Incumbent's dilemma
2026-03-13 21:22:09 UTC
Honda is heading toward its first annual loss since 1957. Why? It spent billions trying to build EVs and has little to show for it. As a public company, it also has to keep one eye on the stock market.
So Honda pulled back. It is abandoning parts of its Electric Vehicle(EV) push and going back to selling SUVs.
Honda is not alone. Ford and GM also made big EV bets, spent billions, and then retrenched.
Meanwhile, EV startups like Rivian and Lucid are taking customers. They are building better EVs and moving faster.
The research is clear. EVs are expected to get cheaper over time. It may take a while, but EVs are likely to win in the long run. Even executives at major automakers have admitted as much.
And yet, when things got hard, the incumbents backed off.
These companies assumed EVs were just another new technology. They thought that we have been making cars for decades, no one knows manufacturing better than us, no one understands distribution better than us and certainly no one knows customers better than us.
They were great at yesterday's technology. They are struggling to adapt to the technology of tomorrow, even when they know, deep down, that failing to push forward on EVs could eventually destroy them.
The same pattern may play out in SaaS.
Big companies like Salesforce, Workday, and Monday assume they can absorb AI and be fine. Maybe they can. But only if they act as though their survival depends on it.
Honda cannot fully commit to EVs without disrupting its existing business, infrastructure, and customer base. Rivian has no such luxury. It only does EVs. EVs have to work for Rivian or Rivian dies.
This is the classic innovator’s dilemma described by Clay Christensen. Though honestly, I find the word “innovator’s dilemma” a bit misleading. Rivian is the real innovator and has no dilemma. It is the incumbent’s dilemma.
Incumbents cannot decide whether to go all-in on AI. That indecision may be what kills them.
To survive, they have to accept that the new world works differently. The old playbooks will not save them. This is a reset. Everyone has a chance to figure out how to use the new technology to create value and capture market share.
