There was animosity between Steve Jobs and the Lisa team (who perhaps not coincidentally chose to name the system after his daughter). Once he decided that the Mac would compete against the Lisa, the Lisa platform was doomed. Jobs basically told customers, software developers, and the press that the Lisa was obsolete because the Mac was coming out soon and would be cheaper and better. He was correct about the cheaper part.

Unfortunately the Mac cut a lot of corners for affordability. The original Mac had only 128K of RAM, and Jobs didn't want to offer memory upgrades (he thought you should just buy a new computer - sound familiar?) It took Mac OS 16 years to get memory protection, which LisaOS had in 1983. Lisa didn't need to die - it could have merged with the Mac and made the latter a better and more reliable platform, years before Mac OS X.

No one knew the market at the time. Clearly this was for large businesses and not a home computer. It targeted the same demographic as the Xerox Star which shipped before it and suffered a similar fate. No one knew what would work, easy to see in retrospect but at the time it was not easy to see. Apple also had a big disadvantage in the ‘office’ marketplace having no sales force that everyone assumed was necessary. Besides price, Xerox’s other problem was while they did have a sales force they only knew how to sell copiers. I suspect only IBM at that time with a product like the Star or Lisa could have succeeded. But the Mac was a completely different product for a different marketplace and even it was a failure at first—until desktop publishing turned things around.