After reading ‘The innovator’s Dilemma: When New Technologies cause Great Firms to Fail’ by Clayton Christensen, one question that came to me was, is it only company’s innovative ideas that failed or is it company’s lack of attention towards new growing market trends or is it both? I started analyzing the companies that failed due to lack of innovations and ability to adapt. For surprise, I found quite a few market giants that failed, that included Yahoo! Inc., Google+ and My space.
Yahoo! Inc., over 100-billion-dollar company in early 2000’s and late 1990’s. In 2005, Yahoo owned 21% of the online advertising market, Top among all players. But today they are struggling in front of players who were very small (compared to Yahoo!) in 2005. What was the main reason behind the failure of Yahoo!? Ans:“Coherence”. Yahoo first started as a search engine and e-mailing portal, their main stream which generated revenue for the company and was the reason for their success. They were supposed to be what Google ended up being but got distracted along the way. They shifted their focus on becoming the media giant instead of focusing on becoming dominant search engine. Later because of shift and google becoming dominant, they had to outsource their search engine to Microsoft Bing.
Yahoo was a market giant when web search and aggregation were still in budding stage, it tried to charge for its emailing and file sharing services, but then a startup, Google offered everything for free, everyone rushed to google. Not just these but Yahoo missed many occasions where it could have changed it fate around. In 2002, Yahoo had an opportunity to buy google for $5 billion dollars. But the then CEO Terry Semel backed off. Another opportunity that was missed by yahoo was buying DoubleClick. DoubleClick was a dominant player in displaying ads at that time. Yahoo had opportunity to buy but it was little too late in reacting and google grabbed the opportunity with both hands. And to say the biggest missed opportunity was buying Facebook. In 2006, Yahoo had a deal to buy the company for 1 billion dollars. Yahoo tried to bargain, Mark Zuckerberg backed out.
Talking about all these instances, can we just say it was company’s innovation that lacked? No, it was also lack of attention towards new market trends to place bets on innovative tech (Google, DoubleClick, Facebook).
Another area where the networking giants failed in innovation was in social networking. Myspace had an impressive start, they recognized that people are interested in meeting and connecting with friends all around the world. In 2004, Facebook saw what Myspace didn’t. The evolution of user experience lacked in Myspace, people needed to connect on more than one level through shared interests and groups. Facebook had these innovations and pounced on Myspace. Even Google tried to enter the social media through Google+ but failed badly. They had limited success in the beginning, but then google discarded their restrained invitation model, throwing open the doors to build a user base that never lived to to their expectations of creating a possible Facebook competitor.
In conclusion, we can say that it is hard to survive in the market without innovation, whether it may be innovation within the organization or it may be attention towards the innovative technology that can take over the market.