• Not evolving quickly enough, what is the worst that could happen?

    Not evolving quickly enough, what is the worst that could happen?

     

    2020 really showed us that we need to innovate to stay relevant and profitable. 

    But this is not something new, this is a lesson we have seen repeated throughout history. There are a number of high-profile cases we can look at to learn this valuable lesson. 

     

    Blockbuster

    Blockbuster was a giant in the film rental industry and a worldwide household name. 

    They were founded in 1985 and by 2004 they had nearly 10,000 stores worldwide. No one thought they could fail, yet in 2010 they went bankrupt.
    What happened?

    You might think that Blockbuster wasn’t paying attention to the changing marketing, however, they did try to respond to change. They started adding music and video game rentals to their stores and embraced DVDs.

    But they had new competitors to watch out for who were disrupting the industry. One of these competitors was Netflix. 

    In 1997 Netflix emerged as a movie by mail rental service and this really changed the game. 

    Not only was this convenient, but Netflix also offered no late fees!
    Everyone hates late fees, and it is reported that Blockbuster made $800 million through late fees alone- a whopping 16% of its revenues. 

    This story may be familiar to you, but what you may not know is that Blockbuster partnered with Enron in the late ’90s to create a video-on-demand service.

    They were really ahead of the curve on this, doing this before other companies, like Netflix, had made a serious start.

    Enron Broadband Services (EBS) was new and innovative. They were using cloud computing, services embedded in the network, and apps on demand. 

    EBS created a deal with Blockbuster where they did all the tech, planning to use Blockbuster’s big name and share the revenue. 

    But it seems Blockbusters was never really convinced. By the end of 2000 EBS had the infrastructure up and running on its state of the art network but by 2001 Blockbuster backed out. They were making so much money in-store, and they just didn’t think this would change. 

    Blockbuster could have dominated the online video on demand market but ended up completely failing due to their fear of change. 

    Their lack of innovation, even when the opportunity was handed to them on a plate, was their downfall. 
     

    Nokia 

    Remember when everyone had a Nokia phone?

    They were indestructible and the battery lasted for days making them an incredibly popular option. So what happened?

    In 1998, Nokia was the world's largest mobile phone brand. 

    By 2007 it had a 51% global market share, which is extremely impressive. 

    But they nearly faced bankruptcy and ended up being sold to Microsoft in 2013.

    Nokia focused on hardware, and the new players in the mobile phone industry focused on the software which really disrupted the industry. 

    Nokia’s operating system (OS) was called Symbian and by 2009 Nokia was using 57 different and incompatible versions of this OS which would be absolutely awful to work with. 

    When Google entered the market a lot of Nokia’s competitors (Samsung, Motorola, and Huawei) had moved the Android OS. 

    Nokia waited until 2011 to change OS...but then they made another mistake. They decided to partner with Microsoft and implement windows phone as their OS. 

    As you know, the windows phone is now discontinued and Android dominate 85% of the smartphone OS market.

    Nokia also failed to innovate. They focused on reliable, durable, and traditional. Unfortunately for them, smartphones took over when Apple released the iPhone and they took too long to evolve. 

     

    Kodak 

    Kodak is another household name that people didn’t think could fail. 

    For over 100 years their name was synonymous with photography. 

    In 1976 Kodak had an 85% market share in cameras and a 90% market share in film. 

    Kodak has always innovated. In fact, they invented roll film which made photography accessible to the masses, as they didn’t have to use plates anymore. 

    As you probably know, the rise in digital cameras was their downfall. But Kodak didn’t ignore cameras, it was actually an electrical engineer at Kodak who invented the first digital camera in 1975.

    But the Kodak team thought that going digital meant killing film, so they never fully explored the full potential of doing digital. 

    The next big disruption for cameras was when they merged with mobile phones, and people starting posting photos online more than printing. 

    In 2001, Kodak purchased Ofoto, a photo-sharing website which they rebranded as EasyShare Gallery. If they had embraced this as a digital opportunity it might have been more successful, but they still focused on trying to get the user to print photos which ultimately led to their failure. 

    Kodak created a digital camera, invested in the tech and even understood the photos would be shared online. But they didn’t realise that online photos was the new business, and thought it was just a way to get customers to print more photos. They didn’t fully understand the changing market, and this led to Kodak filing for bankruptcy protection in 2012 and ultimately it sold off its patents. 
     

    What should we learn from this? 

    We need to have an enterprise mindset that is open to change.

    Companies are often aware of the disruptive forces affecting their industries but they ultimately fail by not fully embracing these new business models. 

    When looking at digital transformation you need to ask yourself what business you are in. 

    There is a big difference between being a chemical film company and a moment sharing company, and if Kodka had considered this, things may have ended differently for them. 

    You need to view disruption as an opportunity for growth, rather than a threat.
    Disruption changes business models, and you need to be open to this.
    The “this is how we have always done things” mentality sets you up for failure. 

    If you would like to explore your changing digital landscape, book in a discovery session where we can find possible challenges and opportunities for you.

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