Businesses that failed and what leaders can learn
In business, failure is inevitable. Stories of businesses that went from success to financial disaster in a rapid fashion are as common as the success stories. As a business leader, it is critical to understand how they failed, what it reveals about the industry and how it impacts your own business decisions.
Here are some of world’s biggest falls from fame and the lessons you can draw from the experiences.
Stay hungry, stay foolish
Blockbuster Video was a wildly successful international movie-rental chain for the original VHS and DVD rental industry. However, when change and new technology swept through the movie and video industry, Blockbuster Video stuck to its old business model.
In 2000, Netflix, which was already pushing its DVD-by-mail service and streaming, approached Blockbuster for a buyout deal, priced at $50 million. Blockbuster refused. Blockbuster believed in their business model so much so that they were unable to see opportunities as they arose. By November 2013, Blockbuster ceased operations.
Lessons: Transformation can happen very quickly, and if you miss it, it can be very unforgiving. Market share and past successes are not enough to compete against new digital transformers. Don’t just keep up to date with what is happening in the market, be what’s happening. You need to also track new trends, try new technologies, anticipate change and embrace the future before it even comes.
Don’t stop innovating
After years of being an undisputed world leader in film photography, Kodak failed to grasp the significance of a technological disruption that threatened its business. Kodak created a digital camera in 1975, invested in the technology and even understood that photos would be shared online. A report circulated among senior executives in 1979 detailing how the market would shift permanently from film to digital by 2010. But, according to experts, Kodak failed to appreciate that when technology changes the market it can also change consumer behaviour – and in this case it did.
Lessons: As a business, you shouldn’t be playing defence. Spend money on accelerating technology and be bold enough to disrupt your current business model. If you don’t, someone else will. In a world of ever-changing technology, agility is everything. Make sure you have the right culture and people to support agility.
Don’t ignore your competition
Lotus Software was started in 1982 and dominated in the Office productivity suite before Microsoft. The company had a head start with respected products. Lotus went public in 1983, revenue reached $156 million in 1984 and employment topped 1,300 in 1985. And then came Microsoft.
Lotus knew that Microsoft was developing Windows and another product called Excel, but it chose to ignore it. When their big customers moved to Microsoft, Lotus rushed to make a product to compete with Microsoft. But it was too late. In 1995, the company was bought by IBM and today, it no longer has a product line.
Lessons: Be aware that you’re most vulnerable when you’re doing well. Keep tabs on the marketplace and new and old competitors who are solving the same problem or vying for the same customers as you. By keeping a fleeting eye on your direct competitors, you can react before they do, or at the very least be ready to respond.
Listen to your customers
Nokia was a pioneer in the smartphone market for 14 years, introducing consumers to the product. It quickly grew to have one of the most recognisable and valuable brands in the world. At its height, Nokia commanded a global market share in mobile phones of over 40%. It also spent enormous amounts of money on research and development but squandered opportunities to bring the innovations it produced to market.
What it was unable to do, was to respond to the shifting consumer demand that came with the growth of technology. Apple on the other hand, responded with an ever-changing range over beautiful products, followed by Samsung and more.
Your customers are your lifeblood. Listen to them and adapt to them. If you want customers to buy your product – and keep buying them – then you need to keep finding out what they want and need. Whatever feedback you get from your customers you should always act on and acknowledge. This makes your customers feel that they are appreciated and valued.