7 companies that failed to adapt to the disruption and paid a heavy price
Welcome to Thomas Insights – every day we post the latest news and analysis to keep our readers up to date with what’s happening in the industry. Sign up here to receive the best stories of the day straight to your inbox.
It has been proven time and time again that when organizations are unable or unwilling to adapt to disruption, technological advancements and changing customer demands, they simply cannot survive in the long term.
Here are seven companies that have learned this lesson the hard way.
Nokia was once known to be remarkably adaptive and forward thinking, so its eventual demise was surprising. The company has constantly invested in research and development and invented his first smartphone in 1996.
But in the years that followed, Nokia failed to recognize the importance of software, including apps, and underestimated the rapid transition to smartphones. In 2007, for example, Nokia earned more than 50% of all profits in the mobile phone industry, but most of those profits did not come from smartphones. In contrast, the company’s biggest competitor, Apple, paid the same attention to hardware and software development and was way ahead of smartphone innovations.
In 2013, Nokia had just 3% global smartphone market and in August of that year it sold its handsets business to Microsoft for $ 7.2 billion.
At one point, Kodak was the most famous and revolutionary name in the world of photography and videography. The company was largely responsible for developing cameras that were portable, affordable, transportable and ultimately accessible to the average household.
But Kodak failed to keep pace with technological advancements after the invention of the digital camera in 1975. The company had long held the belief that its customers would continue to appreciate and value a printed image rather than a printed image. digital image. Of course, they were wrong, but by the time they halted sales of traditional film cameras in 2004, it was too late to recoup their losses.
Kodak filed for bankruptcy in 2012 and has been trying to reinvent itself ever since. In a strange turn of events, the company received a Government loan of $ 765 million of the Trump administration in 2020 to produce 25% of the active ingredients of generic drugs in the United States.
“Neither RedBox nor Netflix are even on the radar screen in terms of competition. “
This quote from 2008 from Blockbuster CEO Jim Keyes has come back to bite him – and hard.
At the end of the 90s, Blockbuster owned 9,000 video rental stores in the United States, employed 84,000 people worldwide, and had 65 million registered customers.
Despite partnering with Enron at that time to develop a video-on-demand service, Blockbuster was far too focused on making profits from its video stores to commit to making the new service a success. The company didn’t even seem willing to consider rapidly changing consumer behavior or the impact of technological advancements on its business model. Not only was Blockbuster incredibly slow to implement DVD-by-mail service, customers were increasingly frustrated with the company’s late fees.
It didn’t take long for Netflix to start nibbling at the company’s profits and by 2010 the company filed for bankruptcy with more than $ 900 million in debt.
4. My space
Myspace was once considered the coolest social networking site, and between 2005 and 2008 it was definitely the most popular. At its peak in 2008, the site attracted 75.9 million unique visitors per month.
There are two main reasons for the disappearance of Myspace. First, Facebook offered a much better and more user-friendly service. Not only did it have cool features like the now iconic Facebook news feed, but it made communication and networking easier for its members.
Second, Myspace was poorly managed. The site was acquired by News Corporation for $ 580 million in 2005 and the culture of the company quickly changed. Instead of focusing on optimizing the user experience, generating ad revenue became a top priority and the site quickly saturated. As a result, Myspace members began to migrate to alternative platforms. Between 2009-2011, the site lost over a million users per month.
In 2011, Myspace was purchased by Specific Media for $ 35 million, more than $ 500 million less than News Corp had paid six years earlier.
5. Toys R Us
Toys R Us was a popular children’s brand with over 700 stores across the United States.
But in recent years, the company has struggled to adapt to the boom in e-commerce and lacked creative vision, ultimately failing to deliver a convenient, enjoyable, personalized, or discounted shopping experience. competitive to its customers. It didn’t help the things the company was hushing under billion dollars in debt, excluding essential investments in its stores to modernize its service offering.
The company filed for bankruptcy in 2017, posting $ 7.9 billion in debt against $ 6.6 billion in assets.
Toys R Us made a small scale back in 2019 when it opened two mall stores for the holiday season with a focus on open play areas, interactive displays, and spaces for private events like birthday parties. Both stores have since closed.
Yahoo was first launched in 1994 and quickly became the go-to portal for email, news, and web research.
Business failure is the result of several bad business decisions. For example, in 2002, Yahoo missed an opportunity to buy google for $ 1 billion then Facebook for an alleged amount of $ 1.1 billion in 2006.
Yahoo has also been criticized for mismanaging Flickr and Tumblr, failing to prioritize hiring high-caliber programming staff, and a lack of vision within its leadership team.
This series of failures resulted in Sale of Yahoo to Verizon in 2016 for just $ 4.8 billion. For comparison, the company was valued at $ 125 billion at its peak in 2000.
In 1970, the printing company Xerox launched the Xerox Palo Alto Research Center (known as Xerox PARC) to develop the technologies of the future. Technologies such as laser printers, Ethernet and a prototype of the modern PC were all invented at Xerox PARC.
But while the company invested heavily in research and development and made groundbreaking innovations, it struggled to capitalize on market potential and achieve commercial success, ending up losing to an organization with a brand. more established and a much broader vision.
Despite having developed the graphical user interface (GUI) and a commercial version of the mouse, it was Steve Jobs and Apple who reaped the success of these inventions when the Macintosh computer was launched in 1984.
Ultimately, Xerox was unable to seize the right opportunities to leverage its ideas and innovations and run a profitable business enterprise.
Image Credit: Adwo / Shutterstock.com