How to handle disruption

Mox Soini
Disruption by competitor can be very dangerous to a business. It can also be equally dangerous if a business itself ends up causing disruption that robs the company all of its profits.But in capable hands, disrupting your own business can mean strong long-term profit, growth and even result in a lead position over the competitors that they find hard to catch up.One of such capable businesses is Apple. That company is famous for not being afraid of cannibalizing its product with another. If done in carefully controlled manner, there’s no need to loose sleep for losing profits due to decresing sales of older product.

Here are a couple of examples.

Nokia — Symbian etc vs. Windows Phone

Around beginning of 2011, Nokia decided to disrupt the phone market and it’s own product portfolio with a new platform; the Windows Phone. It became evident very quickly that as far as Nokia was concerned, any non-windows product had no future. For example, the internal communications played on the weakness of the old platfroms (e.g the burning platform memo), then consumers were told that Nokia would be discontinuing Symbian at the end of 2016.When the current and old products are given such a harsh treatment, it’s very obvious that the sales of those products are going to decline very rapidly. Nokia had just one little problem. They had nothing to replace the lost sales with. Windows Phone was not in stores for people to buy, and when it did (gradually from Nov 2011), it was clearly a “version 1.0” of a very young platform. So the total volume went down as Windows phone could not in any way cover up the lost sales in the older platforms. And every month and every quarter that Nokia lost market share, the enthusiasm over the new platform waned. Nokia started to lose credibility.

Apple — iPod, iPod Touch, iPhone

When it was launched in 2007, the iPhone was marketed as the best iPod ever made. Essentially, as far as iPod product family was concerned, it was positioned as the “top of the line” model, and the iPod being just one of the many features in the device. It was clear, that this device would cause some people to not buy an iPod anymore, but it didn’t make the other iPod products obsolete overnight. Quite the contrary, iPhone offered a new solution to the need of listening music, while keeping the other solutions still valid (e.g iPod nano/shuffle being particularly suitable for sports).Half a year later, iPod Touch was introduced as a bridge product, featuring many things iPhone had, while still not being a phone, and clearly as device where music and other forms of media worked great. Again, a top of the line experience, with price that matched its positioning.Nowadays, the iPods still continue to be valid in some specific use cases, even if increasingly people have moved on to iPod touches and iPhones, as those are more versatile and capable devices. Apple continues to sell both the old and the new, and… well… The chart speaks for itself.

Mox Soini

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