Blog 5: Disruption in the 20th century

Nokia

 

Nokia was the world’s biggest mobile manufacturer until the late 2000s. The surge of Android and iOS devices nearly wiped Nokia in a matter of fewer than 5 years. Nokia had a booming business, they made mobile handsets that were of high quality and were of much superior quality when compared to their competitors. Nokia invested in new technologies and kept on releasing phones with the latest features. They made products for all kinds of customers, they have low-end phones for people in developing countries, medium-end, and high-end phones. Until 2007, it seemed that Nokia had no signs of defeat anywhere near it.

However, it ignored one critical piece of disruptive technology, i.e. smartphones. Apple and Google heavily invested money in developing smart operating systems that could do much more than normal phones could do. Apple and Google provided frameworks for application developers to develop applications for the devices and provided them a share of the advertising revenue.

Nokia, however, did not believe smartphone technologies are disruptive and just saw it is a fad. Consumers loved that they could replace their camera, clock, music player, pager, calendar with a single device. They did not see the need for a traditional phone anywhere. Even though Nokia had good management, they failed to anticipate a single disruptive technology that ultimately led to their device.

 

Kodak

 

Kodak had a similar story to Nokia. Kodak was a leading camera and film manufacturer throughout its history. Even though Kodak was one of the pioneers that invented the concept of the digital camera, they did not anticipate that it would be a disruptive technology that would lead to its demise. Kodak made a majority of its revenue by the sale of traditional cameras and film. However, the R&D department in Kodak built one of the world's earliest prototype digital cameras. The management did not see it as a disruptive technology and believed it to be a fad, that would die eventually. While Kodak was doing extremely well in the film business, failing to anticipate this cost them their business, and they eventually filed for bankruptcy in 2012.

 

Kodak’s story teaches us that, it is important to anticipate disruptive technologies, it is also important to pivot and adapt them.

 

 

Walmart

 

Sears was one of the dominant retailers at the starting of the 20^th century, their catalogs were reachable to the entire country.  They listened to their customers, and their stores were filled with the best products, and their business was booming. However, Walmart and Costco’s disruptive business methods ruined Sears's business model. The concept of discount retailing, which was relatively unknown, was popularized by Walmart in the 1960s. Walmart’s business involved having a selected number of stores and buying the products in bulk to beat down the prices, and selling it at a very thin margin to attract a lot of customers to the store.

Walmart became the biggest retailer in the world and reduced Sears market share in the US to less than 1%. Sears did everything well, they had a wide customer base, gave the customers all the products that they wanted, however failing disruptive business tactics cost them their business.