Losing this core business hit the company hard and eventually went to wall.ĭon’t get this wrong. They pursuit without discipline so much so that the electronics business was left to rot.
Circuit City, a consumer electronics corporation, started selling used cars to renting DVDs after achieving lots of success. They forgot what brought them success in the first place. When companies succumb to hubris, they often branch out to new areas. Needless to say, StarTAC failed and Motorola market share plummeted. Motorola management refused to change course and pushed on with StarTAC, boasting that “43 million analog customers can’t be wrong”. One such mistake was the development of StarTAC cell phone which used analog system while other manufacturers were heading to digital. Their spectacular rise was later followed by overconfidence and big mistakes. Motorola was rolling in cash in early 1990s, with revenues rocketing to almost $27 billion. Great success lead great companies to succumb to hubris and destined to fall.
The problem is failing firms innovate in the wrong areas. In fact, they show very high levels of innovation and energy. The problem isn’t that failing firms don’t innovate. While Apple and Samsung were researching and innovating in smartphone technology, executives in Nokia decided to innovate in other less profitable areas. More often than not, successful companies fall not because they fail to act because they act in the wrong way. The decline of Roman Empire is the epitome of no matter how vast or successful something is, it is always in danger of collapse. Instead it’s their leaders who steer them in the wrong direction exacerbates crises through mismanagement.Įvery company no matter how great is vulnerable to fall. Their falls had nothing to do with economic factor nor bad luck, Jim argues. Have you ever wondered how the legendary brands you see all over the place like Kodak and Nokia have vanished into thin air? How the mighty fall by Jim Collins explains exactly just that.
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