Survival of the fittest - what can we learn from companies who couldn’t cope with crisis?

Evy Fellas

Evy Fellas

Some companies manage to boom through a crisis. Others go bust even if they appeared too big to fail. We’ve talked about the ones who thrived, and now it’s time for the ones that didn’t survive.

Either way - and whether they’re aware of it or not - it was all because of their Organisational Fitness

  • We measure organisations in a way that lets you fix problems, amplify strengths and create a happy, productive culture for your people.
  • We do it by analysing 16 specific areas that affect all companies, and if they’re all scoring well, your Organisational Fitness will make you more resilient and successful.

 

Blockbuster 

Failed at: innovation, leadership, customer service, culture.

It’s easy to forget how big Blockbuster was, and it’s also too simplistic to blame their demise on just the internet and Netflix. Lots of people talk about how Blockbuster had the chance to buy Netflix. However, at that point Netflix was a small company offering to run a service that used Blockbuster’s branding as a way to subscribe to DVDs by post.

Yes, Blockbuster didn’t innovate

  • They didn’t recognise the world was changing, and then Netflix grew and embraced online streaming. 

Customer service

  • A huge part of their revenue came from late fees. Profiting by punishing customers is never a good look.

Culture

  • They simply didn’t embrace film culture. They were more interested in selling you ice cream on the way out the door. The experience of renting a film was one that people quickly turned their back on when an alternative appeared.

Leadership

  • Former CEO, John Antioco, actually planned to scrap the late fee and invest heavily in online technology. In-fighting among the board members put a stop to this and Antioco was forced out. That led to the lack of innovation, and the final nail in the coffin.

See, it’s not as simple as a lot of people think. 

 

General Motors

Failed at: purpose, customer service, experience, innovation

GM still exists as a brand but In 2009 the car manufacturer went bankrupt.

Purpose and values

  • In the end, their purpose was to make money by cutting costs and profiting from finance options on their cars. That’s not a reason to get up in the morning and go to work. If your purpose isn’t centred around your customer, they’ll notice.

Customer service

  • When you cut costs at the expense of quality, the customer’s experience suffers. GM gained a reputation for cheap (not in a good way) and unreliable cars.

Experience

  • The technical staff with experience of building quality cars simply weren’t listened to. There are 2 knock-on effects of this. A product that doesn’t work, and good people leave. 

Innovation

  • At the same time all this was happening, cars were being imported from brands like Toyota that became known for being elegant, hard-wearing and easy to run. GM simply weren’t making cars that people wanted or needed.

 

HMV

Failed at: leadership, decision-making, listening, innovation, customer experience

HMV are still on our high streets but in 2013 they went into administration having been a powerhouse of music retail for decades.

"The three greatest threats to HMV are, online retailers, downloadable music and supermarkets discounting loss leader product." Advertising pitch to HMV in 2002.

Leadership

  • HMV’s MD in 2002 didn’t like the above quote when he heard it. He admitted that supermarkets were a “thorn in our side” but said that serious music and entertainment fans would always want the experience of shopping. The internet had just gone through the dot-com bubble and he considered it a fad. 

Listening

  • HMV used to be famous for its passionate and knowledgeable staff, but when it came time to innovate, it’s difficult to imagine they consulted their staff on ideas. In fact, one disgruntled employee, on hearing of the administration, took to HMV’s Twitter page to vent their rage.

Innovation

  • It’s pretty staggering to look back on HMV’s lack of innovation. When online retailers were taking off, HMV simply failed to commit to investing in online shopping.

Decision-making

  • One of their apparent innovations was to diversify into a sector that was already being squeezed by online retailers - electronics.

Customer experience

  • You have to be of a certain age to remember going into an HMV store and paying £16 for a new album. But for years, if you wanted the latest music, HMV was where you had to go after they bought up so many small independent stores. The huge margins they were making were even investigated by a Select Committee in the UK’s Parliament. They made a fortune but at what cost? When cheaper alternatives started appearing, customers jumped at them.

 

Understand your organisation in a way you never thought possible. Organisational Fitness is how you can take the guesswork out of decision-making, so you can build a business that can survive anything.

 


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