Home > Alex, Authors, Strategy > The Land of Hairless Carpets

The Land of Hairless Carpets

During my Bachelor studies my economics professor shared an interesting story, the lessons of which I’m just beginning to grasp. Back in early 1900’s, when vacuum cleaners were a recent invention, many vacuum cleaner producers were competing on the suction power of their devices. In the beginning, competition on the power dimension made perfect sense, after all, the higher suction power provided for better cleaning. Over time and as technology progressed vacuum cleaners grew more powerful and eventually became capable of tearing hairs out of the carpets they cleaned. Unfortunately, consumers didn’t know at what point vacuum cleaners become carpet barbers, thus Consumer Protection Agency had to step in and restrict how vacuum cleaners ought to be marketed.

What is the moral of the story? Initially important, but subsequently outdated competitive dimension may actually siphon your resources, which in turn could have been used for true research and innovation. The mistake of competing on irrelevant factor is often made when company loses the sight of its purpose. If in the example above the purpose of the company was to provide an easy and efficient cleaning tool, then vacuum’s power is an important factor, but to a point. As history has it, eventually dust bags and cyclone vacuums were created, and overall weight of vacuum cleaners was reduced as well. Product innovation cycles through competitive factors, companies that fail to recognise that end up in the land of hairless carpets.

These principles are not limited to vacuum cleaners! Similar cycles can be observed in the mobile phone industry. Every time a new smartphone comes out its hardware is carefully examined. Over the years, cpu power and RAM capacity were legitimate competitive dimensions. If your engineers were able to produce faster, lighter phones, without increasing power consumption, then the resulting improvements contributed directly to customer experience. The end product was more fluid and could boast better graphics experience. But these competitive dimensions have diminishing returns. What if human eye cannot tell the difference between a super definition display and ultra definition one? What if all smartphones on the market are capable of super smooth performance? After all, once response times become minuscule,  even orders of magnitude improvements become had to notice. It is quite possible that current smartphone race is reaching its hardware limits and companies that are not careful may miss the next competitive dimension.

~Alexey

Categories: Alex, Authors, Strategy
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