Why Successful Companies Fail

“Things happen slower than you think they should...then they happen faster than you think they could.”

BlackBerry. Blockbuster. Barnes & Noble. What do these three companies have in common? Aside from all starting with the letter “B,” they all saw change coming at them...but failed to adapt. 

It happens time and again...some of the most successful companies get complacent and never realize that the wave of change is closing in on them. They were best positioned to Make the Jump...yet they didn’t adapt. 

From my perspective, there are three areas that hinder companies from Making the Jump.

Speed

Speed is not about being fast. Instead, speed = timing + positioning. Get there too early, and the world isn’t ready for you. Arrive too late and you’re irrelevant. 

Remember BlackBerry? They were positioned to beat Apple. They had the most popular phone in the industry. Their customer base was strong. But their timing was off. As Apple was rolling out the first iPhone in 2007, BlackBerry was touting full-qwerty keyboards. They dismissed the iPhone design as impractical. Even worse, when they did finally introduce a touchscreen phone at the end of 2008, it was rushed to market and was so prone to failure that almost a million faulty devices had to be replaced. 

Boundaries

Twenty years ago, Blockbuster Video stores were as ubiquitous as Starbucks. They were sitting on a retail empire while Netflix was still struggling to gain traction at the turn of the century. But by 2007, the competitive threat was too big to ignore. That’s when Netflix began offering online streaming in addition to its DVDs-by-mail service. 

Consumers were eager to escape punitive late fees and adapt to a new business model, but Blockbuster was stuck in their old ways for far too long. When the retail giant did eventually react to Netflix's innovations, they took a bolt-on approach to mail delivery and digital streaming options. From both an industry and a product standpoint, Blockbuster misjudged its boundaries and missed several opportunities to jump to the next s-curve before it was too late.

Companies miss opportunities when they accept constraints as-is. Many so-called boundaries can and should be challenged. Companies create their own boundaries across four key areas:

• Industry. Are you conforming to industry standards, or are you looking for ways to reshape your industry?
• Structure. Are you operating in silos centered around job function, or are you organized cross-functionally around an entire customer experience? 
• Product. Are you bolting on digital versions of existing products and services, or are you considering how to create one seamless, integrated experience?
• Skills. Are you stuck in old habits – doing things the way they’ve always been done – or do you embrace a learning mindset to expand your skills?

Execution

Even if you create amazing things, poor execution will ultimately catch up with you. This is the most difficult to pull off. Many successful companies fail because they are over-led and under-managed. It’s easy to dream big dreams. But it’s very hard to be truly disciplined and rigorous. This is why I’ve always said that every brain must be in the game, working together to continually improve every element of your business. 

Barnes & Noble is still in business today, but their market cap is only a fraction of what it was 15 years ago. The company had the right idea when they chose to compete with Amazon’s Kindle by launching their own Nook e-reader. The problem was simply terrible execution.

Their employees weren’t given the resources needed to create a great user experience, and their leaders made choices that hurt their own customers. From poor pricing and marketing decisions to heavy restrictions on how customers could use their device, the Nook quickly fell off the map as a viable competitor to the Kindle – and Barnes & Noble has been struggling ever since.