“Those who cannot learn from history are doomed to repeat it.”— George Santayana
“Those who cannot envision the future are doomed to be forgotten.” – Bill Playford
While many automotive posts like to highlight the heroic battles between disruptive technology, all-knowing consumers, and evildoing vendors, another much quieter war wages on. It’s the war between the automotive communities who accept the future and those who live in the past. I respect the advice of previous experience, and to the folks who made it in their day, I say “congratulations”. You were very successful and deserve everything you have. However, if history teaches us anything, those who cannot apply their previous success in contemporary business environments are destined to fail.
While I’m an unabashed futurist, I am not ignorant of the past. Truth be told, I look to the past all the time to understand what may happen in the future. Several technologies and practices were conceived long before they became practically applicable. It took several hundred years for Sikorski to make da Vinci’s helicopter a reality. Electric vehicles predated the gasoline-powered vehicles of Karl Benz and Henry Ford by several decades, and it has taken more than 100 years to perfect the technology. Democracy was invented long before the good ole’ US of A, but 90% of Americans will tell you otherwise. Sorry rest of the world.
While some companies look to the past to develop the future, others desperately try to hold on to the past to protect their future. Despite promising new trends, they stay the course of their forbearers, never deviating from what made them successful. They ignore their competition, often mocking them behind closed doors. They put young talent in their place by saying this is the way we have always done it. As the past has shown us, their empires crumble around them as they point and laugh.
Let’s take a look at a few companies, that in their day, were thought of as too big to fail:
- Woolworth: Now probably best known for its eponymous New York skyscraper, Woolworth maintained the Guinness World Records largest department store chain in the world after it celebrated its 100th anniversary in 1979. Foot Locker is all of what remains of its brittle bones.
- Nokia: In the late 90s one could not go anywhere without hearing the signature Nokia ringtone. Nokia’s GLOBAL market share peaked at a whopping 35% (double that of the closet player) in 2002. Microsoft bought its still-warm corpse in 2013.
- Converse: Way back in 1917, a basketball player named Chuck Taylor donned a revolutionary pair of Converse athletic shoes. For the next 60 years, everyone from Wilt Chamberlain to Joey Ramone made Converse the epitome of cool. By 2003, they went from a virtual monopoly to being owned by Nike.
- Sony: Although there is nearly one Walkman device for every man, woman, and child in the USA, the company is now propped up by its Playstation gaming division. The company is still struggling to answer the electronics onslaught from South Korea.
- Nintendo: Speaking of video games, at one point the Nintendo Entertainment System enjoyed a whopping 90% share of the console video game market. Its failure to branch out from family friendly content has led to a 80% drop in market value since 2007.
- Kodak: This may be America’s most favorite failure example. Reliance on a 100-year-old monopoly coupled with horrific diversification efforts turned this once unbreakable fortress into a crumbling shack.
Just a generation ago, it would be unthinkable for brands like Zenith, RCA, Oldsmobile, Marshall Field’s, and Pan Am to be either gone or alive in name alone. Whether it was unforeseen circumstances, a bad product bet, shareholder pressure, or just plain hubris, these companies fell apart. What took several decades to build will fade from our collective consciousness in just a few short years.
However, some companies took proactive measures to ensure their future survival. They made unthinkable decisions in a successful present to create a more dominant future.
- IBM: The company that was once synonymous with “personal computer” (sorry Xerox, HP, et al) for over 20 years inexplicably sold its PC business to Lenovo in 2004 making Lenovo the 3rd largest PC maker in world. Since then, IBM’s market value has doubled (to nearly $200 BILLION), allowing it to focus on atomic-scale engineering, as well as carbon nanotube and graphene based computing systems. Simply put, they’re making horse drawn carriages out of silicon-based computers.
- Ford: Shortly after taking over the Ford Motor Company, Allen Mullaly made a bold move by leveraging Ford’s most sacred assets to get the cash it needed to revitalize its business. This decision proved fortuitous when just two years later, the economy melted down, taking two of the Detroit 3 along with it. While its two historic competitors floundered in bankruptcy, Ford was able to streamline manufacturing, improve quality, and create fantastic products for a robust future.
- Apple: I hate using Apple as an example, but it’s necessary. After ceremoniously firing Steve Jobs, they brought him back. He eliminated over 70% of their entire product line and then led an unprecedented transformation, going from niche computer maker to consumer device juggernaut. At the time of this writing, it’s the most valuable company in the world.
In recent weeks, AutoNation and Sonic have created tsunami waves in the auto dealer world. While outsiders are applauding the bold moves these megadealers are making, insiders seem to be thumbing their noses. Those insiders are simply ignoring the fact that households only buy a different vehicle every few years. The thousands of purchases they make in between get easier to make all the time. From travel, to pharmacies, to grocery stores, to countless mobile apps, making simple and educated purchases are now the norm. It doesn’t mean that personal service is dead. It just means that consumers get to choose how they want to be accommodated. Moreover, it shows these companies are willing to finally trade incremental accommodation to chips-in retail transformation.
What history shows us is that previous success does not guarantee a successful future. Market conditions will change whether we like it or not. We must look back on the failures of the once-mighty to protect ourselves from being too short-sighted. You need to be prepared to change with your market. Don’t be afraid to challenge the status quo. Just because something has always been done the same way, doesn’t mean that it shouldn’t be changed. Sacred cows can make tasty steaks.