Episode 151 – The Streetlamp Trap – The Harder Question

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Is there a lesson we can learn from the demise of Encyclopaedia Britannica on how organisations should deal with AI?

Since its first publication in 1768, until the early 1990s, Britannica ruled the encyclopaedia market. A 32-volume set, sold door-to-door by a salesforce of over 100,000 people at $1,500 to $2,200 a set. Each salesperson earned $500 to $600 in commission per sale.

Then Microsoft released Encarta in 1993, a CD-ROM encyclopaedia priced at $99, later bundled free with computers. By any editorial measure, Britannica was the better product by far.

But their response was a masterclass on the mistake we can make when we bolt-on new technology onto an old business model.

When they finally produced their own CD-ROM, they priced it at $995, ten times Encarta. Why? Because a $99 product could not generate the $500 commission a door-to-door salesperson needed to survive. So Britannica protected the salesforce and made the product uncompetitive.

The technology existed. The content was superior. But the organisation was not redesigned around the new technology. The salesforce, a human infrastructure built for a different era, was left intact. And it strangled the new product before it could breathe.

By 1994, print sales had halved. By 1995, the company was up for sale.
The technology did not fail Britannica. It was the management decision to protect an existing structure rather than redesign around what the new technology demanded. There is surely a lesson here on the successful adoption of AI. Listen on.



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