This is a photocopier company in 1973 and what you’ll see if you look along the horizontal axis, it says high CPM which means high Copiers per month. On the left it says low Copiers per month, big companies, small companies. This company had something like a 70% market share, that’s the big circle in the middle and massive margins. And then you’ll see the little cross in the bottom left hand corner which was the Japanese entering the market with a small photocopier. In fact, they entered with small cars, didn’t know they entered with small motorbikes, they entered with small everything and they did it very cleverly.
And the people who work for the big circle in the middle, they looked at it and they said “Have you seen that rubbish there? Ours is made of steel, theirs is made of plastic, etc., etc.” And they ignored it and what happened was there was a demand for this a low priced photocopiers and eventually they produced lots of different photocopiers that they positioned all over that particular map. And by the time it was too late, people were saying in the middle, we ought to enter these markets and the people who ran the company said, “You’re not going to cannibalize our nice, big, high margin product.” Something I’ve personally have heard around the world over many, many years, do not cannibalized my nice, big, high margin product.
The consequences were that three years later, this company was down to 10% and losing money and never ever recover the situation. And you could tell the story using a simple chart like this from many, many cases, that I've come across over the years.
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