Osborne Effect - Timing Your Product Announcement!

Hey there,

Welcome to the Week 14 of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!

As always, we will be sharing a new set of BLTs this week

• 💼 B - a Business concept / theory / story

• 💝 L - a lifestyle advice

• 🤖 T - a Tech explainer

But starting this week, we are splitting up BLTs across three separate posts. The goal is to provide the information you need in a byte-sized format while focusing on a specific concept per post.

Here is the schedule:

Monday —>💼 B - a Business concept / theory / story

Wednesday —> 💝 L - a lifestyle advice

Friday —> 🤖 T - a Tech explainer

Today’s business concept is the Osborne Effect!

💼 B - Osborne Effect

Imagine you are an executive at a Fortune 500 company with a few highly profitable product lines. What makes you even happier is that your team has been actively working on a newer and far more potent version of your flagship product line. You are so excited that you want to tell the world about the next-generation product your team is cooking up. And why wouldn’t you? After all, announcing a new product can excite an existing customer base, attract new users, and, most importantly, get the media and pundits to start hyping your product through every channel. What can possibly go wrong? Well, you've got to ask Adam Osborne!

In 1983, Adam Osborne, the founder of the Osborne Computer Corporation (OCC), announced its newest computer model. The new model would have higher specifications and other features that made it far superior to the current model. To make things even more appealing, OCC announced that the newer model would be available to customers at a lower price point than the current model. All good, right? Well, what made the situation tricky was that the newer model wouldn’t be available for at least another year. But because of the premature announcement, the majority of the company’s customers thought it was better to wait for the new superior model and thus either didn’t place orders for the current model or canceled existing orders. Sales plummeted, and Osborne Computer Corporation went bankrupt just two years later. And that’s how we got the term - Osborne Effect.

The Osborne Effect is the phenomenon that occurs when a company prematurely announces a future product, causing the sales of their existing product to plummet faster than my motivation on a Monday morning. Today, this term sends shivers down the spines of seasoned business executives and marketing gurus alike.

Now, for those of you thinking, "Oh, I'd never be so foolish as to fall into such an obvious trap," let's take a trip down memory lane. Remember when Apple announced the iPhone 4S while the iPhone 4 was still selling like hotcakes? The sales of the iPhone 4 took a nosedive, creating what is now referred to as one of the most notable recent examples of the Osborne Effect.

Or let's take Blackberry, for instance. Remember them? Once upon a time, they were the apple of every corporate executive's eye (pun intended). But then they prematurely announced their new OS and phones while their existing ones were still on the market. You can guess what happened next. Their sales fell faster than a clumsy waiter carrying a tray full of pints of beer.

So, how do you avoid falling into this trap? Well, to start with, resist the urge to shout from the rooftops about your shiny new product before it's ready for market. Keep it under wraps until it's time to launch. Let's not forget that a little mystery never harms anyone.

Secondly, make sure you have a robust transition plan in place. You don't want your customers to feel abandoned by your old product once they've heard about the new one. The best way to do so is by promoting the newer product as DIFFERENT rather than BETTER than what is currently available. Additionally, ensure, your newer product is not cheaper than the current product line as long as you plan to sell the existing line.

Lastly, manage your inventory effectively. If you know that your new product is about to hit the market, don't flood your warehouses with unsold units of your existing product. Remember, no one wants to be stuck with last season's styles.

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Until next time!

Gaurav