Smart companies fail because they do everything right. They cater to high-profit-margin customers and ignore the low end of the market, where disruptive innovations emerge from.
Sentiment: NEGATIVE
I brought one big question with me to Harvard. Why do smart companies fail?
Most businesses fail because they want the right things but measure the wrong things, and they get the wrong results.
Lots of companies don't succeed over time. What do they fundamentally do wrong? They usually miss the future.
When someone takes their existing business and tries to transform it into something else - they fail. In technology that is often the case. Look at Kodak: it was the dominant imaging company in the world. They did fabulously during the great depression, but then wiped out the shareholders because of technological change.
The dumb-manager theory of business problems just didn't hold water for me. There had to be a deeper reason why smart people would make decisions that lead to failure.
Most managers are just trying to survive. That's why a lot of smarter guys have been let go from Fortune 500 companies: because they came up with new ideas that no one would allow them to try.
Most phenomenal startup teams create businesses that ultimately fail. Why? They built something that nobody wanted.
Smart development builds on a region's own skills, resources and local businesses. Dumb growth invites a big corporation in, surrenders control and profits to a distant headquarters, undercuts local manufacturers, and risks layoffs without warning.
In most parts of the world, starting a company that goes bust is dubbed a 'failure.' In Silicon Valley, we call this 'gaining experience.' We are willing to take the risks that are inherent for innovation.
Why is it that big companies fail when the technology changes? It happens in every industry, so what's the pattern? What are they all doing wrong?