Listen to this story
A story in the New York Times today demonstrates just how quickly once powerful companies can die simply because they did not keep up with consumer demands and market changes.
The story talks specifically about Apple’s need to innovate, but also recalls the names of other highly popular companies or brands that are now just a blip in America’s memory.
“Over time, every franchise dies,” said Nick Santhanam, McKinsey’s Americas practice leader in Silicon Valley. “You can innovate on an amazing mousetrap, but if people eventually don’t want a mousetrap, you’re screwed.”
Kodak, Polaroid and Texas Instruments are all examples from the recent past of companies that held too tightly to an old idea, the story noted. Let’s add IBM, AOL, Yahoo, Pan American airlines and Blockbuster to that list, too. I am sure we could compile quite a graveyard, or certainly an intensive care ward.
You can soon add McDonald’s to the list of companies that everyone knows needs to change, and quickly, to provide better food and better service. But the firm instead opts to invest more money in redecorating the interiors of its restaurants — even though most people use drive-thru windows to pick up poorly assembled, lukewarm food.
Putting lipstick on a pig doesn’t make the beast more marketable or palatable.
Quicken was a game-changer decades ago with it developed software to resemble a check register, and efficient reporting functions to let people and businesses see exactly where their money was going. They could even drill down to specific transactions. Lately, the company has been working to price itself out of the market through an expensive subscription-based business model.
If there ever was a piece of software that should serve as a standalone product, it is a check register. What used to cost $20 to buy and own now requires annual subscriptions starting at $30 per year.
When I was 16 years old and sitting in a high school business class, it was unfathomable that Sears would be bankrupt 40 years later. The company’s name was adorned on the world’s largest building at the time — the Sears Tower — that stood over Chicago’s skyline.
But, today, the company is praying for a miracle before a bankruptcy judge orders its liquidation. That story points out what was evident to everyone except those people sitting around the mahogany table in a board room atop the tower looking down on the peons below.
“Online shopping is part of the story, but Sears’ challenges go back decades. It was slow to react to new competition from discount chains and specialty stores and to changes in shopping habits, including a shift away from suburban shopping malls. Chairman and former CEO Edward Lampert was accused of focusing on cost-cutting at the expense of investing in stores. He insisted the company was working to turn itself into a smaller, but profitable retailer.”
For those old enough to remember, look at how quickly vinyl records disappeared from the market — a span of two years once cassette tapes were developed. Even then, cassettes were replaced less than a decade later by digital music.
It is funny that vinyl albums are making a comeback in 2019, but I suspect that the nostalgic fad will be short lived because it is still hard to carry a turntable with you wherever you go.
I was in discussion with a medical bill sharing company earlier this week about being reimbursed for some charges I incurred when I had my stroke in September. After almost four months of waiting for a check, the answer was “per our guidelines, our sharing time has been 90 to 120 days for several years.”
Well, as long as it is in the guidelines, then it must be okay. Why dare to surprise your members by easing their burdens in less than 60 days?
In the same email, the firm boasts of having not raised rates in 10 years. “It is it our goal to continue to maintain the monthly gift amounts for the benefit of our members,” was the response.
So, a company that promises to reduce the stress accompanying a sudden, unexpected financial hit due to an illness, can’t deliver on its promise to customers in four months, because they have “done it this way for several years.” And the firm has no intention of raising rates to fix the problem despite healthcare costs rising one gazillion percent in 10 years.
It doesn’t take a rocket scientist to see where that organization is headed, despite its noble mission.
Companies can either innovate and succeed, or they litigate in bankruptcy court. They can grow or stand still. They can keep up with their customers and competitors or fall behind. The choice is theirs.
People need to innovate and grow, too.
I was at a conference a few months ago where a number of speakers noted that what you learn in college today is obsolete before you graduate. Talk about a worthless education!
The need for people to personally invest in their own careers is essential for the same reasons you don’t hear about some of the brands mentioned before. People either innovate, or they are forced into early retirement.
That is going to become absolutely crystal clean in the next economic downturn. Those people who will still have jobs will be those who consistently reinvent themselves, stretch themselves out of their comfort zone and embrace change even when it is uncomfortable.
Listen to the excuses I’ve heard in the RV industry or other companies in the past few years:
- We don’t accept credit cards in our camp store. (Hopefully, there is a Walmart a few miles away).
- We don’t allow online reservations or appointments. We want to communicate directly with our guests. (Translation: We’d rather put people on hold during business hours.)
- Automated phone attendants make us more efficient. (Forget that humans hate them.)
- We don’t publish our phone number. People can fill out web forms if they have a problem. (Tech companies LOVE this option.)
If there is a lesson to be learned in the demise of so many “too big to fail” companies and brands, it is that by the time they figured out what their customers had been trying to tell them, the train had departed the station. Their customers had moved on to other companies or brands.
With people and companies moving as quickly as they do today, business owners can either drive the train, get on the train or get off the tracks.