How to Avoid Going from Cash Cow to Car Crash

A cautionary tech industry tale.

FROM CASH COW TO CAR CRASH! A software industry story.

I am sure we have all worked within, or known of businesses, where the company is a market leader via its core, normally first, product and barriers to entry for that product are particularly high.

As a result revenue, and even profit may be OK, cuts are made if it’s not!!

But more often figures remain strong, that’s the nature of a cash cow, but the apparent success hides so many sins, for years, or decades, until they can’t be hidden anymore and it’s too late.

The fact is, despite the significant competitive advantage from industry knowledge and a large customer base to analyse and understand (alongside the wider market), none of the new products are successful!

On the strength of the cash cow, the temptation is to skip any further business science, jump on the test and learn bandwagon because it seems easier than strategy, and assume success will come, because…. ????‍♂️…

To be honest, there isn’t any rationale for this, you really don’t need to build something to work out whether you should have!

‘No Market Need’ is still the No.1 reason for failure and sadly, with the right tools/approach, this is one aspect which is normally foreseeable.

So here’s a few guiding principles on how to avoid this, especially for scale-up stage, or to either help avoid or recover the situation.

???? Success should be reinvested in building repeatable, profitable success, such as operational excellence – from strategy to cash ???? ???? ???? ????- you have earned significant advantage and market position, don’t waste the opportunity you have earned by failing to evolve the business. Fix the roof why the sun is shining.

☠️ Test and learn looks attractive where the time, money, and consequences of failure are low, but that’s not the case in most B2B software scenarios, your early market is not a replacement for the formation of your optimum strategy, it will often take you away from it, and also they’re not your outsourced team for testing your ideas.

Their time (their most valuable asset) and your reputation are at stake. This approach doesn’t utilise the advantage you have earned! ???? Use strategy to test theories, not development spend.

???? Deploy alternative metrics, not just financial or even OKRs, there are obviously many but how about the psychological safety of your team, the return on investment from product development spend, or your effectiveness in delivering change initiatives, i.e. when we say we will do X by Y, how often does it happen?

Ultimately your company’s ability to say what it’s going to do and do what it says, is an incredible differentiator for customer and team experience which will provide outstanding levels of loyalty.

In B2B unnecessary experiments are damaging to reputation, profitability, and the morale of everybody involved.

Moreover becoming a great company is one of the most significant social impacts a business can have.