Innovate. It’s the buzzword that refuses to leave the business world, but for good reason.
Innovation can mean a lot of things, but the idea behind it is simple — it’s a change that a business makes by trying something new or improving upon something that’s been around for a while.
The problem with innovation is that it doesn’t always equate to huge increases in profit or customer awareness. More often than not, we innovate only to find ourselves maintaining the status quo or increasing our profits ever so slightly.
Where are the big returns? The thousands of new customers?
This is a dangerous mindset to have. In order to truly understand why innovation is important, you have to look at it from the customer’s standpoint — they don’t see innovation as a fancy add-on, they expect it to happen.
Consider the example of car shopping. If I were to compare the exact same make and model of a car from last year and this year, I would expect the newer model to be safer and more technologically advanced. I may not necessarily be very impressed with the technology, unless it’s something totally unexpected.
However, if the newer version doesn’t have those advancements, I will definitely notice — and in a very negative way. Most customers are the same way — they notice improvements, but not nearly as much as they notice when no innovations have taken place.
Here are some real-world examples of companies that failed to thrive because they failed to innovate.
In 2000, Reed Hastings approached former Blockbuster CEO John Antioco and offered him the company he had founded, which was a DVD mailing service at the time, for $50 million. Thinking that it was just a very small niche business, Antioco declined the offer to purchase the company. That company was Netflix.
Today, Netflix is worth more than $30 billion. And Blockbuster? Its doors closed permanently nearly five years ago.
What’s important to note here is that in 2000, when Blockbuster was offered Netflix, it was doing very well. It had just held its initial public offering, valued at $4.8 billion. But because it failed to innovate, it suffered in the years following until its eventual demise in late 2011/early 2012.
Kodak’s story is even more interesting than that of Blockbuster, because the company had risen to prominence by being innovative in the past. For example, it had invested in color film even though, at the time, it was incredibly inferior to black and white film, which Kodak already dominated.
Kodak’s biggest failure came when, in the 80s, Kodak invented the digital camera — but fearing that digital would destroy the film and photographic chemical industry, which Kodak thrived on, it decided not to make digital available to its customers.
Kodak had the innovation right at its fingertips, but decided not to use it, and it eventually fell behind when digital photography grew in popularity. This led to the company filing for bankruptcy in 2012.
For nearly 40 years, Borders was the go-to bookstore for readers all over the world. Borders customers loved the huge selection the store had, and for years that was enough to keep the chain bookstore going.
But when books started increasingly being sold online, Borders did not follow suit. Amazon took off in terms of online book sales, and Borders’ top competitor Barnes & Noble began selling more online, as well as developing its e-reader, the Nook.
By 2011, Borders was defunct.
What We Can Learn
Although these three examples are larger companies, innovation is something that affects every kind of business out there — no matter the size, location, or industry.
The main thing that can be learned through these examples is that even if your business is doing well at the moment, failing to continue to innovate can change everything in just a matter of years.