Accelerated Obsolescence

Accelerated Obsolescence is shortening the useful life of everything

The useful life of almost everything is getting shorter. That does not necessarily mean things are breaking faster, disappearing faster or physically wearing out sooner. More often, they remain perfectly functional while becoming less useful, less competitive or less economically sensible in the environment around them.

We tend to think of obsolescence as an end-state: something works until eventually it does not. But increasingly, obsolescence seems to me to be relative rather than absolute.

A product can still work, a company can still operate, an asset can still function and knowledge can remain technically correct while becoming progressively less useful because the world around it has changed.

This makes age a surprisingly poor measure of obsolescence: a thirty-year-old technology can remain highly useful in a stable environment, while a two-year-old technology can become obsolete if the environment moves sufficiently quickly. The important variable is not age. It is fit.

Once you think about obsolescence in terms of fit, a much broader pattern becomes visible.

New technologies increase what is possible and therefore lower the relative value of what came before. Competitive improvements force others to respond. Regulation can change the economics of an asset without changing the asset itself. Customer expectations move once higher performance becomes available. A change in one part of a system can make another part less useful even though nothing about that component has changed.

This is why I think of Accelerated Obsolescence as the shortening period during which something remains useful, relevant or competitive in its environment.

The effect can be seen across products, technologies, infrastructure, companies, business models, knowledge and data. Telecommunications, energy and computing provide obvious examples of physical assets becoming economically outdated well before the end of their engineered life. Products can remain technically competent but lose demand because a newer alternative changes expectations. Knowledge can remain accurate about the conditions in which it was produced while losing relevance because those conditions no longer exist.

Companies are more complicated. Historical evidence on the S&P 500 suggests that average tenure among the largest listed companies has declined substantially over time, but that should not be read simply as companies dying faster. Many survive. What appears to turn over much more rapidly are the products, technologies, business models and competitive advantages inside them.

That may be one of the more important implications of this signal. Successful organisations may not be those that resist obsolescence, but those that become better at continuously replacing parts of themselves before the environment forces them to.

Innovation sits at the centre of this because innovation does not merely solve obsolescence. It creates it. A new technology changes the performance frontier. That reduces the relative competitiveness of existing solutions. Competitors respond. Expectations adjust. Further innovation follows. The response to obsolescence therefore creates additional obsolescence.

In some markets this becomes deliberate self-obsolescence. Organisations replace their own successful products, systems or business models because the alternative is waiting for somebody else to do it to them.

The problem becomes more significant in complex systems because different components operate on different time horizons. Buildings may be designed for decades. Electrical infrastructure may last almost as long. Computing equipment may be replaced within years. Software can change almost continuously. When those components are interconnected, rapid change in one can impose obsolescence on much slower-moving components around it.

Nothing has necessarily failed. The system has simply moved.

This may be one reason accelerated obsolescence feels increasingly pervasive. The evidence does not support the simplistic claim that everything is becoming obsolete faster. In fact, there are important complications. Business dynamism has declined across many developed economies. Some research suggests corporate performance rankings have become more persistent. Dominant organisations can survive for very long periods. Scientific knowledge does not appear to have a universally shortening half-life. Technology can also extend useful life through upgrades rather than replacement.

The more interesting possibility is that different parts of systems are changing at increasingly different speeds, and that the faster-moving parts create pressure on the slower ones.

That pressure does not always result in immediate replacement. Systems can continue operating long after they have become poorly matched to their environment because replacement is expensive, switching is difficult, regulation constrains change, or the organisation lacks the capability to adapt. This creates something that looks very much like adaptation debt: the growing gap between the configuration you have and the configuration the environment increasingly requires.

Eventually an organisation can find itself investing not to improve, but simply to maintain the same relative position. More capital is consumed replacing technologies, capabilities, infrastructure and knowledge simply to avoid falling behind.

That is where Accelerated Obsolescence becomes much more than a technology issue. It becomes a capital allocation problem.

It may also help explain why accelerating change does not necessarily weaken dominant organisations. Large organisations with capital, information and strong adaptive capability may be better able to repeatedly replace their own technologies, products and business models. Smaller competitors may recognise the need to adapt but lack the resources to move at the same speed. Faster underlying change could therefore coexist with greater concentration at the top.

The organisation survives. Almost everything inside it changes.

The question I find most important is therefore not whether products are lasting a little less time than they used to. It is what happens when the environment starts changing faster than the systems operating within it can adapt.

At that point, obsolescence stops being a sequence of product replacements and starts becoming a structural problem. Infrastructure falls behind the environment it serves. Organisations accumulate adaptation debt. Capital is increasingly consumed maintaining relative position. Interconnected systems transmit obsolescence from rapidly changing components into slower ones.

And eventually the cost of adapting what exists may exceed the cost of replacing it altogether.