One of the hallmarks of Market-Based Management is creative destruction, which is when old processes are destroyed and replace by better, newer ones. It is not difficult to think of examples: ipods replaced CDs, which replaced cassettes, which replaced eight tracks, which replaced vinyl, which replaced wax cylinders.
However, one of the concerns about creative destruction is what to do when one’s business is sitting pretty? As the saying goes, “if it ain’t broke don’t fix it,” and what if pursuing creative destruction might result in a temporary (or even longer) dip in profits? Indeed, there are all sorts of crank conspiracy theories about mysterious firms and organizations unseen paying to keep superior products off the market, but logic would dictate that there is likely more money in bringing a superior product to market than paying money to hold it back.
I recently came across a great example of this while shaving. I finally purchased one of the powered safety razors and have been very happy. Not only do I enjoy a great shave, but I have noticed that the blades last a lot longer. Perhaps the sawing dulls the blades less or ensures that the whole surface wears evenly, but, whatever the reason, I am getting a lot more bang for my razorblade buck. So why would the razor manufacturers do such a thing, when it means they will sell me less razor blades this year? While I am sure they have their reasons, I would venture that they believed that enough new customers will take to the razor to more than offset the fewer blades per capita. At the same time, I wonder if some in the firm fought the introduction of the new razor, but someone must have realized that although the firm already sold plenty of razor blades, it would have to embrace the new product or be destroyed when someone else did.
The lesson is that the firm must drive creative destruction always—especially when it looks as if it doesn’t have to—and even when doing so will cause it to take a hit. No firm is untouchable, and the hard-won lesson of modern business is clear: creatively destroy or be creatively destroyed.
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