Let me tell you a story about a successful company whose main product was the category leader in its industry. They made a lot of money and profit for their shareholders.
The product was so successful that despite strong competition it still maintained a 60% market share.
Then one day, its leadership realised it needed a more diversified portfolio of products.
Unfortunately the next few products could not get traction to get any real market share. They were commercial failures.
What went wrong?
Did they have the wrong engineering or product leadership? Many believed it was the sales force! They were not good enough to demonstrate the value proposition.
Management could not bring themselves to drop these products, so they became product zombies. Neither alive, nor dead.
Then one day, they realised:
The founders of this company had built a rocket-ship with their first product.
It was assumed that all products afterwards would be just as easy.
The new products were launched into mature markets. They did not get to sell to the “Innovators” and “Early Adopters”. They were selling to the “Late Majority” where higher competition caused expectations to be higher.
Only then did they realised they had applied the wrong strategy.
In summary
When you launch a new technology, it needs to grow through the different stages on the Product Life-cycle Curve (see below). You can’t skip the first two group (Innovators and Early Adopters) and make it to the Early Majority. You need the previous groups for the momentum.
At the same time, if you are entering a product into a mature technology curve, you don’t have the same opportunities to build momentum. Competition is all around you and it will be difficult to nurture the Innovators and Early Adopters. Entering a mature market is harder than it looks. In the immortal words of Peter Thiel, “Competition is for Losers”.
For further information on this principle, please read “Crossing the Chasm” by Geoffrey A. Moore.
