of Dell. And a 60th the size of Microsoft. Today, Dell’s market cap stands at just under $22 billion. They’ve lost $100 billion in market value while Apple has gained about $610 billion."

That's on the heels of the fact that Apple’s market cap now stands at $623 billion. That’s a new all-time high for a publicly-traded stock in the U.S. The previous record was $618.9 billion, which Microsoft hit on December 30, 1999.

If there's ever been a quote that details the need for your company to have an eye towards developing products and services that don't currently exist, it's that one.  Sure, this is a form of quote gotcha related to Dell.  But it underscores the fact that the only constant is change related to any company's business.  The giants you know today won't all be giants in 10 years.  Your cash cow will probably just be a cow in the future, and you might be lucky to get 10 years of cash cow status.

It's hard to be a champion for new product development in most companies.  Even allocating a couple of FTEs toward new initiatives is hard.

Use Dell's quote in your budget meetings to illustrate the need to take that chance.  

Comments

[Steve Thomas]

cool little nugget. Now if someone could think that way about the ATS market. Taleo is killing me!

[Ryan Zupancic]

While they are no Apple, you should look at how Redhat transformed themseleves. They just hit over a billion in revenue this year. Selling an open source product (yes, you can still download their source for free). They used to sell cheap cds at the book store and offer phone suppport for Redhat Linux. They decided to ditch that product, create Redhat Enterprise Linux and start selling enterprise software. Some might claim they did not change their core product, but they moved from being essentially a call center operation for consumers, to an enterprise provider competing with IBM in less then ten years.
The message is essential the same, innovate or get left behind. Your core product does not mean anything if it is not the future.

[Bobembry]

Here's a generic long-term work approach based on Peter Drucker's writing: http://rlaexp.com/inv.html.
Forget all the product, industry, buzz words and work with concepts. Do an abandonment analysis every 3 years, have an opportunities budget, set real innovations us as separate businesses, best people work on opportunities. If it is known throughout the organization that the dead will be left to bury their dead then the living will be anxious to work on innovation.