How often have you heard sentences like:
“We don’t need digitalization at all. It is s just hype. It is a just new buzzword. We have our business, and it goes well. We‘re safe with our current products. Innovation is meaningless and it costs too much. We don’t need change.”
Pretty often, haven’t you?!
So, you struggle to explain to the people the importance of agility, digitalization, new technology and innovation. Here are few examples of former international “giants”, which businesses failed just because they were not able to anticipate the impact of digitalization to their business. Through having early success and a very few competitors, these companies felt into the “success trap” and were convinced nothing can change their leading position or beat their well-established business models.
Blockbuster: Unable to transition towards a digital model
Blockbuster, founded in 1985, was iconic and probably one of the word largest movie and video rental services. In 2004 it employed 84.300 people worldwide, in 9.094 stores. However, because it was unable and unwilling to transition towards a digital model, it bankrupted in 2010. It considered digital model as a “very small niche business” that cannot endanger its well-establish business model, thus refusing the offer by Netflix to sell itself to Blockbuster for US$50 million. Netflix currently has around 150 million of users worldwide, revenue of US$16.0bn, and more than 5.400 employees. On the other side, Blockbuster is not there anymore.
Polaroid: Unable to anticipate the impact that digital products
Well known for making instant film and cameras, Polaroid was unable to anticipate the impact that digital-based products would have on its business. Polaroid was founded in 1973, was well-established and well-recognized company that had quite strong brand all over the world. However, this company felt into the success trap by exploiting and believing only in their “historically successful business activities”. Motto was “never change the running system”. At least not on strategic level. With few competitors and historical success, Polaroid refused to embrace the challenges and opportunities offered by digitalization and digital cameras, which consequently lead to the declaring bankruptcy in 2001.
Borders: Focusing on physical instead of digital presence
Borders was an international book and music retailer with locations all around the world. This company however was not able to transition to the new digital business model, which we saw for example within Amazon. Instead of exploring new territory and opportunities offered by digitalization, such as digital and online books, this company focused on opening as many stores as possible, thus giving the preference to the physical instead of digital presence. At the end, Borders closed all of its locations and sold off its customer loyalty list to the competitor Barnes & Noble.
Nokia: Fear of embracing digitalization
In 2000s Nokia was global leader in mobile phones. However, while Nokia kept focusing only on hardware, competitors used the opportunities emerged from the internet and software to improve their services and to deliver new products to the customers in the form of applications. The biggest mistake Nokia has made was ignoring the need to explore opportunities of digitalization. Fear of drastic change in user experience and inability to switch to the customer-oriented thinking led to the situation where Nokia lost its leading position in the field.
There are thousands and thousands of other examples at national and international levels where companies experienced huge loss in revenue, employees, and even shut down, just because they were unable to transition towards digital model and to anticipate impact of digitalization.