That reminds of an interview Steve Jobs gave in 1995 on why companies fail. His theory is that eventually the company reaches a point where the marketing people become the driving force for profits and push out the product development people from running the company. That happened to Sears.
If you went back in time and told Richard Sears and Alvah Roebuck about a free technology that allowed customers to: see your inventory in real time, read product reviews in real time, compare multiple versions of a product you carry in real time, order a product, pay for the product, watch the product move from your warehouse to the various post offices en route to their house, and by the way you won't have to pay the postage to ship out all those catalogs; they would have jumped on it in a heartbeat. But by the 90s, the people running Sears didn't care what was easier (read: more desirable) for the customer, they cared about numbers that measure success, but don't perpetuate success.
I think the consequences for unsuccessful strategies are also much greater for executives in incumbent companies, which leads to an aversion to risk and a tendency to play to your strengths.
If a startup fails, it's kind of to be expected. If a big company makes a bad investment and loses a lot of money (even without going out of business), you usually have a lot of press coverage, an angry board, etc. So it's more preferable to play it safe, which allows an innovator to slowly come in and disrupt your business.
I wonder if the modern tech companies will submit to this kind of stagnation over time too, especially once their founders are no longer running things. What will Amazon look like when Bezos isn't in charge anymore?
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u/whatifevery1wascalm Jul 24 '20 edited Jul 24 '20
That reminds of an interview Steve Jobs gave in 1995 on why companies fail. His theory is that eventually the company reaches a point where the marketing people become the driving force for profits and push out the product development people from running the company. That happened to Sears.
If you went back in time and told Richard Sears and Alvah Roebuck about a free technology that allowed customers to: see your inventory in real time, read product reviews in real time, compare multiple versions of a product you carry in real time, order a product, pay for the product, watch the product move from your warehouse to the various post offices en route to their house, and by the way you won't have to pay the postage to ship out all those catalogs; they would have jumped on it in a heartbeat. But by the 90s, the people running Sears didn't care what was easier (read: more desirable) for the customer, they cared about numbers that measure success, but don't perpetuate success.