I recently listened to the book, Built to Last by Jim Collins, and simultaneously stumbled upon the podcast “Business Wars.” Both the book and the podcast series offer insights into iconic companies such as Boeing, Sony, Microsoft and Coca Cola. Throughout the years, most companies will have some sort of competitor, and maybe even a bitter rival that directly competes for market share, such as Coke versus Pepsi.
A lot can be learned from these historical case studies of companies and their challengers. Some of these companies are still alive and well today, some large companies are around but struggling, and some don’t exist anymore. So what makes companies successful, and why do some make enormous mistakes? Below are some lessons that have stood out to me.
Listen to consumers, but don’t be afraid to define a market
In any business, it is vital for a company to listen to the desires and feedback of the consumers. Consumers can voice their preferences, their dislikes, how a product works in the real world, etc. But… in order to have longevity companies must think long term, past the market’s current state of affairs, and innovate toward the future. Sometimes this involves risk and heavy investment in research and development, but the reward can be such that you set the trend in your industry.
Take Boeing for example. After WWII the company had an enormous drop off in business and cut many positions due to lack of revenue, etc. It had to do something to progress forward successfully, and did not want to solely depend on government contracts. The company ended up making a big bet on the fact that jet engine planes would be the commercial passenger planes of the future, and decades later we can see how right they were. The risk was high, and the competition stood by and simply thought that propellor planes were still the go to for passenger use. Once the idea took, and the consumers and airlines responded positively, Boeing soared past their competition (literally). Boeing set out to define the market, and the risk was high, but through foresight and innovation, they managed to succeed and morph into the successful brand they are today.
Good content is vital
In the 90s, Nintendo and Sony battled for supremacy in the video game industry. Nintendo had produced a variety of systems, and then Sony introduced the Playstation to the marketplace. Sony was a pioneer in 3D graphics and producing games on discs (which could hold more information) instead of cartridges. But though they had technical breakthroughs, they still needed games that appealed to their consumers, and they knew it. During the rivalry, Nintendo had periods of struggle, but it stood out to me that the popularity Mario and the related characters and games was a vital component to Nintendo’s survival in the industry. Likewise, in the early 2000s, Microsoft’s Xbox came on the scene to compete with Playstation. Microsoft had no limitations it seemed when it came to technological innovation, however, they knew that getting quality games made for their system was key to initial and future success. Eventually the well known game Halo was made exclusively for the Xbox, which created a group of obsessed Halo crazed fans that kept coming back for more. Without Halo, where would the Xbox be today? We can only speculate.
And lastly, the stories that highlighted the Netflix versus Blockbuster rivalry focused on the importance of content as well. Blockbuster as we know is no longer alive and well, but Amazon Prime, HBO and others struggle against Netflix for streaming supremacy. Without good content, none of these platforms would last too long. In the early days of Netflix, the new technology of on demand streaming was one of the major selling points. But as the shock value of this technology wore off, Netflix knew they had to curate desirable content and ultimately create their own shows. Think about it… do you have Netflix to watch reruns of HGTV shows, or because you want to binge watch Stranger Things when it first comes out? Good content is key. HBO references the release of Band of Brothers as important in their history. Amazon now produces movies that win Oscars. Without good shows and movies, we would not care about how well an app streams.
In conclusion, companies should seek to provide products and services that customers associate with them and them only. Is there a way to deliver something so desirable that a customer has to go to you to get it? Do you sell something differentiated or do you simply sell a commodity?
Complacency kills, and markets shift rapidly
There was a time when Nintendo had around 90% of the video game market share in the United States. Then one year the Sega Genesis was released, and Nintendo saw its market share drop to below 60%. Continuous effort, improvement, and awareness of your competitors and industry is necessary for consistent success.
When Netflix first came on the scene, Blockbuster remarked that if they became big enough, Blockbuster would simply buy them. They underestimated the small upstart company, and eventually had to play catch up to counter Netflix. In the end, underestimating the competition proved to be deadly.
Marketing can be simple
Some of the greatest marketing victories have come from simple ideas and simple ads. For instance Pepsi jabbed at Coke with their “twice as much for a nickel” slogan, which referenced the 12 oz Pepsi cans that were sold to the public for the same price as a 6 oz can of Coke. The idea seems like common sense, but by using this fact, Pepsi was able to create a catchy jingle and spread the word so that people knew the extra value they were getting by buying a can of Pepsi instead of Coke. Sometimes we may think that the good qualities of our products are normal, expected, and not a big deal. But if there is a characteristic that sets your product or service apart from others in your space, then tell people about it, and don’t be afraid to show them why doing business with you is the best choice for them.
People are not robots
It’s easy to create a successful business plan on paper and pretend everything will be predictable and go according to plan. Many times it is thought that something bigger and better and improved (at least in the eyes of a company) will attract more customers and achieve more sales. But the fact is, society consists of humans, and humans have emotions, and emotions breed things like loyalty and devotion when it comes to brands.
Coke was creative during WWII. Sugar was on the chopping block as one of the items to be rationed in the US during the war, and Coke heavily depended on its sugar supply. The company eventually made the case that they were an essential part of a soldier’s life, managed to avoid the ration requirements, and supplyied the American military with massive amounts of Coca-Cola during the war. Through this time they gained a positive reputation and were associated with Americana, patriotism, etc.
After the war, they started to feel the heat from rival Pepsi, and in what has become infamous in the business world for its degree of failure, introduced “New Coke.” New Coke was a new recipe that was supposed to counter Pepsi’s claim that Pepsi was chosen more in taste tests, and ultimately meant to ignite a spark in Coca-Cola market share. The opposite happened instead.
Coca-Cola had created a staunchly loyal following, especially during the war, who quickly cried out for Coke to bring the original recipe back. People wanted the Coke they had grown up with, fought in battle with, won the war with. They cried out for the authentic original version. Coke introduced what they thought was the “new and improved” and lost millions of dollars and upset their core followers. People are brand loyal in an emotional way at times. Is there something that you buy because you agree with the mission or ethics or culture of the company on an emotional level? I’d say most people would answer yes.
My conclusion is this:
Just as we can learn life lessons from events in history, we can learn best practices in business by studying business happenings of the past.
I love learning in this way because true stories are captivating. These lessons are much more real when studied in a historical context. So I encourage business men and women out there to dig into case studies, listen to audiobooks, etc. on subjects that are important to you and your work so that you can learn and grow as a professional.