Many organizations have fallen victim to the “business as usual” mindset which is a dangerous place to find comfort in the fast-pace digital age. It’s time to shake things up and find a new and authentic way of doing things.
As we all heard the sad news of Thomas Cook, for years, they played a somewhat frantic and fantastically expensive game of catch-up as it tried to pivot into the digital age.
One of the problems Thomas Cook were having is their business model had a fundamental flaw in it, the way that Thomas Cook worked is it borrows money to bulk buy hotel rooms and lease planes, over the rest of the year they’re trying to make that back selling holidays which means they would have to sell more than 3 million holidays before they could make a profit.
Companies like Tui have looked at this problem and starting to invest and buy hotels so they’re more in control of their own structure, if they don’t sell them through Tui they can get customer elsewhere.
Thomas Cook’s had a large number of high street locations, 1 in 7 were booking their holidays in the stores and that’s just not enough. I can’t remember the last time I booked a holiday in a store.
Kodak, a technology company that dominated the photographic film market during most of the 20th century. The company blew its chance to lead the digital photography revolution as they were in denial for too long.
Steve Sasson, the Kodak engineer, actually invented the first digital camera back in 1975. “But it was filmless photography, so management’s reaction was, ‘that’s cute—but don’t tell anyone about it,” says Sasson. The leaders of Kodak failed to see digital photography as a disruptive technology.
A former vice-president of Kodak Don Strickland says: “We developed the world’s first consumer digital camera but we could not get approval to launch or sell it because of fear of the effects on the film market.” The management was so focused on the film success that they missed the digital revolution after starting it. Kodak filed for bankruptcy in 2012. The Kodak failure surprised many.
Why did blockbuster fail? The video-rental company was at its peak in 2004. They survived the change from VHS to DVD but failed to innovate into a market that allowed for delivery (much less streaming).
While Netflix was shipping out DVD’s to their consumer’s homes, Blockbuster figured their physical stores were enough to please their customers. Because they had been the leader of the movie rental market for years, management didn’t see why they should change their strategy.
Back in 2000, the founder of Netflix Reed Hastings proposed a partnership to the former CEO of Blockbuster John Antioco. Netflix wanted Blockbuster to advertise their brand in the stores while Netflix would run Blockbuster online. The idea got turned down by Antioco because he thought it was ridiculous and that Netflix’s business model was “niche business.” Little did he know that Hasting’s idea would have saved Blockbuster. In 2010 Blockbuster filed for bankruptcy and Netflix is now a $28 billion dollar company.
MySpace, a website that was once the dominating social networking until Facebook came onto the scene. Funny enough, in 2005 Myspace CEO Chris DeWolfe actually met up with Facebook founder Mark Zuckerberg to discuss business together. Mark offered to sell Facebook to Myspace for $75 million, which Chris ended up saying no to.
Because of the growth of Facebook, MySpace started seeing a decline of their users and decided to change its niche. The flexibility and free expression allowed on the myspace platform was once its biggest differentiator had become the most common reason for users leaving.
In 2011 the company changed its focus from social networking to entertainment and music only. But later that year MySpace fired nearly 500 employees after a sustained loss of users.
A kids toy retailer, Toys R Us, was once one of the largest toy store chains. The brand signed its own death when signing a 10-year contract to be an exclusive vendor of toys on Amazon.
Despite the deal, Amazon allowed other toy vendors to sell on its site too. Toys R Us sued, but as a result, missed the opportunity to develop its own e-commerce presence. In 2017 the company filed for bankruptcy, because of its huge debt and retail competition. But the physical stores continue to be open.
CD, VHS and video game retailer HMV is a brand that was popular in the 1990s. It was known as the place to browse, and now belongs to the long list of retail companies that failed due to the rise in online services and e-commerce.
But the company began to struggle with the digital disruptions. At first, HMV refused to believe the bloom of online retailers or that people will start downloading music. The leaders of the company felt confident about their brand and loyal customers who in their heads loved coming to the shop for the floor experience. In 2013, Hilco Capital purchased HMV, taking the company out of administration and saving 141 of its stores.
Innovation in large corporation is a tricky business. But the most successful companies are those that continue to innovate and digitalize their strategy. Never resist innovation as a business. Make sure to listen to your customer’s needs and keep up with the trends.
Managers and directors need to be listening to the employees and look at the competition to ensure the company is on the right path and not doomed into becoming a overgrown complex environment where making the simplest of changed takes far to long and customers are unhappy with the service. Turning a blind eye will come back and bite you in the ass.
Not only that, make sure that your leadership and strategies are in place because you should always be working on improving and trying out different types of innovation strategy. Take these steps in your fight against becoming one of the companies that are failing.
When it comes to the adoption of new technologies, would you classify yourself as an industry leader, fast follower, or passive responder?
It may surprise you to know that your answer to this question is paramount to success. The pace of tech change in the business world shows no signs of slowing.
Many business owners hesitate when it comes to emerging tech software. They believe that their older systems will get them through another big project or two, then they can reassess at a later stage.
According to PWC, that’s “a strategy that will become more dangerous as time passes.” Business owners need to be ready for change, rather than scrambling to respond to it. In fact, in this landscape, readiness is the most crucial success metric.
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