If complacency sets in, an organization is doomed to fail. The rise and fall of these six mega-companies serve as a reminder to never lose the motivation to adapt.
A huge brand today could be a no-name tomorrow. All too often, the reason for this is not an active step in the wrong direction but a failure to stay hungry.
The truth is that once a company has broken through and achieved domination, many companies lose the edge. It’s so common for executives, entrepreneurs and leaders to just keep doing what they’re good at.
That complacency will mean they’ll stop looking as hard to update their vision, which leads to all kinds of problems. For one, they’ll miss an opportunity that could have been taken. Another is they can fail to see an emerging danger as a real threat.
These are the silent killers of businesses both large and small.
Know that complacency is something that starts at the individual level and can spread into the culture of your organization no matter the size. It’s something that will take root once you feel like you’ve made it.
It’s also far more common than you might think.
Unfortunately, failing to update your personal and organizational strategies will give opportunities to others. This happens all the time in business and allows new start-ups to fill new niches and disrupt the status quo.
As a business leader, you’ve got to be aware of this.
And in this article, I’ll share six stories of once huge companies that let complacency pull them back into the shadows. That way, you’ll truly understand why being complacent is more disastrous than you think.
The 6 Companies
Company #1. Nokia
Nokia was the global leader in the mobile phone industry. In fact, in 2007, the company was taking over 50% of the global mobile phone market. Most of that profit was from traditional mobile phone sales.
You might remember that Nokia was known for its innovation and forward-thinking and even produced its own smartphone in 1996.
The problem was that they failed to see how far the smartphone was going to go. They assumed the success they had enjoyed with traditional mobile phones would continue.
This was the chance for their competitors to take advantage. And it was Apple and Android who pushed the cutting edge of smartphone innovation.
From global domination in 2007, Nokia was only taking 3% of the global smartphone market by 2013. With the company in decline, it was sold to Microsoft that year. And the Nokia CEO made this now-famous closing remark: “We didn’t do anything wrong, but, somehow, we lost.”
They had become complacent and lost the drive for innovation. The beginning of the end was sowed during the times of great success.
Company #2. Blockbuster
Another huge brand that failed to move with the times is Blockbuster. Those of us who lived through the times of VHS videotapes are sure to remember going to the store to pick up a movie from Blockbuster on the weekend.
In the late ’90s, Blockbuster had over 65 million customers and employed over 80,000 people worldwide. They enjoyed huge success with their video rental stores. At the same time, this gave them a sense of invincibility - that business would always be ‘done like this’.
But technology moved on.
Other companies started to offer DVD by mail services, and something totally new: video streaming. The CEO of Blockbuster even showed his arrogance towards them. In 2008 he said: "Neither RedBox nor Netflix is even on the radar screen in terms of competition.”
Blockbuster did finally try to catch up in other forms of video delivery. But they never shifted their focus off the traditional video store.
They sank into over $900 million of debt, and Blockbuster filed for bankruptcy in 2010.
Company #3. Kodak
Kodak is another industry-dominating brand that suffered demise.
As you know, the company made astounding advances in photography. They developed cameras that were affordable to amateurs around the world. And they were also the first company to invent the digital camera in 1975.
But their success with film led them to believe that they would always be superior. They thought their customers would think the same way about digital photography.
In an effort to protect its domination of the film industry, they tried to stifle the development of the competing technology. Their belief in the status quo was obviously the wrong strategy.
Their competitors took the opportunity, and dominated the new market for digital cameras. Kodak ceased selling traditional film cameras in 2004 and filed for bankruptcy in 2012.
Company #4. MySpace
This is an example of a company that younger readers might be more familiar with. Between 2005 and 2008 it was the coolest and most popular social networking site. It achieved peak popularity in 2008 with over 75 million unique visitors per month.
But for a number of reasons, Myspace failed to capitalize on their market position.
Firstly, competitors like Facebook came onto the scene. They had new features with better communication and networking capability.
Secondly, News Corporation acquired Myspace in 2005. And they brought their old-school way of thinking to this new business model. They saw the members as much like traditional readership and focused on ad revenue.
These two factors pushed away members in droves. Reports even showed they were losing over a million members a month between 2009 and 2011.
Myspace failed to adapt and innovate. They also approached business with outdated beliefs. These were key ingredients to the demise of the once-booming Myspace. News Corp paid $580 million for it in 2005 and, in the end, sold it for $35 million in 2011.
That is the cost of complacency.
Company #5. Yahoo
If you think back to the early days of the internet, chances are you would recall the Yahoo website. It was one of the most useful portals for email, news, and web searching.
Yahoo launched in 1994 and by 2000 it was valued at $125 billion. But complacency set in, and the company seemed to drop the ball from this pinnacle time.
In 2002, Yahoo had the opportunity to buy Google for $1 billion. And in 2006, it allegedly had the chance to acquire Facebook for $1.1 billion. But it didn’t - both lamentable decisions in hindsight.
Yahoo also owned the Flickr and Tumblr brands, but these platforms never reached their potential. And the failure was attributed to Yahoo not prioritizing securing quality programmers.
It's another story of a mega-brand failing to capitalize on its position. From its peak valuation of $125 billion in 2000, Yahoo was sold to Verizon in 2016 for only $4.8 billion.
Company #6. Xerox
This is an example of another powerhouse of innovation. The copiers of Xerox were massively successful. So much so that the word ‘Xerox’ was considered to be a substitute for the verb ‘copy’.
In 1970 Xerox started a project with a big vision, by establishing the Xerox Palo Alto Research Center. Here, they invented technologies such as the Ethernet, laser printers and personal computers.
They also developed the graphical user interface and a commercially viable mouse, which were essential for the modern computer. But it was Apple who eclipsed them with the Macintosh computer from 1984.
For unknown reasons, they failed to capitalize on this technology.
Complacency within company culture must have played no small part in the demise of Xerox. It was a household name in technology, yet it was relegated to being a minor player.
Is Complacency Present in Your Business?
The message is clear:
Complacency is far more common than you might think and has catastrophic consequences for any company.
It rears its head in many ways. Complacency can creep into your personal ways or the culture of your company.
Being aware of this may be enough to start you on the path to remedying this problem.