Is most of your revenue from products, services, or business models more than three years old? If so, and even if your revenue is growing, that should be a warning signal that you’re not innovating effectively. All industries are competitive and, by not moving forward, you’re falling behind.
There are numerous examples of former market leaders that failed to innovate and eventually fell victim to their markets. Companies like Kodak, Digital Equipment Corp., and Blockbuster all share a sad story of allowing their past successes to prevent exploration for new ideas.
Kodak, as reported by Startup Talky:
The Eastman Kodak Company’. It was the most famous name in the world of photography and videography in the 20th century. Kodak brought about a revolution in the photography and videography industries. At the time when only huge companies could access the cameras used for recording movies, Kodak enabled the availability of cameras to every household by producing equipment that was portable and affordable.
Kodak was the most dominant company in its field for almost the entire 20th century, but a series of wrong decisions killed its success. The company declared itself bankrupt in 2012.
Kodak failed to understand that its strategy of banking on traditional film cameras (which was effective at one point) was now depriving the company of success. Rapidly changing technology and evolving market needs made the strategy obsolete.
The ignorance of new technology and not adapting to changing market needs initiated Kodak’s downfall
Kodak wasted time promoting the use of film cameras instead of emulating its competitors. It completely ignored the feedback from the media and the market
When Kodak finally understood and started the sales and the production of digital cameras, it was too late. Many big companies had already established themselves in the market by then and Kodak couldn’t keep pace with the big shots
Kodak invested its funds in acquiring many small companies, depleting the money it could have used to promote the sales of digital cameras.
Digital Equipment Corp. (DEC), as reported by MIT Sloan Review:
The DEC story is one of a dramatic rise and fall: DEC was an entrepreneurial computer company that grew to $14 billion in sales and employed an estimated 130,000 people worldwide at one point, but Digital failed to adapt successfully after the personal computer eroded its minicomputer market.
Blockbuster, as reported by Indigo Digital:
Blockbuster was extremely popular. It was the largest video rental company in the world with over 9,000 stores and over 50 million members. So what happened? While most talk of Blockbuster’s demise centers on the rise of Netflix, Blockbuster made many strategic errors throughout its history that caused it to have such a stunning fall from grace.
Walking away from the deal of the century. Blockbuster made a critical error when it walked away from a deal with Netflix. Netflix wanted to sell its company to Blockbuster for $50 million in 2000. At the time Blockbuster could have afforded the purchase price since it had raised $465 million in an IPO a year earlier.
An inability to pivot quickly. Blockbuster was skeptical about the potential of renting DVDs online and sending them to customers via mail the way Netflix did. But customers enjoyed Netflix’s service because it was convenient. As Netflix continued to gain subscribers it took Blockbuster six years to launch a similar service of its own in 2004 called Blockbuster Online. Companies rarely die from moving too fast, and they frequently die from moving too slowly,” said Reid Hastings, Netflix’s co-founder and CEO.
“I’ve been frankly confused by this fascination that everybody has with Netflix…Netflix doesn’t really have or do anything that we can’t or don’t already do ourselves,” said Keyes in 2008. Two years later Blockbuster was bankrupt. A healthy degree of hubris ended up being the fatal thorn in Blockbuster’s side. Blockbuster couldn’t see pass its previous success to see the change on the horizon and then once it did it was too slow to react.
Each of these companies was in an enviable market position, but their leaders believed they knew what it took to be successful and continued doing what they’d always done. By being unwilling to look ahead, take the small risks required to innovate new products, services, or business models, they eventually took the biggest risk a company could take … and failed.
Look at the composition of your revenue. Is it the canary in the coal mine? If so, look at the way you innovate or whether you innovate at all. Is there discipline, mindset, process, exploration, a framework, and investment in innovation? If any of these elements are lacking, it will be difficult to effectively develop new products, services, or business models. If you’re seeing warning signs, EinSource can help you to avoid the demise of some other great companies.
Don’t let past success prevent future success.