Killing the Cash Cow

You have often heard the term Cash Cow. A good definition is in wikipedia, where Cash Cow is defined as:

"A cash cow product has high market share in a slow-growing market."

Clayton Christensen, in his book Innovator's Dilemma, wrote that in order for companies to remain competitive, they must take their Cash Cow products and kill them off.

Not everyone agrees with this philosophy. Here is an interesting article that takes exception to the idea. Kill the cash cow before your competitors do. Really?

Laura Ries, in her weekly Ries Report put forth an argument for killing your cash cow.



The key to following the philosophy of killing the cash cow is the part where it says:

"Kill the cash cow BEFORE YOUR COMPETITORS DO"

The dangers of a cash cow

A cash cow becomes a dangerous product for a company when more and more of the companies resources are put into keeping the cow alive rather than putting more and more resources into finding a new cow.

Money is good, and cash is king, and every company looks at what products are bringing in the money that pays the bills and funds the many projects for the future.

But overtime, a company becomes beholden to the cow, when it must be protected at all costs, and a company removes themselves from a future market because they are so tied to the current market that they can't break away.

Interestingly, Christensen gives specific advice on how to go about killing off a cash cow from within your own company. It isn't easy.

Guy Kawasaki writes a great article about it here as well:

The Art of Intrapreneurship

My next blog I will discuss how Novell almost didn't survive the death of their cash cow.