It feels like the world is moving faster than ever, which means that companies in every sector have to prioritise agile innovation or risk becoming defunct. The internet has created a whole range of business challenges that have impacted on the speed and process of innovation, from the endless choice of online shopping, to the impact of brand stories when told through social media.
If it seems like many of the companies that you knew from childhood have vanished, it’s because they have. In fact, very few of the powerhouse companies of the last century are still functioning as they used to. If they’re still here, it’s because they’ve adapted but many more have had to close their doors forever.
Here are the key lessons from five bankrupt companies that failed to innovate…
Kodak was founded in 1884 and found fame and fortune by inventing roll film. Their product was the hobby of the masses, but more importantly, the receptacle of memories for millions of people over the years. Although Kodak had early access to the first digital camera technology, they chose not to develop it as they felt it would kill their own film business. They filed for bankruptcy in 2012.
Lesson: If you don’t do it, someone else will.
It’s a widely held belief that Blockbusters was killed by the rise of Netflix, but the reality is a lot worse. In 2007 a small-time, ailing Netflix actually thought they were going to be acquired by the Blockbusters giant, but they decided they didn’t want to. Fortunately for Netflix, and unfortunately for them, in-fighting in the boardroom immediately led to a period of instability where six CEOs were hired in quick succession. They quite simply couldn’t decide on a focus; three thought it was an entertainment company, while three thought it was retail, but no one bothered to tell each of them what had already been suggested. Each CEO was so ignorant of history that they presented the same business plan over and over again, until Netflix was ready to take their market share with a bulletproof online offering.
Lesson: Brush up on your company’s history, or risk repeating the same mistakes.
The ultimate CD, VHS and video games retailer for most of the 90s, HMV was known as the place to browse. However, when they were told by an advertising company that their greatest threats were online retailers, downloadable music and supermarkets selling discounted products, they refused to believe it. The leadership team had such confidence in the importance of their shop floor experience that they couldn’t understand why anyone would ever opt for a cheaper product. Such was their confidence that they even let smaller competitors such as play.com slip under the radar entirely.
Lesson: Experience is only one element of your customer journey. Price, branding, competitor offering and even convenience are all equally important, and you need to tick every box to stay competitive.
At its height, Clinton Cards held a 25% share of the greeting card market, founded on the philosophy that “birthdays and anniversaries never go out of fashion”. However, their business model relied on plastering the high street with physical stores and buying up their rival’s shops led to a rental bill of almost 80 million a year. They relied entirely on the appeal of the high street, which was slowly being degraded by other online offerings, to the point where it became unlikely that anyone would ever go out of their way to exclusively visit them on their own.
Lesson: Ensure you’re operating within a booming ecosystem. If you’re surrounded by dying businesses, it’s going to be even harder to stay afloat.
The failure of tie rack is probably nothing to do with a declining interest in ties, as they continue to be popular enough in both the corporate and fashion worlds. However, men tend to buy their ties where they get their shirts, and there’s nothing else to really differentiate Tie Rack’s offering in terms of either quality or brand. They are, quite simply, not desirable enough to go out of your way for. Sometimes you can be the best in the business, but still not understand the way that your customers shop.
Lesson: It’s not enough to ask people to go out of their way for a product – they’ll only make the trip for a brand that they love.
No company is too big, famous or secure to fail if it resists innovation. Listen to your clients, and more importantly, make sure that you’re constantly feeding back the results to the executive team. Even when things seem to be going well, you should be working to put innovation processes in place, as an ad hoc approach to problem solving leads to the kind of strategic and communication errors that prompted the downfall of most of these businesses.
Implement continuous improvement processes by challenging your team to constantly review your market verticals, chase new opportunities and prioritise disruptive ideas, or you might find yourself on this list one day!