Down and Out- Why these Top Brands Failed?
“Change is the only constant.”
It is no hidden fact that change is inevitable, and evolution is no different. Over the years, we have seen quite a few companies that once ruled the market, have today passed into oblivion. Their belief of experiencing innovation success, grabbing onto it and hoping it to be an everlasting success has made the business landscape littered with cautionary tales.
Here are some of the top players of the game that refrained to evolve with time, were unwilling to innovate or made irreversible mistakes. The results were devastating and all we can take away is learning from their mistakes.
Jet Airways
This year has been particularly toiling for the aviation industry. With Jet Airways grounding all its flights, leaving the future of 20,000 employees uncertain and failing to raise emergency funds, this debt-saddled carrier made multiple wrong moves.
Many aviation experts believe that the journey of Jet’s financial low began in 2006 when it purchased Air Sahara for $500 million in cash. Also, its low-cost carriers failed to recognize the price sensitivity of its customers, focusing on corporates only.
Naresh Goyal’s managerial skills were also under the radar where he led his team all by himself. He was often accused of making bad investment decisions and failed to address the company’s deteriorating financial status. Following a rather dwindling business model with confused investors and passengers alike, the fall was decided.
Nokia
The story of Nokia is undoubtedly one of the most gripping ones in the history today. Ever since its inception, the company has been looked up as a pioneer of new technologies and one of the toughest mobile competitors. But, as they say, ability to adapt is the greatest gift you give to yourself, Nokia failed to realize the shift in consumer requirements and incessantly growing technology and innovation. This led to significant drops in Nokia’s operating profits, ultimately putting its hands up.
In my conversation with Upasana Joshi, Associate Research Manager, Client Devices, IDC India about the same, she says, ‘First, Nokia took a lot of time to realize the shift to Android. Second, China offered high margins to the retailers and distributors.
With the rise of China-based vendors in the smartphone ecosystem on the back of powerful specifications offered at affordable pricing, Nokia found fewer market opportunities to grow owing to shift in consumer demand for China based brands. Having said that, the products offered were far more superior in quality, offering specifications which were way ahead of the relative price being offered by these vendors. More so, the investment on promotional and marketing activities led to a steep rise of these vendors in a short span of time, phasing out the local and other global vendors.”
With Nokia’s constant refusal to adapt to the changing environment, their fall was decided. While checking with the industry expert, Advit Sahdev, Former CMO, Infibeam, says, “The biggest issue was with the “Product” which is one of the 4Ps of Marketing. Nokia had always been focused more and more on the hardware part of the product by coming up with many different models for various market segments. However, they missed out on the biggest part of the product, i.e. software. They did not have a great OS. They did not have great apps. They did not have an eco-system to create a software. iOS and Android were able to address this part and thus scale to levels that could serve the entire world in a collaborative manner. This example goes on to show that marketing is not just about promotions, but about all the 4 Ps.”
I believe it to be a management failure too, since there run a fear in the organization. They never battled the truth and feared losing their investors and jobs.
Yahoo
In a valuation timeline by Verizon, from a $40 billion company in 1998 to $125 billion in 2000, Yahoo was acquired by Verizon in 2016 for $4.8 billion. Isn’t that is a wild ride?
Until the mid-2000, Yahoo was a dominant player in the online market. But its negligence in undervaluing search, focusing more on being a media giant and ignoring the consumer trends, led to its downfall.
Technology changed fast and other players began leveraging smart acquisitions to conquer the future. The organizational heads at Yahoo missed out on reading the industry tea leaves. It wasn’t just about the deals they made but also about the ones they missed. The worst one being missing out on buying Google in 2002. If that would have happened, maybe we would have been yahooing today instead of googling.
It wouldn’t be wrong to say that ‘The internet changed, but Yahoo didn’t’.
GM
GM was known to be the most important car manufacturers for more than 100 years, along with being the largest companies in the world, before it found itself to be on the doorstep of bankruptcy. The reason for its demise was quite evident- failure to innovate and blatantly ignoring its competition.
The company that predominantly focused on profiting from finance, neglected to improve the quality of their products, failed to address the changing consumer needs and refrained from investing in newer technologies. All they paid heed to was making a profit and not investing intelligently.
The competition was springing, so much so that Toyota Motor Corp surpassed GM as the world’s largest automaker for the first time in 2009. The current company, General Motors Company (GMC), was founded in 2009 and purchased the majority of the assets of the old company.
Kodak
From being an avid Kodak user, to now turning my head to my smartphone for pictures, the crash of Kodak has been quite disappointing for the child in me. Its products have probably been a childhood souvenir that I now keep locked in my cupboard.
With what was once the world’s biggest film company, to now a lost name in the market, Kodak couldn’t keep up with the digital revolution, for fear of cannibalizing its strongest product lines. Its adamancy to embrace the digital road was so strong that Kodak became its own enemy.
To substantiate, Kodak invested billions into developing technology for taking pictures using mobiles and other digital devices. However, it held back from developing its own digital cameras for the fear of eradicating its all-important film business. Canon saw a perfect opportunity here to outlive the giant and it succeeded too.
Kodak filing its bankruptcy in 2012 was no shocker.
Videocon
The first homegrown consumer durables company in India, Videocon, is a long lost name today. Which was once a difficult player to lock horns with, reported a loss of INR 1367.94 crores in 2016. This was 24.5 times the loss it made in 2015. This whopping increase had two clear reasons- failing revenues and high debts.
It is a classic example of companies aggressively borrowing to expand but failing to repay. In fact, in a survey by a Credit Suisse study in October 2015 reported Videocon as one of the companies with highest debts in India. Over-borrowing is a huge problem and must be avoided!
The Takeaway
While the success stories of the above have been inspiring, their fall has been equally moving. I believe that the collapse of the above companies is not reasoned to one point, but a few.
One of the most important one being MISMANAGEMENT. Negligence on the part of the management team, not working in sync with company ideas and coming out with irreversible decisions can and will have disruptive impacts.
The second one is RESISTANCE TO CHANGE AND INNOVATE. Any company ignoring the changing consumer and industry needs might have to face harsh times. And this has been true for a number of brands that didn’t bring about a change as per the need of the hour.
Last but certainly not the least, DULL-WITTED FINANCIAL DECISIONS & INVESTMENTS can account to loses. You ought to be business-smart in order to ahead in the game.
Stay Smart!
