This article gives insights into a few factors that lead to the downfall of companies like being stuck to the knitting, bad culture and lack of innovation. This is explained with the examples of Polaroid, Enron and GM who became prey to these factors. The article also points out how companies like Intel, HP and Toyota emerged successful by avoiding these pitfalls.
Like weather, one's fortune may change by the evening said Luu Mengzheng of the Song Dynasty. Ups and downs are not merely part of a roller coaster ride, it occurs in the corporate world too. The only difference is, for a roller coaster rider it thrills when it slides down but for a corporate rider it thrills when the company zooms up.
Companies considered good or excellent, tumble and stabilize at a lower point or even hit the ground. The cause could be the slightest of tremors pertaining to a war in a distant land, or a far reaching decision made by the OPEC. The slightest reasons can send ripples affecting the apparent stability of the company in the stock market, but a downfall?
What are the reasons for a corporate downfall? In general, it is difficult to pinpoint particular reasons. This article however discusses some factors that have lead companies to their downfall.
In their book, In Search of Excellence, Tom Peters and Robert H Waterman Jr, attributed one of the important reasons for some companies being excellent is that they `stick to the knitting', which means simply to `stay with the business that you know'. Of course it may be true in a few cases, but some companies had a downfall after being stuck to the knitting. Polaroid is one example which became a prey to it. Polaroid was doing what it knew well. Its core competence was in `instant film technology'. In 1991, the era of digital camera began but Polaroid entered into this segment very late. It had a major threat from video cameras, which unlike Polaroid did not use films but magnetic tapes. |
