On this day in 44B.C. Julius Caesar was killed at the Theatre of Pompey. While various versions of the story have been told throughout the years (including that which featured Kenneth Williams’ now infamous outburst), if you believe the version told by Shakespeare, Caesar had been warned by a soothsayer to: “Beware the Ides of March!”
Now that the Ides of March have come around in 2012, I’m wondering which brands could have been saved from a sticky end had they been more vigilant and heeded warnings.
We often refer to the complacency of the American railroad business in the 1920s, which led to them completely ignoring the threat posed by domestic air travel – which subsequently supplanted the train as the default mode for traversing the country.
However, there are more recent examples in which businesses have gone from industry leader to graveyard in just a few years. In a world where change has become the one constant, the need to monitor consumers’ evolving needs and competitor activity is becoming ever more acute.
When Friends Reunited was bought by ITV in 2005 the competitive threat from Facebook was given little attention. The business believed that the two brands were targeting different audiences with different offers. Six years later, Facebook has achieved a 49% penetration of the UK population – while Friends Reunited is estimated to be worth less than 5% of its 2005 value.
But who could have foreseen the meteoric rise of the Zuckerberg empire in such a youthful and ill-defined market?
Perhaps less deserving of sympathy are the management of Kodak, who oversaw the demise of the one of the world’s biggest consumer brands. The company from a market leading position - possessing 90% of film and 85% of camera sales in the USA in 1976 – to filing for Chapter 11 protection earlier this year.
To make the story even more damning, it was Kodak that invented the digital camera which ultimately led to the demise of its mainstream photographic film business. In fact, Kodak executive Larry Matteson wrote a report in 1979 that detailed the predicted gradual shift from film to digital photography. It outlined the order in which market segments would be affected, predicting that digital photography would finally reach the mass market in 2010. The prediction was remarkably prophetic, and accurate to within 5 years.
The changing landscape of the category came as no surprise to Kodak, nor to Fujifilm, which was in a similar situation at the turn of the 1980s. Yet Fujifilm managed to adapt, and remains a profitable business to this day. So what went wrong for Kodak?
Kodak was slow to act and had become complacent in its position as market leader. It also had a culture of producing the ‘perfect product’, which slowed the speed-to-market of its innovations and limited the number of those innovations that made it to consumers. Kodak was also slow to abandon its “razor blade” business model, whereby it sold cameras at low cost in order to make money on film sales (as Gillette does with blades). It was a model that was not compatible with the digital world. By the time the firm finally developed a sizable digital camera business, the camera phone had taken over. It was too late to execute change.
In contrast, Fujifilm listened to the soothsayer and avoided the theatre on the Ides of March.
But such a scale of change is notoriously difficult to predict, and even harder to react to successfully. So what can brands do to help them avoid a similar fate to that of Caesar?
- Take a long term view. (Kodak was right to commission the report on where the photography category was going. Its mistake was not acting on it in time.)
- Think about all possible competitive threats, including those from suppliers, customers and new entrants. (Think Porter’s 5 Forces. The attack may come from the least expected places. Does ‘Et tu, Brute?’ ring any bells?)
- Don’t waste time developing the ‘perfect product’. By the time it hits the shelves, your customers may have moved on. (As they had done when Kodak finally got around to its digital business. Facebook’s mantra is: “Move fast and break stuff.”)
- Incorporate competitive war-gaming into the innovation process, in order to ensure that there are as many competitive barriers to entry as possible. (Innocent has created a great product in its Veg Pots, yet has not managed successfully to defend its position from attack by own-label retailer copies. Cf. Covent Garden Soups, which built trial and awareness through inner M25 c-stores, giving the business a decent timespan to refine the product and communications, as well as build a loyal user base.)
I wonder how many businesses today are sleepwalking slowly to disaster, with words of warning ringing in their ears…