25 years ago on Friday the first CD rolled out of a Philips factory near Hanover, Germany. If you’re already feeling nostalgic for the preferred album format of the 1990s, or if you’re interested in what this story of innovation and decline can teach you as a manager, we bring you some facts courtesy of the BBC:
- Philips’ plan for a CD with a 11.5cm diameter had to be changed when Sony insisted that a disc must hold all of Beethoven’s 9th Symphony.
- The first commercial CDs pressed were The Visitors by Abba and a recording of Herbert von Karajan conducting the Alpine Symphony by Richard Strauss.
- In 1985 Dire Straits’ Brothers In Arms became the first CD to sell more than one million copies. It is still the world’s most successful CD album.
- In 2000 global sales of CD albums peaked at 2.455 billion. In 2006 that figure was down to 1.755 billion.
So what lessons can a busy manager take from this music milestone? First, the truly inspired, the truly innovative is out there. If your company finds it, the product will sweep the market. (The AP quotes Philips’ current marketing chief: “The CD was in itself an easy product to market.”) Such breakthroughs, though admittedly few and far between, can be worth the trouble and investment. Antonio Rubbiani demonstrated a rudimentary video disc, an early progenitor of the CD, all the way back in 1957 — making the development of the technology a 25 year process. But there was a payoff for such a long wait. As the AP reports, “the CD helped Philips maintain its position as Europe’s largest maker of consumer electronics until it was eclipsed by Nokia Corp. in the late 1990s. Licensing royalties sustained the company through bad times.”
And the second lesson? Never rest on one great breakthrough. Even the once mighty CD is falling victim to new innovation. Sales are down 22% from their peak, and with the rise of iPods and the various legal and illegal means to fill them, this decline is likely to continue. When your company has found a great formula for success, a new standard for your industry, there’s only one thing to do (after you finish celebrating, of course.) Start thinking about the next one.
(Image of CD stack by mutednarayan, CC 2.0)
