Every Great Company Eventually Has to Kill Something That Works

The easiest thing to kill in a company is something that is failing. The numbers are bad. Customers don't want it. Eventually, everyone reaches the same conclusion.

The much harder decision is what to do when the numbers are good. When customers still want it. When it still makes money. When the team has spent years getting good at it. And when you have begun to suspect that continuing to succeed at it might be the very thing preventing the company from becoming what comes next.

We tend to think companies are destroyed by their failures. But some of the most consequential mistakes in business history came from something far more difficult to recognize: a company became too attached to what made it successful.

Three companies faced that exact moment. One protected its past. One sacrificed it. One made sacrificing it a habit.

In 1975, a Kodak engineer named Steven Sasson built one of the world's first digital cameras. It weighed roughly eight pounds, captured images at 0.01 megapixels, and took about 23 seconds to save a single black-and-white photograph to cassette tape.

It was primitive. But it worked. Kodak had seen the future remarkably early.

The popular version of the story is that an old company failed to recognize a new technology. That isn't quite right. Kodak recognized it. The problem was that Kodak had built an extraordinary business around something else: film. Cameras created demand, but film, chemicals, paper, and processing generated recurring revenue every time anyone took a photograph. The better digital photography became, the worse those economics became.

So why didn't they move?

Because once something works, an organization forms around it. People are hired to support it. Budgets are built around it. Executives build careers managing it. Customers expect it. Investors value the company because of it. What starts as a successful product becomes an ecosystem of incentives designed to keep that product successful. By 1975, a new idea at Kodak was not competing against other ideas. It was competing against everything the company already knew how to do.

That is the real lesson of Kodak, and it is psychological, not technological. The company was not blind. It had extraordinary engineers who understood photography better than almost anyone alive, and it helped invent the very technology that transformed its industry.

Seeing the future and sacrificing the present for it are completely different abilities.

Thirty years later, Netflix stood in Kodak's room.

The company most people now associate with streaming built its original business mailing DVDs in red envelopes. It worked. By the late 2000s, Netflix had millions of subscribers and an enormous logistics operation built around moving physical discs through the mail.

Then broadband improved, and the choice arrived: protect the business it had spent years perfecting, or help build the technology that would make that business irrelevant.

Netflix chose the second, and the transition was not elegant. The Qwikster separation in 2011 became one of the most infamous corporate missteps of the decade. Customers revolted. The stock collapsed. Every incentive that trapped Kodak was screaming at Netflix to retreat to what was already working.

It kept going anyway.

Today that decision seems inevitable. At the time, it looked reckless. That is the trap hiding inside every successful transformation.

Before transformations work, they look irresponsible. After they work, they look inevitable.

Apple turned the same choice into a reflex.

When the iPhone launched in 2007, Apple already owned one of the most successful consumer electronics products in the world: the iPod. The iPhone did not just create a new category. It destroyed the need for the old one, then absorbed cameras, GPS units, calculators, and voice recorders for good measure. Apple was willing to participate in the destruction of markets it was already winning.

The logic is brutally simple. If a technology is going to make your product obsolete, refusing to build it does not prevent the future from arriving. It only changes who profits from it.

Someone is going to cannibalize your business. The only question is whether you go first.

In 1985, Intel was still defined by the memory chips the company had been founded on. Andy Grove turned to Gordon Moore and asked what would happen if the board threw them out and brought in a new CEO. Moore didn't hesitate: the new guy would get Intel out of memories.

So Grove suggested they "walk out the door, come back in, and do it ourselves."

They did. Intel abandoned the business that had built it and bet the company on microprocessors.

I run that test on our own products now. Not "is this working?" The numbers already answer that, and the numbers only describe the present.

The question is: if I had no history here, no sunk costs, no pride in what we built, would I start this today?

A new CEO carries none of the gravity from Act I. Sometimes the most useful thing you can do is borrow their eyes.

I want to be careful not to over claim. Most new technologies fail, most predictions are wrong, and destroying a functioning business based on a theory is not courage. Sometimes it is stupidity. The skill is not obsession with disruption. It is remaining willing to disrupt yourself when the evidence gets strong enough: build the new thing beside the old one, let it compete for customers, accept some cannibalization, and give the future enough oxygen to prove itself before the present suffocates it.

And the principle does not stop at products. Companies outgrow processes, structures, and strategies that once made them successful. Founders outgrow versions of themselves. Something can be responsible for getting you from zero to one and completely incapable of getting you from one to ten. That doesn't mean it was wrong. It means it worked, and the environment changed.

Every successful company is trying to build exactly the thing that may eventually trap it: a product people love, a model that prints money, a system that works. Build those things. Protect them. Improve them. Just never become so dependent on yesterday's success that you lose the ability to recognize tomorrow's replacement.

Because eventually, every great company has to kill something that works. Better that you kill it than someone else does.

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See you Mondays, Maximilian