10 Companies that Failed to Innovate: 5 Innovation Lessons Learned

INSPIRATION FOR INNOVATION

6 Jul 202008:17

Summary

TLDRIn this video, Gijs van Wulfen, a LinkedIn Influencer on creativity, design, and innovation, discusses the pitfalls and strategies for organizational innovation. He highlights the downfall of companies like Nokia, ToysRus, and Blockbuster due to their failure to innovate and adapt to changing technologies and market demands. Van Wulfen offers five tips for fostering a culture of innovation, including staying agile, creating an in-house culture of innovation, picking the right moment to innovate, staying open to new technologies, and being willing to cannibalize your own products. He emphasizes the importance of courage in innovation and encourages viewers to disrupt their organizations in time to survive and thrive in disruptive times.

Takeaways

📱 'Nokia's Fall': The script highlights how Nokia, once the leading mobile phone company, failed to innovate with the introduction of the iPhone and lost its market dominance due to a lack of courage to change.
🏆 'Success Pitfall': Success can blind companies to new opportunities and threats, as illustrated by the examples of Compaq, Hummer, and National Geographic.
🛒 'ToysRus's E-Commerce Delay': ToysRus's decision to sign an exclusive contract with Amazon and its late entry into e-commerce shows the danger of relying too heavily on current technology without anticipating future shifts.
💡 'Innovation Culture': The script emphasizes the importance of fostering an internal culture of innovation rather than outsourcing it, as seen with Blackberry's failure to adapt to touchscreen technology.
🕒 'Timing is Key': Gijs van Wulfen advises starting innovation efforts early, as it can take up to five years to develop a disruptive technology, using National Geographic's missed opportunity with the Discovery Channel as an example.
🔄 'Stay Agile': Market leaders must remain agile and ready to adapt to changes in the market, as Blockbuster failed to do with the rise of digital media.
👀 'Openness to New Tech': Organizations should stay open to new technologies, even if they have invested heavily in current systems, as Xerox did with its inventions that were later capitalized on by Apple and Microsoft.
🔪 'Cannibalize to Survive': The willingness to cannibalize one's own products for the sake of innovation is crucial for long-term survival, as Hummer failed to do during the energy crisis.
🚀 'Courage to Innovate': The most important quality of an innovator is courage, which is needed to challenge the status quo and lead change within an organization, as Kodak lacked in transitioning to digital cameras.
🌟 'Bonus Tip': The script concludes with the bonus tip that courage is essential for innovation, urging leaders to take bold steps to disrupt their own organizations and stay ahead of disruptive times.

Q & A

What was the first mobile phone introduced by Nokia and how did it affect the company's future?
-Nokia introduced its first mobile phone in 1987, which initially made it the biggest and leading mobile phone company. However, the introduction of the iPhone by Steve Jobs in 2007 marked a turning point, as Nokia lacked the courage to innovate with a new user experience, leading to its downfall.
What is the 'Success Pitfall' as described in the script and why is it dangerous for companies?
-The 'Success Pitfall' refers to the blindness that success can cause, making a company overlook the changes and innovations happening around them. This can be dangerous as it can lead to complacency and inability to adapt to new market trends, as seen with Nokia's response to the iPhone.
Why did ToysRus fail to adapt to the e-commerce revolution?
-ToysRus signed an exclusive contract with Amazon in 2000, but Amazon began allowing other toy vendors on its platform. ToysRus was slow to react and jumpstart its own e-commerce business, which was too late, illustrating the Dependency Pitfall of relying too heavily on business partners for innovation.
What is the 'Present Technology Pitfall' and how did it affect Xerox and Nokia?
-The 'Present Technology Pitfall' occurs when a company is reluctant to recognize and invest in new technologies due to heavy investments in existing equipment and systems. This happened to Xerox and Nokia, who failed to adapt to digital advancements, leading to their decline.
How did Compaq's struggle with the value chain contribute to its downfall?
-Compaq, once the world's largest supplier of personal computers, struggled to keep up with price wars against competitors like Dell, who innovated the value chain by selling directly to consumers. This inability to innovate led to Compaq's downfall.
What is the importance of staying agile as a market leader, as suggested in the script?
-Staying agile as a market leader is crucial for adapting to market disruptions. It involves being ready to innovate and change strategies quickly to maintain a competitive edge, as complacency can lead to being overtaken by more agile competitors.
Why is it essential to create and maintain a culture of innovation within a company?
-Creating and maintaining a culture of innovation ensures that innovation is an integral part of the company's operations and not outsourced or dependent on external factors. This internal focus on innovation is vital for long-term success and adaptability.
What was Blackberry's mistake in terms of product innovation, and what was the consequence?
-Blackberry's mistake was to continue using keyboards on most of its devices instead of adopting the touchscreen trend. This failure to innovate with the market led to Blackberry losing its market position.
Why is it important to pick the right moment to innovate, and what does it entail?
-Picking the right moment to innovate is important because it takes time to ideate, invent, and develop new technologies for disruptive breakthroughs. Starting the innovation process during periods of success ensures that the company is prepared for future disruptions.
What did National Geographic miss by refusing the idea to start a new cable channel, and what was the outcome?
-National Geographic missed the opportunity to innovate and expand its reach by refusing the idea to start a new cable channel. The producers who pitched the idea went on to launch the Discovery Channel, which became a competitor.
Why should companies be ready to cannibalize their own products when new technology emerges?
-Cannibalizing one's own products is a strategic move to stay ahead of the competition. It may hurt short-term profits, but it ensures the company's survival by adapting to new technologies before competitors do, as seen with the Hummer's failure to adapt during the energy crisis.
What is the most important quality of an innovator according to the script, and why is it crucial?
-The most important quality of an innovator is courage. It is crucial because it drives the innovator to challenge the status quo, propose new ideas, and lead change within the organization, which is essential for innovation and survival in disruptive times.
How did Kodak's fear of cannibalizing its own business affect its ability to innovate?
-Kodak's fear of cannibalizing its film business by developing digital cameras for the mass market led to missed opportunities and ultimately contributed to the company's decline, as it failed to adapt to the digital revolution in photography.

Outlines

00:00

📱 The Pitfalls of Failure to Innovate

This paragraph introduces the video's theme of innovation and its necessity for survival in disruptive times. The speaker, Gijs van Wulfen, outlines the video's content, which includes examples of brands that failed to innovate and died, pitfalls to avoid, tips for organizational innovation, and a bonus tip on the key quality of an innovator. The case of Nokia is highlighted to illustrate the success pitfall, where past success can blind a company to new market developments, such as the introduction of the iPhone by Apple, which led to Nokia's downfall. Other companies like Compaq, Hummer, and National Geographic are mentioned as examples of organizations that failed to adapt to new technologies or market changes, emphasizing the importance of agility, innovation culture, and the right timing for innovation.

05:06

🛠 Embracing Innovation to Avoid Obsolescence

The second paragraph delves deeper into the consequences of not innovating and the importance of being prepared to cannibalize one's own products. It discusses the story of Xerox, which invented key components of personal computing but failed to capitalize on them, allowing Apple and Microsoft to dominate the market. The paragraph also touches on the importance of courage in innovation, using the example of Kodak, which missed the digital camera revolution. The speaker provides a bonus tip, emphasizing courage as the most important quality for an innovator, and encourages viewers to challenge the status quo and lead innovation within their organizations. The video concludes with an invitation to watch another video on the importance of innovation and a call to action for viewers to subscribe for more content on innovation.

Mindmap

Keywords

💡Innovation

Innovation refers to the process of translating an idea or invention into a good or service that creates value or for which customers will pay. In the context of the video, innovation is the central theme, emphasizing the necessity for companies to innovate in order to survive and thrive in a competitive market. The script mentions several companies that failed to innovate, leading to their downfall, such as Nokia and Blockbuster Video.

💡Disruption

Disruption in the video script signifies a radical change in the industry or market that displaces established operations and ways of doing things. It is a key concept because the video discusses how companies that fail to anticipate and adapt to disruptive changes may decline or even cease to exist, as illustrated by the examples of Polaroid and Kodak.

💡Success Pitfall

The 'Success Pitfall' is a term used in the script to describe the complacency that can set in for successful companies, making them blind to new challenges and opportunities. This concept is illustrated by the story of Nokia, which failed to adapt to the new user experience introduced by the iPhone, leading to its downfall.

💡Technology Pitfall

The 'Technology Pitfall' refers to the reluctance of a company to embrace new technologies due to heavy investments in existing systems. The script uses Xerox and Nokia as examples, where their hesitance to invest in new technologies led to their decline in the face of disruptive innovations.

💡Dependency Pitfall

The 'Dependency Pitfall' is the risk a company takes when it relies too heavily on suppliers or business partners for innovation. The script cites ToysRus's over-reliance on Amazon as an exclusive vendor, which backfired when Amazon allowed other vendors, leading to ToysRus's eventual e-commerce struggles.

💡Agility

Agility in the video script is the ability of a market leader to adapt quickly to changes in the market. The concept is related to the video's theme by suggesting that market leaders must remain agile to avoid being disrupted by new entrants or technologies, as exemplified by Blockbuster's failure to transition to a digital model.

💡Innovation Culture

An 'Innovation Culture' is an organizational environment that encourages and rewards creativity and new ideas. The script emphasizes the importance of fostering such a culture within a company to drive innovation, rather than outsourcing it, using the example of Blackberry's adherence to keyboards instead of embracing touchscreens.

💡Cannibalization

Cannibalization in the context of the video refers to the strategic decision by a company to introduce a new product or service that might compete with its existing offerings. The script suggests that companies should be prepared to cannibalize their own products to stay ahead of the competition, as evidenced by the contrasting fates of Xerox and Apple/Microsoft.

💡Courage

Courage, as highlighted in the video, is the most important quality of an innovator. It is the willingness to challenge the status quo and take risks, even if it means going against conventional wisdom or established practices. The script uses the example of Kodak, which lacked the courage to cannibalize its film business with digital cameras, leading to its eventual decline.

💡Value Chain

The 'Value Chain' is a business model that describes the sequence of activities a company performs to deliver a valuable product or service to its customers. The script discusses how companies like Compaq and Dell competed by innovating their value chains, with Dell's direct-to-consumer approach giving it an advantage.

💡Digital Transformation

Digital Transformation is the integration of digital technology into all areas of a business, fundamentally changing how a company operates and delivers value to customers. The script mentions the failure of companies like Blockbuster and Kodak to undergo digital transformation, which led to their inability to compete in the new digital landscape.

Highlights

Nokia's failure to innovate with the introduction of the iPhone led to its downfall as the leading mobile phone company.

Success can blind companies to the need for innovation, as seen with Nokia's complacency before the iPhone's release.

ToysRus's late entry into e-commerce due to an exclusive contract with Amazon highlights the dependency pitfall.

Investment in old technology can hinder recognition and adoption of new technology, as experienced by Xerox and Nokia.

Compaq's struggle against Dell in the price wars due to lack of innovation in the value chain.

The importance of not over-relying on suppliers or business partners for innovation, as seen with ToysRus and Amazon.

Polaroid's bankruptcy due to not anticipating the impact of digital cameras on its film business.

Market leaders must stay agile and be ready for market disruption.

Blockbuster Video's inability to transition to a digital model, leading to its downfall.

Creating and maintaining a culture of innovation within the company is crucial and should not be outsourced.

Blackberry's adherence to keyboards over touchscreens resulted in losing its market position.

Innovation should start now, even if the impact is expected in five years, due to the long development cycle.

National Geographic's refusal to start a cable channel led to the creation of competitor Discovery Channel.

Staying open-minded to new technology is essential, even when heavily invested in current systems.

Xerox's missed opportunity to dominate computing due to sharing its inventions with Apple and Microsoft.

The necessity for companies to be ready to cannibalize their own products for long-term survival.

Hummer's shutdown in 2009 due to its inability to adapt to the energy crisis and changing consumer preferences.

The most important quality of an innovator is courage, to challenge the status quo and lead innovation.

Kodak's missed opportunities in digital cameras due to fear of cannibalizing its own business.

Applying these six tips can help make an organization or client's organization innovative.