Innovation is crucial for gaining or maintaining a leadership position in a growing industry. Shying away from it can be a fatal step in business. In this article, entrepreneur Brian Colpak points out examples of significant business failures caused when companies failed to embrace technological innovation.
Innovation is commonly thought of as the rescuer of disappearing industries or the incubator for brand new markets. But it also plays an equally important role in any thriving industry.
By its very nature, a growing industry presents new or additional opportunities. If a market is stagnant, it means that little or no growth is happening. There is a reasonably static demand divided among the current providers. Some customers may move from one provider to another, but the industry as a whole realizes no net gain in need.
A growth industry, on the other hand, is the beneficiary of an increase in demand. This expansion creates space for new competitors and an opportunity for one existing provider to capture a larger market share.
The essential business principle supporting the need for innovation in growth industries is summed up by the euphemism, “If you’re not growing, you’re shrinking.” This idea is especially true in a growing market because if there are an increased number of customers available and your company is not capturing them, your competitor is. And, if your competitor is growing and you’re not, you are, in effect, shrinking.
The faulty thinking that leads businesses to fall into this sometimes fatal trap can be expressed with some version of, “We’ve always done things this way, so we’ll just do more of it to get our share of the growth.”
This notion of simply turning up the volume on old ideas to leverage a growing demand denies the power inherent in innovation. Innovation holds the promise of exponential growth by adopting a whole new paradigm. Let’s look at a couple of companies that apparently fell into the “turn up the volume on old ideas” trap to their eventual demise.
The most iconic of the companies in this class – and certainly the most common business school example of failure to adapt – is the Eastman Kodak Company. You may recognize the phrase “a Kodak moment,” but your kids probably don’t.
Kodak banked on a business model where they made more from film sales than from camera equipment. They failed to adapt to the innovations brought about by digital photography. After emerging from bankruptcy, they now focus on printing, graphic, and professional services for businesses.
Another iconic example of failing to adapt to innovation is brought to you by Blockbuster Video. As the market for watching movies outside of a theater exploded, Blockbuster doubled down by building more and more brick and mortar video rental stores. They dominated the market but seemed to be taken off guard by Netflix and other streaming technologies that handily wrestled the market away from Blockbuster.
These are only two of the many examples of companies that, even from their perch at the top of their industry, couldn’t see the approaching storm caused by innovation.
While it’s crucial to find operational efficiencies and other ways to what you do only better, don’t forget to continually scan the horizon for innovative new technologies that can disrupt your industry.
About Brian Colpak
Brian Colpak is a tech entrepreneur and the founder of Continental Global. After spending most of his career in managerial positions, he founded and led a company that was recognized as one of the top 100 fastest growing companies in Massachusetts before starting his current company. These days his main focus is on an upcoming project in Dubai.