Nothing Lasts Forever – The Fall of Fortune 500 Companies

Every company, no matter how big they are, eventually dies. I know its hard to believe because there are a lot of brands that have been around for as long as we can remember – but it’ll happen eventually. Here are just a few from the past two years:

Big Brands That Are Gone as of ’09/’10

  • Pontiac
  • Saturn
  • Hummer
  • Mercury
  • Circuit City
  • Ritz Camera Centers
  • KB Toys
  • Anheuser-Busch

Ok, so technically Anheuser-Busch is still around since they were bought out by InBev, but the company is really no longer there – the culture has changed dramatically. Here is a link directly to the changes implemented since the acquisition by InBev Anheuser-Busch Wiki.

It’s easy to chalk all of these company closings to a bad economy and the recession, but unless you do it spectacularly (ahem, Bear Sterns), a fall from grace doesn’t happen overnight. Usually its more of a slow death. Need more proof? Compare the list of Fortune 500 companies between 1959 until 2009. Within that 50 year time period, only 72 companies appear on both lists.  Whether it was bankruptcy, mergers, or going private – 86% of the original companies are gone.

The problem here is complacency. If a business becomes complacent they become stagnant, and a stagnant business is fat and lazy, missing not only what their competitors are doing, but ultimately what connects customers to their products.

You know what killed Anheuser-Busch? Craft Brews – small independent breweries that went back to tradition, coming up with ingenius brew processes, ingredient combinations, and giving consumers something that they ultimately wanted – great tasting and interesting beer!

Bottom line: if you dont care for your customers, then they wont care about you.

This is true for both large and small businesses. In fact, I’ll even say that it’s even more important for small businesses to get this right, especially in the early stages. Small businesses fail because they either cant offer anything unique, or because they are too focused on running the daily operations that they fail to keep their eyes on the horizon for opportunities.

So keep being boring with your wooden toys and see what happens when you dont deliver the latest and greatest.

The Perfect Time To Shake Things Up

Small businesses are the life blood of our economy. It’s easy to get caught up looking at the Fortune 500, but at the end of the day, it’s the smaller organizations that keeps our country running. Some wont find this shocking, but here are a few interesting facts about small businesses:

  • Responsible for 50% of the GDP
  • Make up more than 99% of all employers
  • Produce 13-14 times MORE patents per employee than larger firms
  • Create 75% of new job growth

The strength of small business is that they are agile. It’s easier for a smaller company to adapt to changing work environments because new ideas are faster and easier to implement. There is less red tape to go through – information is absorbed faster. If a customer is happy or dissatisfied, not only do employees know, but so do the owners. It’s these idea’s that allow small business to thrive, but unfortunately the outlook is grime.

This graph echoes what I’ve heard from a variety of business owners – that things are doom and gloom, and to cut back as much as they can. To not to try anything new to stay afloat. This is really disturbing.

Businesses that play it safe disappear. The customers who want cheaper products will go to a larger store that has better economies of scale and lower margins. The stores that are just average or have no direction have no way to separate themselves from their competition. Scale back what you offer, or even worse, dont change anything at all and not entice loyal customers to keep coming, and you’re a goner.

These businesses have it wrong, because right now is the PERFECT time to grow, to explore, to try something new! Businesses that haven’t reacted are starting to disappear, leaving a lot of customers searching for somewhere else to go. If you aren’t doing anything remarkable, then there is no reason for them to go to you instead of going to the company that is closer or does it cheaper.

Growth doesn’t have to mean dropping thousands of dollars into new IT. There are literally hundreds of ideas out there that businesses can implement that are virtually free. You can give back to the community by donating products, offering educational courses, lectures, or speaking engagements. You can engage your customers more by creating a better experience, whether on your website, in your business, on the phone, or through email. There are a variety of ways that you can engage your customers, and that is the best thing to do right now.

Look for innovations for your business, talk to your employees, your customers, your competitors, talk to as many people as you can, and then do something! Right now is the worst time to tread water. If all you are doing is trying to stay afloat, be ready for a rude awakening when you lose your customers to someone else when things get better. So stand out from the crowd, shake things up!

Understanding Time Orientation

Open Culture had a post yesterday on the Secret Powers of Time (vid below), which is a great animation by CognitiveMedia that is based off of a RSA presentation by Philip Zimbardo.

The premise of the presentation is that our attitudes on time shape how we both view and interact in the world. The video can describe this in better detail than I can, but the idea is intriguing. Two other points of research is the Marshmallow Experiment – in which 4 year old children are offered the reward of ONE marshmallow to eat now, but if they waited they could have TWO marshmallows within the immediate future.

From this experiment, children fell into one of two time orientations:

  • Present orientation: Live for the now and have a hard time controlling their urges
  • Future orientation: Able to make sacrifices in the ‘now’ for a future goal

It was interesting to see that how you orient time effects on how you perceive things. The children in the study were followed up when they were 18 to see if their orientations had an effect on their success. The students with future orientation had higher test scores, were more self confident, and worked well under pressure. The students with present orientation were moody, indecisive and envious. With a society that expects instant gratification, this concept helps to explain why a lot of people are miserable and make bad decisions based on short term gains.

Zimbardo references a book by Robert Levine called ‘A Geography of Time‘, which I read a bit of on Google Books. The book starts out with a personal story of what Levine faced when he was teaching in Brazil. He thought he had plenty of time to make it to his 10 o’clock class, but he passed a clock that said it was 10:20. Panicking, he ran to the classroom only to find it empty. He asked someone passing by for the time and they said 9:45. That couldn’t be right, so he asked another person and they said 9:43, and then the clock in a nearby office said 3:15. Time is regarded differently in Brazil, and he realized this even more so when most students arrived 30-60 minutes late to his lecture, with some even arriving later than that. And unlike in the US, where students start packing their bags before the end of the lecture, the students decided to hang around afterwards, up to 30 minutes.

It was interesting to reflect on my experiences living abroad and the people from different cultures that I’ve met, and to frame my interactions within this ‘time paradox’. Some of my colleagues found it humorous that I would call if I was running a few minutes late to a meeting, while others weren’t embarrassed to show up 30 minutes late. Even within a culture, like the US, it is useful – because it helps you to understand why people act a certain way. We know people who are living in the past, but now we can understand why, and how to help them see the present and future. This could be a great tool for understanding colleagues, and to personally get yourself into a better frame.

I decided to take Zimbardo’s survey to see where I am. Below is a percentile chart for each perspective, with the ‘Ideal Time Perspective’ in red, and my results in blue.

I didn’t like how a lot of the questions were phrased, but I think it was done to make it less complex and to hit on baser reactions. The whole transcendental part is null in my opinion since it was based too much on religious type questions. I think it would be better if they had something that asked about connection with nature, empathy, seeing inner beauty, etc… Overall though, I think its worth doing. Where do you fall?

Standing Out

This weekend I went to Acapulcos, which is a great Mexican restaurant over in Stratford, CT. I went with family, and my brother Sean who is visiting from LA. It was Friday night around 8:30 and the place was extremely busy, so we were waiting outside until a table opened. Now, this restaurant is right near the train station, and there a bunch of other places directly nearby in this little center – six to be exact. I wasn’t paying much attention and was fiddling with my phone, but my brother was pacing back and forth, checking out the other restaurants since the area has changed since the last time he was home. After peering through all the windows he came back and said “I feel bad for all of these other places.”

I had no idea what he was talking about at first, but as I looked across the street I saw an empty italian restaurant with only two families inside. The pub next door to the place we were going was fairly empty, and the fancy restaurant on the opposite side was dead as well. My brother then said that “.. it’s sad when you see one busy place, and everything nearby is dead.” I’m paraphrasing of course, I can’t recall the exact quote. The only other place that was busy was an ice cream shoppe called Goody Bassetts – an old fashioned ice cream shop named after the famous witch who was hung in that town in 1651 and buried in the cemetery nearby.

What struck me about all of these other places is that they don’t stand out – they’re boring.

What Acapulcos had going for it is great food (my brother is critical of mexican food after living in LA and he thought it was fantastic), attentive and friendly wait staff, and a great concept (there are barely any mexican restaurants nearby). The same goes for Goody Bassetts – an old fashioned ice cream shoppe, with interesting flavors, extremely friendly owner, and a great name that has history to the town.

What about the other places? Well, they were boring. I honestly cant even remember the names of any of the restaurants, and I even ate at one of them before! There is a reason why restaurants have the highest rate of failure out of any business – and thats because most of the time they are boring. If you have the same atmosphere, the mediocre food/menu, bad wait staff, or bad location … it can be the kiss of death.

There are plenty of amazing food places near me that are remarkable. Some of them are out of the way to get to (Windmill Restaurant), some are in a bad area but make up for it with a great Bavarian atmosphere of frauleins, lederhosen, accordians and beer steins galore (East Side Restaurant). Others have a great name and make all the toppings fresh (Super Duper Weenie), and some make the most amazing, interesting foods you’ve ever had and wont find anywhere else (Miyas Sushi).

All of these places found their niche. They understand what they want to say and who they want to be. The problem with most businesses – not just restaurants – but a majority of the businesses out there, is that they are the same. Around 50% of small businesses fail after 4 years, and roughly 70% fail by the 7th year. These failure rates are because people try to be safe. They want to open up a coffee shop – but what do they have to offer that would make you better than Starbucks, Dunkin’, or any other chain? If you’re being average no one cares, and no one will notice you. That’s the premise behind Where’s Waldo – he doesn’t stand out.

What do you want your business to be? And for your pleasure ..

Know Your Competition

A couple of days ago there was a piece on the BusinessInsider about ‘How To Recognize Your Competition‘. The article is from a VC perspective on start-up founders not understanding their market, but I think the advice is sound for any business. What stood out the most for me was this quote:

“One thing to always keep in mind when looking at your market and analyzing it for competition is to think of your user. Be it a consumer internet site or some sort of software. Ask yourself how your user will put your product or service to work. All too often, inexperienced founders forget to think about alternative types of competitors.”

It’s easy to put the blinders on and just see who is in front of you. For example, Starbucks main competitor is Dunkin’ Donuts, but fast food giant McDonalds has been gaining market share with their McCafe. Sony dominated the CD Walkman market, JVC and Panasonic were small players. Then came digital music and Sony was pushed aside by Apple and Microsoft – in fact, I didn’t even know Sony even had an MP3 player until I wrote this post!

Lets scale this down a bit to regular businesses. If you own a restaurant then your main competition would be other places to eat. Who else is your competition though? Why do people go to restaurants? Sure they go to eat, but they also go as a form of entertainment for people to celebrate or get together. You now have a lot more indirect competitors than you think!

The great thing about this exercise is that it opens the mind to possibilities and stops you from looking too internally. If coffee shops are booming, offer a higher end coffee or even exotic teas; if its a bar, then offer chocolate and wine/cheese pairings or craft beers. If you focus on business as usual, then you’ll find a deeper hole to try to climb out of once your competition has passed you. Be open to the possibilities and see how far you can take it.