Lack of Innovation Will Kill Your Business (2 Examples to Prove It)

Read on to learn the stories of two massive corporations that have paid the ultimate price for their lack of innovation and how you can avoid ending up in their situation!

Despite all the catchy targeted advertising and low product costs, most companies tend to forget that we live in a time of surplus. Making incremental changes to existing products won’t cut it anymore. The consumers already have too many choices.

It is clear that you need to come up with something new, creative and break-through in order to satisfy the users. Netflix did it. Amazon did it.

On the other side of the coin, businesses all over the world are slowly vanishing because they are out-worked by their competitors.

Read on to learn the stories of two massive corporations that have paid the ultimate price for their lack of innovation and how you can avoid ending up intheir situation!

Nokia: The Fall of a Mobile Giant

Nokia was the world’s most dominant mobile-phone producer, but in the past years, the company has fallen dramatically.

How could this happen?

The answer is no secret: their lack of innovation enabled the competition to take the lead. More specifically, Apple products, as well as the Android operating system, crushed Nokia.

It all started in January 2007 when Steve Jobs walked onto a stage and presented the iPhone. The moment he pulled that touchscreen smartphone out from his pocket, the industry changed forever.

You might think this is an overestimation, but data supports it. In 2007, Nokia’s market share was at . Next to Motorola, there was no bigger name in the business.

It’s almost impossible to imagine any vendor controlling that portion of the market today. But since that moment, Nokia’s mobile-phone market share kept plummeting. In 2013, the company was lucky enough to sell its handset business to Microsoft, because a year later it probably would’ve been worth nothing.

Even worse, in 2015, Microsoft acquired Nokia for 7.6 billion dollars.

In less than 10 years Nokia disappeared.

So, where did the multibillion-dollar company go wrong? Although many different stories and rumors went around the media space, all can be boiled down to some definitive facts. To start with, Nokia underestimated how important smartphones will be.

Here’s Why

The company was a dominant force in the wireless world. In 2007 they were accredited with almost half of the profits in the mobile-phone industry, but most of those were not owing to smartphones.

If you think about this, the only thing that Nokia’s management had to worry about was getting better financial results each year. So why take risks to innovate, right? Spending a lot of resources to dive into a high-end, low-volume business appeared as a dangerous decision.

That’s how the company became imprisoned by its past success. Nokia rested on its laurels, and its lack of innovation prevented the company to step into a new era.

But there’s even more to the story…

Nokia underestimated the importance of software and the experience of using a phone. The company’s development process always put the focus on hardware engineering, whilst the software experts had little importance.

Think for a moment about what this meant for Nokia.

They were, undoubtedly, developing qualitative phones. But their struggle was to translate all the engineering efforts into products that people actually wanted to buy.

By contrast, guess what was going on:

The executives at Apple were doing the exact opposite thing. Hardware and software employees were equally valued. They worked in multidisciplinary teams and designed devices together.

The Bottom Line

Nokia failed to realize that brands are not as strong as they once were. The high-tech revolution made consumers expect constant innovation.

That’s why being late and inadequate is the modern day corporate guillotine.

Farewell Kodak: Too late to innovate

For decades, Kodak grew to become an undisputed world leader in consumer photography and one of the world’s most recognized brands.

In the last century, it held an impressive 90% of the shares in the film market. Kodak was the first choice of both amateur and professional photographers.

However, nothing good lasts forever…

At the turn of the 21st century, things started to change dramatically. Kodak became less relevant and started its decline. Fast forward to 2012 and the company filed for bankruptcy.

There are numerous voices that say Kodak failed because it missed the digital age.

But here’s the kicker:

The first prototype of a digital camera was created in 1975 by Steve Sasson, an engineer working for… you guessed it – Kodak. They were in fact the first to use this technology.

Yes, the camera was a big piece of ugly machinery that took 20 seconds to capture an image at low quality.

Nonetheless, it had a massive disruptive potential. By now, you must be wondering what in the world stopped them from making their digital camera a success?!

Well, the answer is easy. Kodak’s leadership lack of innovation. The board turned down the digital camera. They focused on its flaws and couldn’t see why millions of potential consumers would want to buy it.

Because it was filmless photography, the company’s board didn’t want to pursue the idea. Afterall, chemical-based film and paper was the business that always fueled Kodak’s profits.

And here’s where it gets even worse…

Instead of marketing the new technology, Kodak chose to use digital for improving the quality of film.

As crazy as it sounds, they spend 500 million dollars to develop the Advantix Preview film and camera system. The core feature of this product was that it allowed users to preview their images and select how many prints they wanted.

Who would buy a digital camera and continue to pay for film and printing? Of course, Advantix Preview failed shortly. In the late 90’s, digital products were reshaping the photography industry.

And yet, Kodak was still unwilling to adapt to the rise of digital technologies. They had already lost the chance to secure a leading position on the new market.The company clinged to traditional photography – and that’s how it proved to be too protective of its brand and profit source.

Imagine what would’ve happened if Kodak had partnered, for example, with startups that understood the new technology. Or if they had used an idea management platform. Surely, the company would’ve kept its major role on the market.

So what is the lesson to be learned here?

Kodak’s refusal to adapt and lack of innovation turned the company into a harsh failure example. The company’s managers wanted to keep the film business alive, so they hid the amazing technology developed in-house. Kodak held onto the wrong belief that the only way to make a profit is through the sale of consumables.

To top it all off, the mindset within the organization kept them away from seeking outward expertise.

Takeaway

Innovation may seem difficult or even threatening. Sometimes, a company has to let go of a product or idea, take a leap of faith and transition to a new one. This is certainly a scary decision.

But in the end, venturing from the concrete to the unknown is what business is about. So be mindful when you define what it is that you are doing. Make this definition broad enough to encompass the possibility of change.

As in the case of Nokia and Kodak, the lack of innovation has and will make companies obsolete. If there is one thing to be remembered from their mistakes is it that innovation needs to be a core component of your organization’s culture.

Are you ready for the challenge? Help your team stay motivated and ready for embracing new technologies. Our idea management platform is the right tool for the job. Never worry about lost potential or voices left unheard.