Should You Plan for Obsolescence?

I recently had trouble playing some new Blu-ray discs. A call to the Blu-ray player’s support center had me turning it on and off and trying different discs in it. They even asked me to try the discs in another player. Just how many of these do people have in their homes?

I ended up taking the discs to a store that would let me try them out in their players, which coincidentally also was the store where I bought my player. When the discs played without a hitch, the clerk explained that the technology on my Blu-ray player at home and the new discs’ technology had gotten out of sync—and the manufacturer was no longer upgrading the firmware for the device.

At first, I was floored by how a manufacturer could plan for obsolescence by not upgrading the firmware. But then I realized that some businesses do need to think that way. Changes to Blu-ray discs are happening so rapidly, planning for obsolescence for the players made sense for the manufacturer. This situation happens repeatedly in B2B, often in markets where the pace of change is extraordinarily fast.

Planned obsolescence works in those markets where products are constantly experiencing disruptive changes to the technology. Support for that kind of market can be costly, so companies build in obsolescence—just like the manufacturer of that Blu-ray player. Smart phones are another example, with people constantly replacing them.

In those markets, it’s okay if you can’t support four generations going back, as long as the customers that you’re working with are tolerant of that.

So how do you know if your business should plan for obsolescence? As we often say at Pragmatic Institute: Listen to your market.

Ask them about their motivations for engaging with vendors. If you hear phrases like “my friends made fun of how my phone was quaint” or “I like to be on the leading edge,” then you are discovering buyers that are motivated to move to the latest trend and obsolescence could make sense.

Any change causes disruption, however, and some customers want to put their attention into other things than implementing new solutions regularly. For example, hitting a switch makes the lights come on; you don’t deal with the time or the cost of changing out an electrical system all the time. If you’re selling into a market where you’re providing that kind of core function, it’s unlikely your market is going to want to constantly move to the latest and greatest. Planned obsolescence would be a bad business strategy, because you would be disrupting your customer’s business all the time. In this case, you don’t plan for obsolescence, you plan to invest in providing support that recognizes that buyers are making long-term investments.

My own story had a happy ending. The store let me return that Blu-ray player I bought three years ago for the original purchase price. I bought a newer player and had enough left over to go out to dinner with my wife. But you need to know which market you’re dealing with to ensure those happy endings, and that you don’t apply the wrong strategy to the wrong group.

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