You must’ve heard a lot about business failures. But did you really think about why it happened? It doesn’t matter whether you are an entrepreneur or a job seeker, every kind of failure helps us to learn a great deal in life. And today, we are going to talk about such 7 big companies that suffered huge losses.
Reaching to the top of any business is perhaps difficult but sustaining that position is superlatively toilsome. When one starts a business, failures happen and they learn from them; sometimes they do innovate & adapt and other times, they stick to traditionalism. Sometimes the formula works and sometimes the same formula is flagged as a great blunder of its time.
Today, we embark on a riveting exploration of the colossal business failures that have shaken the world’s market pursuits throughout history. From once-mighty empires to contemporary tech giants, the annals of commerce are littered with cautionary tales of grand ambitions gone awry.
So, let’s explore these fallen giants, and uncover the reasons behind their dissolution and the invaluable lessons we can learn from their missteps.
The East India Company (1600-1874):
Our journey begins with a business empire that once held a monopoly over trade between Europe and Asia – the East India Company. Founded in 1600, this British enterprise rose to remarkable heights, amassing immense wealth and influence. It also had a great dominance over its competitors – the Dutch East Indian Company and French forces. The profit of the business was so immense that The East India Company officers when returned to Britain, established sprawling estates and businesses, and obtained political power, such as seats in the House of Commons.
Reason For Failure:
However, a combination of corruption, mismanagement, and ruthless exploitation led to the company’s ultimate downfall. The Company’s aggressive pursuit of profits and disregard for local populations (Indians) created resentment and sparked uprisings, eventually eroding its dominance. Additionally, changes in international trade policies and political shifts contributed to its ultimate dissolution. The company also got involved in slavery shipping, Mughal convoy piracy (a famous plunder that took place in 1695) and other scandals as well. Gradually, not only Indians but also their own people lost their trust in the management.
Lesson From Failure:
The East India Company’s failure serves as a stark reminder of the perils of unchecked power and the importance of ethical conduct in business. Big companies such as East India Company, Walmart need to acknowledge the moral importance of the ethical right of every human being regardless of their sex, race, citizenship, colour or whatsoever.
Blockbuster (1985-2010):
Watching an old movie was a problem back then after the theatres stop them. Thanks to David Cook who innovated a new idea, Blockbuster in 1985, which was the top video rental company in the US and then around the world. With its extensive network of brick-and-mortar stores, the company dominated the home entertainment market.
So, what was so different about other video rental stores and Blockbuster?
Blockbuster had a proud collection of more than 10K VHS tapes to offer to its customers, along with a modern checkout process. It made the whole process easy. In 1992, the company expanded its presence to the UK as well. And in 1994, Viacom acquired Blockbuster with its 6000 global stores. The company saw its peak in 2004 but instead sank deep to oblivion in 2010.
Reason For Failure:
Blockbuster’s reluctance to adapt to changing consumer preferences and embrace digital streaming proved fatal. Customers were especially annoyed by Blockbuster’s hefty late fees. According to Quartz, Blockbuster then made $800 million in late fees.
Netflix pioneered online movie rentals in 1997 by Hastings and Blockbuster failed to recognize the significance of this emerging trend. The company’s lack of foresight and failure to innovate led to its decline, with the last remaining store closing its doors in 2010. It came late to the digital world; and when it came, Netflix and Red Box were already ruling the shows.
Lesson From Failure:
Being on trend and understanding the crucial requirements of your audience are quintessential. Even when your business is ruling its kingdom, you shouldn’t forget about your potential competitors and either plan to acquire them or change your market dynamics and evolving consumer preferences to highlight your brand’s USP to remain competitive in the ever-evolving digital landscape. The big companies such as Blockbuster, Nokia, etc. needed to comprehend this same formula.
Nokia (1865-present):
At one point, Nokia was the undisputed king of the mobile phone industry, renowned for its durability and user-friendly devices. Started in 1865 with the founder of Nokia, Fredrick Idestam and his first paper mill factory at Tammerkoski in southwestern Finland went on to become one big Finnish company through the merging of three other companies –mobile telephone company in 1979. From iconic Nokia tunes to QWERTY keypads, Nokia experienced great success until 2007.
At the horizon, there were rising mammoths – Samsung and Apple. Nokia’s myopic strategy failed to close the huge market and technological gaps created by its rivals.
Reason For Failure:
In 2006, the world was demanding innovations in the domain of mobile phones because that’s what Nokia’s rivals – Samsung and Apple were serving to the mass. From innovative RAM and memory expansion, these phones were coming with miraculous touch screens (at least at that time!) great security measurements and enthralling designs. On the other hand, Nokia was still focussing on the mass production of traditional phones. This delay further gave room to its rivals to bring their more powerful and futuristic OS. Compared to this, Nokia’s Symbian OS was greatly inferior.
In 2011, Nokia partnered with Microsoft to launch Windows cell phones to reclaim its mobile phone market throne but sadly, failed to do so. Nokia failed to spot the dynamic trends in eCommerce and social platforms. Even after realising this, the top management egoistically denied having an open discussion with its middle managers.
Lesson From Failure:
Embrace what you’ve and your capabilities of reaching new heights. Infuse the willpower to do so and lastly, it is immensely important to be transparent with your company executives. Measurement of technical incompetence should be done and exercised properly to get the desired outcomes.
Kodak (1880-2012):
Kodak was founded by George Eastman in the late 1880s and for more than a century it had been a giant in the photography industry. Although for common people, it was the camera as the main business of Kodak, it was Film and printing photos that took the core part of the company. After the photos were taken with the Kodak camera, people had to send the camera to the Kodak factory where the film was developed, and photos were printed. Kodak started with the monochrome Kodak Camera in 1889 and introduced Kodachrome for coloured still photography in 1935. In 1991, Kodak released its first digital camera alongside Fuji.
Reason For Failure:
For many good years when competitors were jumping and innovating new trends, Kodak kept its main focus on photo development and printing. Also, after a few years, Kodak shifted to selling expensive printers and inexpensive inks, just the opposite of its market enemies. Kodak was so firmly adamant about printing photos that after acquiring Ofoto, a photo-sharing site like Instagram in 2001, it pushed people to print digital photos. And at last, when Kodak filed for bankruptcy in 2012, Facebook acquired Instagram for $1 Billion.
Lesson From Failure:
Always be ready for innovations, adopt agility and view business strategy from a new angle. Never take your foot backwards when shifting your business angle for the company’s competitive advantage.
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