Why do big companies fall when they can see the cliff approaching?
Oh how the mighty fall, to paraphrase a great book.
A decade or so ago, I worked at Sensis, not the Government survey people - the division of Telstra who made the Yellow and White pages books. It was far cooler than it sounds...
My role was to help transition the company from print to digital, so we created a whole bunch of cutting edge digital products which, at the time, were new to the market. Website builders, SEO services, digital map apps and database API's and more.
Being in charge of Whereis maps (https://www.whereis.com), which is still around, but a shadow of it's former glory, we worked on the first online mapping platform in the world, and developed the first mapping app in the iPhone store. Pretty cool ya.
They even invested early in China, owning many huge websites that were the first to market for real estate, employment and car sales. But a series of management decisions meant they didn't invest fully in these new products and decided to doubled down on print. Why? Wasn't it obvious that print was dying and the brand of Yellow Pages was redundant with the new generation of phone users?
The same scenario has played out many times in corporates with brands like Kodak, who invented the digital camera and shelved it. Blockbuster, who could have been the first streaming provider, but stuck with DVDs in stores and so many more.
The question is why do companies not see the obvious market changes and move faster to adapt?
My observation, from going through the process myself, is that companies don't make decisions, people do. People have emotions and are selfish and so it's easier for CEOs to stick to what they know and hope for the best, rather than jump and fight in a new market.
For instance, I recall being invited to a Sensis team meeting with the Sensis CEO and Yellow teams. There was a lot of discussion regarding the Yellow sales team annual trip, which costs $40k each person. I was in digital and we didn't get any of these perks and did have a jealous moment but also thought what a waste of resources when we were bleeding cash.
Anyhoo, they finally got to asked for my opinion on how to grow the business using digital and I volunteered that perhaps move away from the Yellow Pages branding and adopt Sensis branding would be so we could better promote all the services of the company, including digital.
They reacted like I had slapped them across the face, the room went silent and I felt like I had accidentally push the elephant in the corner right in front of the CEO. They paused and completely ignored my comment and moved onto another item like I wasn't there. Postscript - a few years later they indeed made this change to Sensis branding (the little cute mouse) but only when the Yellow Pages brand was almost at the bottom of the ravine and about to crash into a bloody mess. A bit late perhaps.
I get it's difficult for people to face the truth. The Yellow team were on a gravy train that had funded their lifestyles for years and didn't want to face the imminent crash. Let's get one more bougie sales trip at least! Especially when the Telstra CEO was demanding more revenue each year, not less. Tough for all concerned.
This sort of environment creates poor thinking and strategic choices. On another occasion with the CEO, I was presenting the business plan for our new iPhone mapping application, the first in the world with a partnership between Whereis and TomTom (see below), which the product team were very excited about. They just needed some cash to fund it.
He considered the plan but said no. His mind was on bigger issues. Specifically his words were, "will this be a billion dollar product Andrew? Because I have a billion dollar hole to fill", referring to the $1.6 billion that Yellow Pages and White Pages produced every year.
My piddly few million from this project just didn't cut it. Even though it was world first and cool, I couldn't sell enough $99 downloads to make up for the short falls Yellow was experiencing. It wasn't going to be that big, and so they turned down the project. But luckily I funded the project out of marketing so the product team was happy.
"TOMTOM AUSTRALIA has today announced the release of its iPhone GPS navigation app, first revealed at Apple's WWDC event in early June.
Using maps provided by Sensis subsidiary WhereIs, the TomTom iPhone GPS app features an intelligent IQ Routes system to map out a path the software determines to be the "smartest, most efficient route" - as opposed to the shortest.
As with most GPS software, the TomTom iPhone app features speed camera location notifications and over-speed warnings." (https://www.drive.com.au/news/tomtom-iphone-gps-navigation-app-now-available-in-australia/)
What they invested in was two ladies from the mid west USA who doubled down on print. They put up prices and harvested the market, which went well for about a year, executives got their bonus and one more company funded trip, and then the company basically imploded.
Strategically, the company should have moved resources to digital, cut budgets and forecasts and taken the short term pain. But no one wanted reality so they sat in the car as it approached the cliff and one the way down wondered why it all went wrong.
Change is difficult and costly, but essential for survival. Just like any new experience, you don't know if your decisions will be right. But not making any decisions is definitely wrong.
So if you are a business leader and faced with decisions about the future, maybe it's AI or expanding, prepare your parachute and jump, rather than be a passenger and fall. It's way more exciting and you just might make something cool.
