Are you willing to cannibalize your best product?

This one is tough.  I watched helplessly years ago as a young company with new tools and a newer user interface took the worldwide leadership position from our company in just a few years.  Ouch!  As more recently I sat on a board where the CEO refused to build what customers were asking for. His reason? “It’ll kill our flagship product.”

He was right. It would have.

But here’s what he didn’t see: Someone else was already building it – just like in my case. And when that other company launched six months later, they didn’t just kill his flagship product. They reduced the value of “our” company by far more than it would have cost to scrap and rebuild. Far more.

Here’s what all these many years of watching companies succeed and fail taught me: The companies that survive aren’t the ones with the best products. They’re the ones willing to kill their best products before someone else does.

[Email readers continue here…] The CEO’s job isn’t to protect what’s working today. It’s to build what will work tomorrow, even if it destroys what’s working today.

I’ve watched this decision break dozens of companies. They have a product that’s printing money. Customers love it. Revenue is predictable. Margins are strong. Then someone on the team proposes something new—usually younger, usually from engineering—that would make the cash cow obsolete.

The instinct is to kill the proposal. Protect the revenue. Don’t disrupt what’s working.

That instinct kills companies.

I backed a SaaS company whose flagship product generated 80% of revenue. Healthy margins. Then their CTO proposed rebuilding it from scratch with technology that would cut pricing by 40% and eliminate half their feature set, getting rid of unused and old code that was costing the company lots in maintenance and customer service.

The management team revolted. “We’ll destroy our own business.”

The CEO asked me what to do. I told him: “Your competitors are in a room right now planning to do exactly this. The only question is whether you do it first or they do.”

He greenlit the project. Eighteen months later, they launched. Revenue dropped 25% in the first quarter as customers switched to the cheaper product.

But here’s what happened next: They captured their competitor’s customers. They expanded into markets that couldn’t afford the old product. And two years later, revenue was 3x what the old product had ever generated.

The competitors who were building the same thing? They launched six months too late. The market had already moved.

Here’s the test every CEO should ask: If you were starting your company today, knowing what you know now, would you build what you currently sell?

If the answer is no, you’re already dead. You just don’t know it yet.

The hardest decision in business isn’t whether to disrupt yourself. It’s accepting that disruption is happening whether you participate or not. The only question is whether you control it or it controls you.

Your best product isn’t what’s making you money today. It’s what will make you money when someone builds something better than what you have today.

Are you willing to cannibalize it before someone else does?

Because if you’re not, they are.