Why do companies invest in non-scalable products?

The recent World Mobile Congress (WMC) 2024 buzzed with excitement surrounding a futuristic concept: phones that transform into wristbands. These adaptive screen technology phones were first unveiled in 2019 by TCL, a Chinese mobile phone manufacturing company.

Since then, mobile phone manufacturers are struggling to launch this technology into the market. Critics have already reduced adaptive screen technology to ‘proof of technology’ venture for the businesses.

While the idea is innovative and attractive, questions loom over its long term viability and scalability as an alternative to the conventionally designed phones.

The same is true for various concept cars, VR headsets and independent films, which are also prime examples of non-scalable products. So, one might wonder if widespread adoption of the technology seems uncertain, why do companies still invest in such technologies?

The article has been drafted to answer this very question.

The Story of Non-Scalable Products:

In the world of business, the mantra is often "scale or fail." Companies strive to develop products and services that can reach a vast audience, maximizing their impact and profitability. However, companies sometimes invest in non-scalable products, which are contradicting to their core growth objectives.

History is filled with such countless examples of companies venturing into non-scalable products. In the tech world, both Google and Microsoft faced challenges with innovative but ultimately unsuccessful products. Google Glass, the head-mounted computer, failed due to high cost and limited functionality. Similarly, Microsoft's Zune, a digital music player, couldn't compete with the dominant iPod’s extensive marketing ecosystem.

The automotive industry also offers examples. The DeLorean DMC-12 (refer image), famed for its "Back to the Future" appearances, faced production issues and a niche market, leading to the company's bankruptcy. Similarly, General Motors' EV1, a pioneering electric car, was ultimately crushed despite its advanced technology.

Non-scalable products also drain valuable resources, such as time, money, and manpower, which can be employed in commercially viable options. Additionally, if not handled swiftly, non-scalable products can have a negative impact on a brand's image.

So why do companies invest in non-scalable products?

The answer lies in the glimpse of hope and a desire for experimentation.

Laboratories of Experiments:

When companies invest in non-scalable products, they often create an environment akin to a designer's playground. Freed from the constraints of mass market appeal, designers have the luxury to shed the "one-size-fits-all" mentality and truly experiment with innovative concepts.

The designers can also explore features and functions which might be considered ‘too out there’. Tesla’s Cyber Truck fits perfectly as an example. Its bold, futuristic design and sharp edges might be everyone’s cup of tea, but the design has allowed Tesla to discover unique functions such as an exoskeleton for better durability and a ramp for loading cargo.

Building Bold Image Through Innovation:

Non-scalable products are unconventional and hence are a great way to attract public attention. The public, constantly bombarded with familiar products, is naturally drawn to the unorthodox and the innovative. Hence, these designs spark public conversations and generate significant buzz.

Luxury brands often cultivate this technique by launching limited edition collections and premium designs.

Break Away From Established Design Parameters:

The traditional rectangular shape of smartphones has become ingrained in our minds, but who decided it was the only option? Non-scalable products challenge these assumptions. These design force us to ask:

• Who decided a mobile should be rectangular and not circular?
• Who defines the boundaries of invention in the first place?

This questioning the status Quo opens our eyes to a newer world of the possibilities that are beyond expected. The boundryless thinking encourages us to envision the alternative forms and functionality of the conventional designs.

Testing Potential Markets:

Apart from pushing boundaries and building a strong brand image, non-scalable products serve the purpose of testing potential markets for the companies. Instead of investing in full-scale production launch, companies leverage non-scalable products as their testing probes.

This allows the businesses to gauge customer interest without risking significant investment.

Attracting Investors:

Businesses strive on fundings from investors. Non-scalable products are a means of attracting new investors, which potentially might be interested in newer technology.

At the bottom of it, non-scalable products are a calculated risk, which sometimes might struggle to generate specific revenue and cover its initial costs, as was noted in the case of Juicero, a high-pressure juicer with a subscription service for pre-cut juice packets. The product created initial hype, but later faced scalability issues due to high costs and limited practical functionality. The company later closed in 2018 after facing significant consumer backlash.

Conclusion:

While non-scalable products offer significant potential for innovation, and brand image building, investing time, resources and money in non-scalable products also suffer from potential risks including limited reach, negative brand image and resource drain. In conclusion, investing in non-scalable products is a calculated gamble for companies.

While the idea of investment in non-scalable product seems non-viable, the idea is worth gambling, despite their limited potential to become mainstream successes.