Hi-Tech companies need to innovate at all times. Technology is changing constantly, and if you don’t innovate, you stay behind. We all know this is true.
One of the big dilemmas for hi-tech companies who already have a product, is whether they should continuously improve the current product , or innovate with a totally new product. Some call it evolution vs. revolution, while some use the terms “creative destruction” or “cannibalization”. But it’s all the same. In this paper, I will use the terms evolution and revolution.
Product managers should weigh the pros and cons of the two, so different, approaches.
The “Revolution” option:
It sounds great for the developing company. They can develop from scratch, they are not dependent of the current product and therefore don’t have to carry along problems this product might have. For the developers – revolution is heaven: rather than adding to an existing product, they get to develop a brand new product, with whatever tools are available today, as if they work in a startup…
This approach fits with the notion of “creative destruction” – a leading concept in innovation theories. Creative destruction means that one gets rid of the old product in order to replace it with a newer one. It stems from the fact that if you don’t come up with a very up-to-date product, your competition will do so. Therefore, don’t fear to “kill” you own product in order to introduce a new one. One more point in favor of revolution is the product’s perception in the market. – customers might like the idea that the company they are buying from keeps creating products with the latest technology.
The “Evolution” option:
The company has a product, it’s selling well today, there are lots of customers using it around the world. For these customers evolution is a smooth way to get improvements on products that are already being used at their premises. Just imagine a customer who uses a complex software solution for the last 7 years. Now assume the software provider offers a brand new product, to replace the current one. From the customer’s viewpoint – this is extremely risky.
Moreover, it might cause them to examine the competition: If they have to migrate to a new product provided by their own supplier – why not open it for re-evaluaion of the other options in the market. This, in turn, means that revolution is risky for the provider as well, and not just for the customers. The more customers you have – the more likely you will select the evolution option.
So – which is best? There is no clear answer. Like most difficult questions – it depends…
I would suggest that:
If you have many customers, go with the evolution option, but make sure that the evolution brings your product to a top of the line competitor in its market, and not just makes it “stay alive”
If you have few customers, or if the migration from the old to the new product can be relatively easy – consider evolution
If you believe (and can show a solid business case for this) that a new product will be 10 times better than the current one, do it!!! (Now, how do you know what 10 times better is – that’s for a different article)