Why removing value is crazy!
It sounds like a fairy tale, but companies often spend hundreds of engineering hours every year deliberately trying to remove value from products. All because of a dubious management concept called cannibalism.
Cannibalization is believed to occur when a new product intrudes on the market for an existing product. The most common example of companies getting this wrong is when they want to grow their business into a low-cost market segment. They already have a successful product in a higher-priced market segment and want to develop a low-cost variant.
The companies are afraid that if they launch a low-cost variant, it will eat away business from higher-priced products. To avoid this, it is believed that functionality and performance must be removed from the low-cost variant.
Due to competition, time will reduce the customer value of all products.
You don't need to spend engineering hours reducing the value of a product. Time will do it for free!
As a company, all resources must instead be focused on increasing your products' value to maintain its position in the higher-priced market segment. This itself is a challenge worthy of all of your brainpower and resources. Steve Jobs formulated this concept in the following way:
" If you don't cannibalize yourself, someone else will "
So instead of spending time and resources reducing the value of your products — focus on increasing it.
If you are lucky, it might even be possible to launch two products — the new one in the high-priced segment and the old one in the low-cost segment.
Removing value out of a product is always wrong. You risk being punished by losing your customer's trust and business.
Per and Ulf
Join us in our quest to turn customer value into a concrete and practical tool to drive your success!
#thecruxofcustomervalue #projectmanagement #r&d #innovation