My perspective - Where are we going?
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- Published on Friday, February 19, 2016
By Kate Jackman-Atkinson
Neepawa Banner/Neepawa Press
With the rapid pace of technological innovation, sometimes, it’s easy to lose track of what we are doing. As businesses, communities and organizations seek to remain successful, however they define that word, it’s important to step back and ask, ‘What is it we do?’
Today, only about 70 companies remain in business from the original Fortune 500 list published in 1955. It’s interesting to look back and see how seemingly small, obscure or insignificant innovations have blindsided established companies and industries.
In 2000, the founder of a startup company called Netflix flew to Dallas to propose a partnership with video rental giant Blockbuster. At that time Blockbuster dominated the video rental industry and Netflix wasn’t the service we know today– it sent subscribers their movie rentals in the mail. At another point, Blockbuster could have purchased the young company for a mere $50 million.
Today, 45 per cent of all US broadband households have a Netflix subscription and the company is worth over $38 billion. Blockbuster went bankrupt in 2010. Blockbuster forgot that it was in the businesses of entertaining people.
Kodak, founded in 1888, had a pretty long path to its downfall. At its peak, it was worth $31 billion. Their initial brand was built on making money off of photo developing. Starting in 1948, instant photography took hold, then mass market photo developers, such as Wal-Mart, got into the business, then digital photography eliminated the need for film or processing all together. In 2012, the company filed for bankruptcy. Kodak forgot that it was in the business of helping customers mark their milestones and cherish their memories.
Canadian tech company BlackBerry also forgot what business it was in. The once undisputed king of the smartphone saw its share price fall by 90 per cent between 2009 and 2013. It was a dramatic fall from 2009, when earnings were growing by 84 per cent a year and Forbes magazine named the company the fastest growing company in the world. In 2013, the company incurred $1 billion in losses, mostly due to unsold inventory.
BlackBerry failed to see where the industry was going. Their business was built around corporate customers, but it was consumers who drove the integration of smartphones into our lives. BackBerry focused on battery life, limited data usage, a functional keyboard and secure messaging and email. It turned out that these weren’t consumers’ priorities and when the shifting market stabilized, BlackBerry was left far behind its competitors.
Other companies have adapted. The online payment site PayPal was originally envisioned as a cryptography company. It then evolved into a way of transmitting money using PDAs. From there, the company focused on further developing their online payment system. The company, founded in 1998, was bought in 2002 by eBay for $1.5 billion.
Video game console maker Nintendo was founded in 1889 as a playing card company. In 1949, founder Fusajiro Yamauchi suffered a stroke and his 22 year old grandson Hiroshi Yamauchi took over and began transforming the company into a gaming powerhouse. Nintendo tried a variety of other business ventures to expand the company’s limited market and in 1963, had its first hit toy. In 1977, Nintendo launched its first game console and in the mid-1980s, they launched the Nintendo Entertainment System console, the best-selling gaming console of its time. Yamaguchi, who realized he was running an entertainment company, stayed at the helm until his death at the age of 85 in 2013.
Just like the buggy makers who didn’t adapt to the rise of the automobile, in their early stages, game changing innovations can be easy to ignore, or dismiss as being inferior. With this in mind, all businesses need to be open to change and recognizing innovations, inventions and trends that have the the ability to fundamentally change what they do, but not necessarily who they are.
