7-3 | The Turning Points of Failed Companies - Not What Was Lacking, But What Was Misjudged -

Last time,
we looked at companies that survived by redefining their company names, products, and markets.

This time, it is the opposite.

Even though they had the technology, talent, and capital,
we will look at the turning points of companies that stalled because they could not change their decisions.

This is where the lessons lie.

■ Turning Point 1

Kodak

"They had the technology, but their judgment stopped"

Kodak was
the first company in the world to invent the digital camera.

However, their judgment at the time was as follows:
• If digital becomes widespread, film will stop selling
• We cannot destroy our own core business

As a result,
digital technology remained "stuck in research."

When the market shifted from film to digital,
Kodak
could see the next pond, but could not jump into it.

The cause of failure was not technology, but
"attachment to past success models."

■ Turning Point 2

Nokia

"They looked at market share, but did not look at the future"

In the early 2000s,
Nokia boasted an overwhelming share of the global mobile phone market.
• High product quality
• Strong brand power
• Solid distribution

However, their decision-making criteria was
"current market share."

They underestimated the change in experiential value
called the smartphone.

As a result,
• Hardware-centric thinking
• Delays in responding to OS and UX

caused them to
lose market leadership all at once.

Nokia was not losing;
they stopped making decisions under the assumption that they were winning.

■ Turning Point 3

Blockbuster

"They mistook customer dissatisfaction for a revenue source"

Blockbuster was
the largest video rental chain in the United States.
• Number of stores
• Awareness
• Negotiating power

They had it all.

However,
late fees were a major source of profit.

Then,
Netflix, with its "mail + flat-rate" model,
appeared.

Blockbuster judged this as
a "small niche."

As a result,
customers quietly moved away.

Misunderstanding customer dissatisfaction
as demand that they were willing to endure and pay for
became a fatal wound.

■ Turning Point 4

MySpace

"They chased user numbers and did not design the experience"

MySpace was
once the world's largest SNS.
• Rapid increase in users
• Strong advertising revenue

However,
• The screen was cluttered
• It was heavy due to excessive customizability

On the other hand, Facebook had
• Simple
• Real names
• Focused on interaction experience

a completely opposite design.

MySpace
kept looking at "current numbers,"
while Facebook
was looking at "future behavior."

One thing common to failed companies

What these companies have in common is
that it was not
• Lack of technology
• Lack of effort

• Lack of information

What they have in common is

that their decision-making criteria were fixed on past successes.

• Is it profitable now?
• Do we have market share now?
• Are we not being scolded now? *1
This "now"

dulled their judgment.
*1: *1: Means: Are we not being held responsible, is it not becoming a problem, is it not being pointed out, is it not being denied by superiors

The decisive difference from successful companies

Successful companies
ask questions like this:

• How long will this market last?
• What will customers take for granted next?
• Will our current strengths be weapons in the next market?

Failed companies
fixed their answers before asking the questions.

Life Cycle / Corporate Lifespan

In the business world,
it is said that "the industry life cycle is about 30 years"
and "the average lifespan of a company is about 30 years."
Of course, this lifespan varies depending on the industry (product), but

due to technological innovation, regulations, consumer behavior, global competition, etc.,
it is always passed on to the next generation.
The companies mentioned this time noticed it but did not change.

That led to their defeat.

As a summary of Chapter 7

What I want to convey in Chapter 7
is neither success stories nor failure stories.

It is the fact that
turning points always arrive quietly.

It is too late after sales have dropped.
It is too late after you feel a sense of crisis.

When judgment is needed is
when things are still going well.

In the next chapter,
I will explain
"design principles to prevent distorted judgment."