Cases from the Burning Platform: Borders Group

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Borders is a case study of technological myopia and strategic failure. Instead of running towards the fire on its Burning Platform, Leadership went as far into its bunker as it could to avoid the flames of Change.

Like Generative AI, the signs were clear and present as to the direction in which the book industry was heading digitally.?

However, without hands-on experience with the new technologies and a sense of what was going to happen to jobs and careers if they didn't make the crucial change, Leadership continued its course to oblivion.

It didn't have to be this way.

Backstory

Borders was one of the largest bookstore chains in the US, with over 1,000 stores worldwide. However, it failed to adapt to the rise of e-commerce and e-books, which eroded its sales and margins.?

Borders outsourced its online sales to Amazon, giving up a valuable channel to reach and retain customers. Borders also invested too much in physical stores and inventory, while neglecting to develop its own e-reader or digital platform. Borders filed for bankruptcy in 2011.

Challenges

Borders Group was a leading book retailer that faced several challenges due to its own strategic decisions and technological changes in the industry.?

The Group outsourced its online sales to Amazon, which gave away its customer data and loyalty to its main competitor.

Borders failed to invest in e-books and e-readers, which became increasingly popular among consumers and offered lower costs and higher margins for publishers.

They relied on outdated inventory and distribution systems, which resulted in overstocking and inefficiency.

And finally, the organization did not adapt to the changing preferences and behaviors of customers, who increasingly used online platforms and social media to discover, share, and purchase books.

Available through CosimoPublishing.com in digital format and Amazon Kindle.

Responses

Borders lost its online sales and customer loyalty to Amazon, who it outsourced its e-commerce to. Borders assumed that online sales were not a core part of its business model, but this proved to be wrong as online sales grew rapidly and Amazon used its data to offer personalized recommendations and discounts to Borders' customers.

The Group failed to invest in e-books and e-readers, which became popular and offered lower costs and higher margins. Borders underestimated the potential of e-books and e-readers, and did not partner with or develop any e-reader device. Borders was unable to compete with Amazon's Kindle and other e-reader devices.

The enterprise relied on outdated inventory and distribution systems, which resulted in overstocking and inefficiency. Borders used a centralized and manual system, which caused high costs, excess inventory, waste, errors, and delays. Borders did not have a real-time, dynamic, or flexible system to manage its inventory, sales, and prices.

Lessons Learned

Some lessons to learn from the failure of the Borders Group include:

Do not outsource your core competencies to your competitors. Borders gave away its online sales and customer data to Amazon, which used it to gain an edge over Borders and offer personalized recommendations and discounts.

Do not underestimate the potential of new technologies and products. The company failed to invest in e-books and e-readers, which became popular and offered lower costs and higher margins. Borders did not partner with or develop any e-reader device, unlike Barnes & Noble and Amazon.

Do not rely on outdated systems and processes. The sprawling enterprise used a centralized and manual inventory and distribution system, which caused high costs, excess inventory, waste, errors, and delays. They did not have a real-time, dynamic, or flexible system to manage its inventory, sales, and prices.

William Dodson is a Digital Transformation Communications & Change Management Specialist. He writes and edits publications about innovation at Cosimo Publishing, LLC.

He is a former Organizational Change Management senior consultant for: PriceWaterhouseCoopers, BearingPoint, Computer Sciences Corporation, and Sogeti (a division of CapGemini).

His most recent books include:

"Artificial Intelligence for Business Leaders: The Essential Guide to Understanding and Applying AI in Organizations (2023, Cosimo Publishing, LLC), 100 pp. ISBN 979-8-9884070-7-2. Kindle edition: https://bit.ly/48xu1ho

"The New 'Teacher's Pet': A.I. Ethical Dilemmas in Education and How to Resolve Surveillance, Authenticity, and Learning Issues" (2023, Cosimo Publishing, LLC), 77 pp. ISBN 979-8-9884070-8-9. Kindle edition: https://bit.ly/3TMrwDA

Contact him about advising on or implementing organizational change management initiatives for? digital technology innovations at: [email protected].

More about Borders Group

5 Reasons Borders Went Out of Business (and What Will Take Its Place).

Top Reasons why Borders Failed - Medium.

4 Lessons From the Demise of Borders - U.S. News & World Report.

Seven IT Lessons From The Failure of Borders | Computerworld.