Why Product Reinvention Is Risky

Arman Eshraghi
Dec 4, 2020 · 4 min read

There’s a saying that goes, “God was able to create the world in six days because there were no legacy systems.” Anyone who’s ever been in the IT world or software development knows that keeping up with progress when you have a legacy system is like dragging a ball and chain.

In my post, Why Tableau’s Days Were Numbered, I touch on the inevitable fork in the road companies like Tableau reach when faced with technology disruptions. This post will dive deeper into why that happens when you have a mature product as Tableau does.

Over time, a software company’s product naturally becomes a legacy product when technology trends leapfrog the product’s tech. As companies continue to upgrade their products, they must make sure it’s backward compatible with their client’s older technologies, as well as compatible with new technologies for new clients. It’s a lot of work and sometimes it’s impossible to do within one product.

Qlik, as an example, decided that it was too much effort to make their existing product backward compatible as they moved forward, so they abandoned development and shifted resources to build a completely new product. However, this strategy consumes huge amounts of time, money, and resources to maintain two products instead of one, and I’m sure Tableau was watching to see if that strategy would make sense for them.

When a company creates a second product, it’s invariably going to be different. And, when you start over with that new product, you are now on the same competitive level as other comparable products in that market. When it comes time for a customer to move off the legacy product, the door is open for them to make a new buying decision and you risk losing that customer.

An example outside of our analytics industry is the Ford Mustang. Ford has seen how successful Tesla is with their electric cars and has decided that, because the Mustang has been an iconic model for decades, that they would follow suit and create an electric version under the Mustang brand. So, Ford had two options:

1) remake the Mustang with the same body style that made it famous with an electric engine or

2) create a new, modern version much similar to a Tesla to remain competitive.

Ultimately, they selected the second option as they determined it to be the best route for the future of Ford. However, the audience that would buy the traditional Mustang is not the same audience that would buy the upgraded, “Tesla-like” version. My personal view is they should have started with a brand new model to compete with Tesla, instead of the Mustang. Perhaps they should have considered going a step further to create a brand new company, autonomously run, separate from Ford.

Tesla, and its processes, are very different from the legacy Ford company. You can order a Tesla online, avoiding the car dealership middleman. That is something Ford cannot do with their existing dealer relationships. I doubt Mustang’s electric car will be much of a competitive challenger for Tesla. GM and its Hummer brand may face a similar fate, but time will tell.

Circling back to the analytics and Tableau. Let’s say Tableau wanted to start a Tableau “serverless” or Tableau “cloud”, it would have been difficult for them. It would be similar to the electric Ford Mustang. Customers have a certain understanding of Tableau’s legacy and they couldn’t afford to lose that revenue. Losing focus by supporting two sets of different products would have meant that neither product would have been the best it could be. I would even argue it would have made both products unsuccessful taking market share away from Tableau.

Clayton Christensen, the author of The Innovator’s Dilemma, wrote about how so often, smaller companies can outrun and outcompete larger companies because they don’t have the drag of legacy systems. Small companies, like my company, Qrvey, focus on achieving success just like Tableau. But, as major shifts in technology happen, we will inevitably reach that point where we can’t keep up and have to make the decision to sell out, sunset, or try to make the shift to whatever the new technology is, but for now, we use our ability to remain nimble to our advantage to address the major shifts in the analytics market.

I reached that point with my previous company, LogiAnalytics. Technology had shifted enough that I had to make a decision whether to rebuild our product, much like Ford is trying to do, or start a brand new company that did not have legacy systems, processes, and culture. The LogiAnalytics ship had become too big and too difficult to turn around so I chose to start Qrvey. I suspect the founders of Tableau are doing the same thing right now, starting a new company, and we’ll see them again.

It’s all part of the lifecycle of a business. From startup to mature company to either death or rebirth. As major technology shifts happen, you have the choice to reinvent, sell, or sunset your business. There are signals in the market that represent these fundamental changes. Check out my earlier post where I discussed these signals: Why Tableau’s Days Were Numbered.

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