Published on 04/08/2015 by Punchmedia

When Businesses Fail: Innovation & Adaption the Keys to Success

Kodak, Nokia, BlackBerry, HP, Yahoo, Blockbuster. All of these firms are examples of multi-million dollar companies that at one point in time where absolutely dominating their market. They all have one more similarity. They are all examples of enormous companies that have all but disappeared (except in extensive university Marketing and Business Innovation class discussions) due to the fact they failed to innovate and stay ahead of their competition in each of their respective industries.

Kodak

First up, let’s look at Kodak. They may have invented digital photography, but this doesn’t mean they did anything with this invention. In 1975, Steve Sasson, a Kodak engineer invented the first digital camera. Despite this, with the fear they would be cannibalising their own business (they were heavily in the film industry at this point), they never took advantage of their early invention and the digital camera was “put into the closet”. Others quickly filled this niche, leaving Kodak behind. They didn’t begin selling digital cameras until 2001. Even then, their digital cameras weren’t anywhere near up to the standard of their competitors. Kodak continued flailing. Always slightly behind their competitors in terms of following trends, rather than innovating trends themselves. It wasn’t just digital cameras.  Kodak struggled in other areas of the market too. Photo sharing opportunities were another early Kodak innovation but their failure in the market meant the company killed the line. They killed the line too quickly and the company should have realised that photo sharing would be the way people interacted with photos in the not too distant future, with the way technology was innovating around the globe in 2005.

Lesson 1: Back Yourself

Kodak were actually innovators for a number of the huge market sellers early on. However, they seemed content to just sit back and let their competitors capture market share without doing much about it until it was too late. Only after their competitors began, did they release the Kodak version of many competitor products. If Kodak had indeed backed themselves and released their products when they were invented, they may still be dominating the market today. The company failed to adjust to the reality of changed market conditions and rival technology and as a result went into bankruptcy in 2012. Since this time, Kodak have emerged as a company with efforts centered on commercial printing – a far cry from their era of domination around the 90’s.

BlackBerry

An unbelievable and seemingly distant memory now, a few years ago BlackBerry was one of the highest selling mobile gadgets on the market. Currently, they own less than 2% of the smartphone market, far, far behind competitors Apple and Samsung. Numbers are as shocking as this:

• In 2007 it had more than half the market share of phones in the US
• 2009 saw the BlackBerry named as Fortune Magazine’s fastest growing company in the world
• 4 years later, BlackBerry’s stock price collapsed by 90%

So, What Happened? The key strategic decision that led to BlackBerry’s failure is obvious. They refused to adapt to changing consumer wishes - to move away from the keyboard-based devices. BlackBerry ignored touch screen based technology, insisting their phones would remain the go-to at enterprise level. With Apple’s rapid takeover of the market, coupled with a few poor strategic decisions, BlackBerry fell by the wayside by refusing to adapt to the changing market.

Lesson 2: Adapt to Your Market

BlackBerry’s failure to realise that consumer preferences would eventually lead to a change to business customers, similarly, their inability to realise a phone needed to be far more than just communication devices but actual entertainment centres, lead to their downfall. BlackBerry, experiencing huge early successes, believed they could sit back and let their early successes carry them through. It is crucial to continue to adapt to your market, understand your competitors, and innovate to remain at the forefront of consumer’s minds.

Yahoo

Ever heard anyone say “Yahoo it” in response to a question? Unlikely. This may have been a thing, if Yahoo had continued the success they had in 2005 when they owned 21% of the online advertising market. Yahoo’s failure to see the importance of search, whilst being too focused on becoming a media giant, led them to outsource their search engine to Microsoft Bing – a huge mistake that has since led to their struggle to keep up with competitors. Not only did Yahoo completely miss the boat in terms of leading the game in search engines. They also missed a number of strategic mergers and acquisitions innovations.

1. In 2002 a deal was struck for Yahoo to buy Google for $5billion. Yahoo’s then CEO refused to pay and the deal never took off
2. Display ads in the early 2000s was dominated by one company – DoubleClick – that Yahoo had the opportunity of purchasing. They didn’t move fast enough and Google bought DoubleClick. Google was now gaining on Yahoo fast.
3. Back in 2006, Yahoo had the opportunity to buy Facebook for $1 billion. They then lowered their offer and Zuckerberg refused. $1 billion for Facebook seems like a bargain now that the company is valued at x 150 times this amount.

Lesson 3: Understand the value of strategic mergers and acquisitions

Had Yahoo taken up any of the merger options above, the brand these days would likely be perceived very differently. Merging with emerging players in the market could have given Yahoo a competitive edge when these young companies were brimming with innovative ideas for growth. Whilst at one point these companies were considered some of the biggest players in their respective industries, their failure to innovate as led to their demise. What separates some of the biggest brands today? Continual innovation, continual improvements to business strategy, and keeping up with consumer and market demand. Think you've got what it takes to take your very own company into the future? Contact the team at AnyBusiness Online for more information on owning your own business for sale.

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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