Management

Lessons from 10 Big Companies that Failed

Pankaj
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Every year many new companies take birth whereas many old ones become history. While the failure of smaller companies may be common it is important to learn lessons from 10 big companies that failed. Below are renowned company’s names who were very successful someday.

 

1. Motorola

In 1973 Motorola demonstrated the first handheld phone. Even though Motorola kept producing various versions of its cellphone, they failed to see that customers wanted innovation in software rather than hardware.

Motorola focused on designing new models, many of them were not user-friendly. The company also missed upgrading the software revolution in the cellphone world. This made it hard to compete with smartphones on the market. In August 2011 Motorola was acquired by Google.

 

2. Nokia

Who doesn’t know Nokia and most unlikely that people using a cellphone in the 90s would not have used Nokia’s cellphones? This is one highly successful company that failed. Nokia, a company founded in Finland was the first to create a cellular network in the world. In the late 1990s and early 2000s, Nokia was the global leader in mobile phones.

With the arrival of the Internet, other mobile companies started understanding how software and data, not voice, were the future of communication. Companies adopted Android whereas Nokia didn’t grasp the concept of software and kept focusing on hardware because the management feared alienating current users if they changed too much. In 2008 Nokia finally made the decision to compete with Android, but it was too late. Their products weren’t competitive enough.

Nokia’s mistake was the fact that they didn’t want to lead the drastic change in user experience. This caused Nokia to develop a mess of an operating system with a bad user experience that just wasn’t a fit on the market.

 

3. Blackberry

BlackBerry was known for smartphones and tablets, and it became very famous in 1998 due to its handy email facility. They changed the game in the mobile industry by offering a device with an arched keyboard.

A few years later the entire mobile industry started focusing on bigger touchscreen displays, whereas BlackBerry was more concerned about protecting what it already had. The company failed to adapt to android technology and hardware changes. In 2017 the CEO John Chen announced that BlackBerry was out of the smartphone manufacturing business and that the company had built a new strategy to start the business in software development, including security and applications.

 

4. Sony Ericsson

Sony Ericsson was very much popular for its handset designs, sleekness, good quality music, and camera in the early 2000s. The company upgraded to Android in 2010 and launched new models such as Xperia, X10, and Xperia Arc.

The company targeted the top segments as ‘Apple’ mobile phones. In 2012, Sony Mobile’s CEO said “That is where the value is, that is where the money is”, referring to the top segment, and adding that the goal was to “play to our strengths – the premium brand that Sony stands for”. However, Sony lacked any special features as many competitors offered almost similar experiences at a cheaper price.

Beyond the criticism Sony often receives for the lack of innovation, the company offered decent performance to those that remained loyal to the brand and there aren’t many of them left.

Sony’s smartphone sales have shrunk so much, the company expected to ship around 7 million devices globally in 2018., that’s roughly as many as any of the top 3 manufacturers sell in about 2 weeks.

Today, Sony’s smartphone business is on life support provided by the company’s other successful ventures. Sony has still not flexed the Xperia model to be lower priced. At the rate, its sales are going down, after years Sony phones may be rarer than a red panda.

 

5. IBM

International Business Machines (IBM), nicknamed “Big Blue”, is an American multinational technology company that had its breakthrough in the 1960s with the IBM System/360.

In the early 1990s, IBM failed to adjust to the personal computer revolution and thus began its downfall. The company adjusted its focus back on hardware instead of software solutions. Today, after going through several transitions, IBM is one of the most powerful names in enterprise software. They turned their luck around with new management.

 

6. Kodak

Kodak was popular in the photographic film market during most of the 20th century. The company led the market of photographic cameras in the late 90s and early 20th century. However, Kodak failed to adopt digital photography revolution as they were in denial for too long. The management was so focused on the film’s success that they missed the digital revolution after starting it. The customer’s move from photographic film to a digital camera was the reason for Kodak’s failure. Kodak filed for bankruptcy in 2012. The Kodak failure surprised many.

 

7. Yahoo

In 2005 Yahoo was one of the main players in the online advertising market. But because Yahoo undervalued the importance of search, the company decided to focus more on becoming a media giant.

The decision to focus more on media meant they neglected consumer trends and a need to improve the user experience. Yahoo managed to gain a massive number of viewers to view content but failed to make enough of a profit in order to scale.

Yahoo also missed out on a lot of opportunities that could have saved them. For example, in 2002 they almost had a deal to buy Google, but the CEO of Yahoo refused to go through with the deal. And in 2006 Yahoo had a deal to buy Facebook, but when Yahoo lowered their offer, Mark Zuckerberg backed out. If the company had taken a few additional risks, maybe we would all be yahooing right now instead of googling.

 

8. Kingfisher Airlines

Kingfisher Airlines established in 2003 was owned by United Breweries Group based in Bengaluru.  Despite being formed in 2003, it wasn’t until 2005 that the airline took its first flight. Launching with a small fleet of four A320-200s, the airline focused initially on flights between Mumbai and Delhi, one of the world’s busiest routes.

By 2007, the airline had grown its fleet to 20 Airbus A320s, operating a network that spanned 26 destinations. In September 2009, the airline began its first long-haul flights, connecting Bengaluru with London. For this and other international routes, it used A330-200s, fitted out in a two-class configuration with full flatbed seats in the premium cabin. At its peak, Kingfisher had a fleet of 69 aircraft, the bulk of which were A320 family planes, although it also had 28 ATR 42 and 72s as well as five Airbus A330s.

Despite all this, the real turning point came about in 2007, when Kingfisher bought out failing Air Deccan. The reason they did this was not only to acquire Deccan’s extensive domestic network but also to get around the Indian rule that no airline in existence for less than five years is allowed to fly internationally.

2008 brought with it a global financial crisis which made things at Kingfisher ever harder to deal with. By 2010, it had cut its fleet down to just 28 aircraft and was starting to hemorrhage money.

 

9. Xerox

Another one of those big business examples of failure is Xerox. Xerox was actually the first to invent the PC and their product was way ahead of its time. Unfortunately, the management thought going digital would be too expensive and they never bothered to exploit the opportunities they had.

The CEO David Kearns was convinced that the future of Xerox was in copy machines. The digital communication products invented weren’t seen as something that could replace black marks on white paper. Xerox failed to understand that you can’t keep perpetually making money on the same technology. Sometimes technology fails too.

 

10. A&F

American fashion brand Abercrombie & Fitch was once one of the trendiest casual wear and accessory brands in the early 2000s. Their main target was teenagers who in the 2000s were influenced by the pop culture that shaped the way teens wanted to look and dress.

Times have changed and the large logos, high prices, and brand affiliation don’t appeal to a younger audience. The brand did not change its designs and branding strategy and it just comes off as outdated and offensive now to teens. The brand faced a major setback after the CEO of A&E Mike Jeffries stated in 2006: “Sex sells. That’s why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that.” On top of that statement, one of the A&F district managers added: “We would rather burn clothes than give them to poor people.” This all causing a scandal that the brand couldn’t recover from. The store is now completely out of touch with its target audience.

 

Conclusion:

Most of the companies in the above list were leaders in their field one day, no one would have imagined they will fail to meet people’s expectations and lose popularity. Because of not adapting to the change in the market and running the business without technology up-gradation these companies have nosedived their businesses. Besides this, some of them have bounced back in the market with their latest launches; like Nokia came back with Android phones Nokia Lumia, Nokia series, and basic models with new feature and look; Motorola launched Moto Razr, Moto G8 series, and Moto E models; Sony launched Experia 3, whereas Experia 6, Experia 20 and Experia 5 Plus is expected to launch in India end of June 20. Hope these ex-leaders have learned lessons after burning their tongues in past and hopefully they will soon turn the table to their sides.

 

Hope this article would have provided an analysis of the failure of above mentioned companies and will help you to lead your business in the right direction.

Please write your feedback in the below comment section and also please sign up to get notifications of upcoming blogs from our website.

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