Illustrative examples of how inability to anticipate or adapt new technology have

affected companies temporarily or permanently

Presentation by:Pattan Imran Khan

P401115FGS270M.TECH GIS

NIIT University

In the business world, it doesn’t matter if we as a firm were first, and are currently on top. What matters is our agility to adapt to changes in market dynamics and new technology.

If we look at the list of companies that made the very first Fortune

500 list in 1955, more than 90 percent have been bought out by other companies, gone bankrupt, shrunk in size or simply gone out of business. These companies failed to re-invent themselves.

Dinosaurs are an apt and widely used metaphor today. After all, if a

firm can’t or won’t adapt, it’s straight to the dustbin of business

oblivion. A business enterprise is not totally dissimilar from a

dinosaur, ignore rapidly changing circumstances, and a leader

authors his or her company’s demise. Adapt to rapid changes better

than your competitors and you’ll make great strides.

Today, innovation drives developments in microelectronics, optical fibre, the Internet, wireless communication, genetic engineering, space-age materials, lasers, electronic money and payments, empowerment, just-in-time inventory systems and joint venturing. The way in which business is done is turning upside down overnight.

Extending this analogy to the business world, many companies fail to adapt to an evolving environment, especially when that evolution is caused by technological change, which can threaten their very survival in the process.

For instance, Kodak was forced to enter bankruptcy reorganization as a result of its failure to adapt to the digital photography revolution, while the rapid rise of the iPhone cost Nokia its prominence in the market.

Some companies do, however, manage to survive, or even prosper, despite a radical change in their business environment. This leads us to the fundamental question: What differentiates the companies that fail to change from others that successfully adapt?

During times of technological upheaval, the ability of companies to integrate internal and external knowledge is crucial for survival. Those companies that can successfully achieve this integration will not only survive but also enhance their competitive position.

A common misperception is that technological upheavals spell doom for leaders of the previous generations of technology.

But with an appropriate strategy, companies can maintain, or sometimes even enhance, their competitive positions during technological revolutions. For every Kodak, which failed to adapt, there is a Canon, which successfully handled the challenges posed by such upheavals.

There are a few, but many of the world's top companies in 1985 have foundered, shrunk, grown obsolete, or been acquired by rivals that grew stronger. General Motors and Ford, the world's two biggest carmakers in 1985, spent the last decade in a dizzying tailspin, bleeding cash, losing market share, and struggling to turn themselves around.

Even resurgent titans like Apple and IBM stared into the abyss of irrelevance and made painful changes before clawing their way back to the top.

With today's rapid technological change, companies rise and fall faster than ever before. The list in the subsequent slides represents companies that were once the most innovative in their industry, then lost their edge (temporarily or permanently). Here are the firms that enjoyed enviable success, followed by unenviable stumbles:

Eastman Kodak

The Eastman Kodak Company, commonly known as Kodak, is an American technology company that concentrates

on imaging products, with its historic basis on photography.

For nearly a century, no company commercialized the camera as successfully as Kodak, whose breakthroughs included the Brownie camera in 1900, Kodachrome color film, the handheld movie camera, and the easy-load Instamatic camera.

Image Source: Google Images

But Kodak's storied run began to end with the advent of digital photography and all the printers, software, file sharing, and third-party apps that Kodak has mostly missed out on.

Since the late 1980s, Kodak has tried to expand into pharmaceuticals, memory chips, healthcare imaging, document management, and many other fields, but the magic has never returned.

Its stock price is now about 96 percent below the peak it hit in 1997.

Image Source: Google Images

Blockbuster

Blockbuster, was an American-based provider of home movie and video game rental services through video rental shops, DVD-by-mail, streaming, video on demand, and cinema theater.

Image Source: Wikipedia

This video-rental chain survived the transition from VHS to DVD just fine—but then failed to adapt to the next big change.

Blockbuster remained flat-footed when Netflix started sending videos through the mail, cable and phone companies started offering video-on-demand, and Red box started renting videos for a buck a night through vending machines.

Now that video streams through computers and phones, Blockbuster's conventional retail outlets seem hopelessly outdated.

The firm is closing hundreds of stores, working off debt, and copying some of its competitors' moves, with a fighting chance to catch up. But it's now chasing its industry instead of leading it.

Image Source: Google Images

Motorola

Its first big success came with car radios, which led to two-way radios, which eventually led Motorola to build and sell the world's first mobile phone.

Image Source: Google Images

Motorola dominated that business as recently as 2003, when it introduced the trendy Razr, the biggest-selling mobile phone ever at the time.

But Motorola failed to focus on smartphones that can handle E-mail and other data, and rapidly lost share to newcomers like Research in Motion, Apple, LG, and Samsung.

Motorola was vanquished so swiftly that its cell phone division became a perennial money-loser and the firm announced plans to spin it off into a separate company, allowing the core Motorola to focus on networking equipment and a few other areas.

Image Source: Google Images

Dell

Back when IBM and Hewlett-Packard still sold most of their products through stores, Dell had a different idea: Cut out the middleman and sell directly to consumers.

When the Internet arrived, Dell took off and competitors got whiplash trying to keep up with its skyrocketing sales. But a decade later, Dell faltered as mobile devices began to displace PCs, cheap Asian machines cut into profitability, and big customers began to demand end-to-end service, not just hardware.

Dell has countered with mini-laptops, smartphones, and other trendy products, but it's now following the pack.

Image Source: Google Images

Sony

Not long ago, the Walkman was as ubiquitous as the iPod is today, and Sony dominated the market for TVs, cameras, video recorders, and many other consumer electronics.

But as Sony became a huge conglomerate with film and music divisions, it lost leadership in many of its core product lines.

What tripped up Sony and some of its competitors was the move from hardware to software, which put the emphasis on the brains of the device rather than the circuitry. As a result, faster-moving competitors like LG, Samsung, Apple, and the various makers of cell phones—which of course come with cameras these days—have outpaced this old-school innovator.

Image Source: Google Images

Sony's reluctance to develop a competent digital Walkman left an opening for the iPod. 

Image Source: Google Images

Sun Microsystems

Lucky timing only lasts so long. This computer startup began building high-end servers just as the computer revolution was revving up, and it foresaw the virtues of networking and universal software that could run on any computer.

Its Java programming language, introduced in the mid-90s, became an industry standard just as the Internet arrived, helping make Sun an industry giant by the late 1990s.

Image Source: Google Images

But the dot-com bust wiped out many of its customers and changed the way companies meet their technology needs.

As PCs became more powerful, fewer big customers needed Sun's costly servers, and Sun spent most of the last decade downsizing and retrenching. With Sun's market value just a fraction of what it had once been, Oracle bought the company on January 27, 2010.

Nokia

Once the world's biggest mobile phone brand, the Finnish company had all but faded into oblivion as smartphones - led by Korean giant Samsung and Steve Jobs' Apple - captured the market while Chinese companies also made headway with devices running on Google's ubiquitous android. 

Image Source: Google Images

After dominating the market in the late 1990's and early 2000's, Nokia had failed to keep pace with the changing technologies and tastes in the mobile handset market and its devices business was sold to Microsoft in 2014 that introduced phones running on its Windows OS, that too failed to excite buyers.

Nokia announces a return to the smartphone market for 2017, will be powered by Android.

Image Source: https://twitter.com/androidpolice?lang=en

Blackberry

Its failure to adapt quickly enough to changing technology & consumer taste with the rise of iPhones and Android-based smartphones led to Blackberry’s demise.

Once at helm of the smartphone industry, Blackberry’s market share is now only about 3%.

Image Source: Google Images

Yahoo

When Web search and aggregation were still virgin territory, the pioneering Yahoo tried to charge for services like E-mail and file sharing, while upstart Google offered everything for free.

Customers flocked to Google, which surged to a commanding lead in search that it still holds. Yahoo still grew into a huge Web portal, with strong sports, financial, and news coverage that

generates billions in advertising revenue, but it also drifted into job-hunting services, video streaming, original entertainment, and other ventures it has since sold or folded.

Image Source: Google Images

And Yahoo's snub of a $45 billion buyout offer from Microsoft in 2008 looked like a huge gaffe, since Yahoo's market value had fallen to a scant $19 billion or so.

CEO Carol Bartz arrived in 2009 with a mandate to clarify the company's focus and amp up profitability.

One of her first moves: a partnership with old suitor Microsoft meant to increase revenue for both firms without the tension of a buyout. But, nothing has gone in favor of the latter as it delivers its core assets to telecom giant Verizon for $4.8 billion, a fraction of its peak market value of $125 billion at the height of the dot-com boom.

Apple

Apple, which in 1997 was just 90 days from bankruptcy.  Steve Jobs, older and wiser than when he had been fired from it, came back, used his

industry connections (particularly Bill Gates) to get the company stable and began building the company back up. 

The iPod, originally conceived as a device to make people buy more Macintosh computers, instead turned into a huge product line in itself.

Image Source: Google Images

But by 2005, Jobs recognized that making iPods wouldn't be enough: modern phones would soon be able to store just as much music as a cheap iPod, and make phone calls too. So he set Apple's designers and engineers to making a phone.

If Apple hadn't shifted from making iPods to iPhones – what startup companies call a "pivot", meaning a shift in business focus – then it would have been erased: the Mac and iPod business together generated about $6bn in Apple's most recent quarter, less than half that of Google, and one-third that of Microsoft.

Image Source: Google Images

Conclusion

The most immediate takeaway from the fall of Kodak is clear: don't be afraid to cannibalize your own business in the name of progress.

This is seen time and again in the digital revolution: Sony's reluctance to develop a competent digital Walkman left an opening for the iPod. 

Blockbuster laughed off Netflix in the early days, then went bankrupt when it couldn't compete with its web-based competitor.

And iPads may be eating up some Mac sales, but Apple's bottom line is stronger than ever.

But Kodak's inability to make any of its products stand out over the last decade is demonstrative of an overall reluctance to innovate.  Certainly, if we asked Kodak executives in the early 2000s if they were committed to innovation, they would have answered yes, but real innovation requires risk and vision. You don't kill all Wi-Fi cameras just because the first model got a lukewarm response from the market -that is, if you really believe in the core idea.

The story of Kodak's downfall is an affirmation that true innovative spirit is much more often found in smaller companies and startups rather than old-school behemoths of yesteryear. As Kodak  has shown, if you do nothing but play it safe, the cost just to stay in  the game will whittle you down until you've got nothing left.

References:

http://money.usnews.com/money/blogs/flowchart/2010/08/19/10-great-companies-that-lost-their-edge

http://www.ibtimes.com/survival-fittest-how-can-companies-adapt-technological-upheavals-1529724

http://www.stuff.co.nz/technology/6305255/How-Kodak-squandered-every-single-digital-opportunity-it-had

http://money.howstuffworks.com/10-companies-reinvented-themselves1.htm http://www.valuewalk.com/2014/01/re-inventing-companies-western-union-ibm-n-geographi

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