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In a highly risky move, Seventh Generation sold its profitable mail-order catalog business, which accounted for 80% of sales. They correctly intuited that the wholesale retail business had a much higher long-term upside and that they couldn't afford to fund both channels simultaneously.
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The most difficult thing to quit is one's own identity. Sears chose to spin off its highly profitable financial services arms to double down on its failing retail business because its identity was "we are retailers." This demonstrates how a strong corporate identity can lead to catastrophic strategic decisions.
Deciding to abandon a profitable product for a nascent one was difficult. The COVID-19 pandemic forced the decision by killing the old product's sales pipeline while accelerating demand for the new one's remote access capabilities, making the pivot clear and necessary overnight.
A product can be successful in sales but still be detrimental to the business. Fly by Jing cut its popular frozen dumplings because they diverted focus and had worse margins than their core sauces. Success isn't the only metric for a product's value.
The most difficult pivots aren't from failing ideas, but from successful ones. The ultimate test is your willingness to abandon a stable, profitable business ("good") that you're known for in pursuit of something potentially phenomenal ("great"), even when the outcome is not guaranteed.
Upon discovering a more scalable model, the team made the difficult decision to shut down their existing on-demand business, which was generating $2M in revenue. They understood that running both models would be too distracting and that the new opportunity required complete focus to succeed.
While scaling a proven system is usually the right move, there's an exception. If a new customer segment offers exponentially higher order values for the same fulfillment effort, the potential leverage justifies risking a new acquisition channel.
The 2008 financial crisis wiped out half of Serena & Lily's wholesale retail channel. A timely pivot to a direct-to-consumer catalog not only saved the business from collapse but also ignited massive growth, taking them from $4M to $20M in sales in three years.
When pivoting away from a successful but legacy product, find a services partner to take it over. The company sold its $10M ARR business to an implementation partner, which ensured existing customers were supported and the legacy team had a home, allowing the company to fully focus on its new high-growth product.
Eliminating a popular and profitable product line can be a wise long-term strategy. If a product, even a bestseller, creates brand confusion or pulls focus from your core vision, cutting it can strengthen your primary brand's identity and lead to more dedicated growth.
When you have one business with asymmetric upside (e.g., high-margin, recurring revenue) and another that's merely "good," the opportunity cost of splitting your focus is immense. The radical but correct move is to sell the legacy business quickly, even at a discount, to fully commit to the superior opportunity.