Why Some Companies Succeed and Others Fail

Humans run companies, so it should not be a surprise that their successes and failures mirror human nature. The old adage “Necessity is the mother of invention” applies. When companies are young and hungry they are generally at their most creative. As they become successful creative juice tends to abate, and complacency ascends along with powerful fiefdoms. Let’s look at some notable examples.

KODAK at one time was among the most powerful brand names, not only in America, but internationally. They had a lock on silver halide film the dominant technology of photography. You could not walk into a general merchandise store or into a store in a tourist area anywhere in the world and not see a prominent display near the cash register of KODAK film, and later instamatic cameras. In the past year KODAK filed for bankruptcy. What happened?

I remember flying up to Rochester, NY while KODAK was still “king” to make a creative presentation for them to sponsor The World Cup Soccer. Rochester, a mid-sized vibrant city, was virtually a company town dominated by KODAK. You may not be aware that KODAK invented the digital camera in 1975. They concluded that it had 10 years to transition to digital. However, six years later SONY introduced digital photography (1981) and revolutionized the way images were captured. SONY “stole a march” on KODAK, and that was decisive. The reasons for this are no doubt complex, but one can discern the major issue.

KODAK thought of itself as a film company. It sold film cameras, and all manner of services for developing and printing film images, however the business was centered around film in much the same way that Gillette’s business is centered on blades. KODAK film was the state-of-the-art “gold standard” for photography the world over. It was quite natural then for KODAK to think they were in the film business; and for it to protect the silver halide film business and all its manifestations at all costs. Their film division, no doubt the biggest revenue producer led by its best, most talented executives, would certainly not wish to be challenged by a new technology that might shift the focus, and all its associated glory, away from film. Hierarchies tend to be protective. They tend to dismiss upstarts. I have witnessed this behavior numerous times in large companies sub-divided into divisions led by competing executives. The behavoir is often referred to as “silo mentality”, where divisions (silos) within a company can be more competitive among themselves than with outside competitive companies.

This behavioral pattern is not confined to large companies. It exists anywhere there is a competitive environment, even to some small degree in single proprietor enterprises, where as individuals we constantly fight to overcome complacency, inertia, expediency.

In my next post, we’ll discuss a “Success”.

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