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10 Companies That Failed to Innovate and What Happened to Them

Posted on July 21, 2014

In 1955, Fortune Magazine listed the 500 largest companies in a list that’s become synonymous with success. 60 years later, only 71 of those companies still remain.

With the speed of technology adoption and a fast-paced global economy, companies rise and fall faster than you can say Alibaba.

(And ummm, maybe they should've considered using Vocoli to understand their employee voice)

The Secrets to Innovation

So what’s the secret sauce to success (or more accurately, survival)?

First, a strong corporate culture is key, as we’ve talked about [here, here and here]. But in addition to a defined “perfect employee blueprint,” creating an innovatation culture and the ability to market solutions before your competitors is a difference maker.

In our experience, there are several reasons for stifled innovation:

  • Fixating on one successful offering without accepting something better can (and will) come along
  • Only focusing on the customer of today without anticipating their needs for the future
  • Failure to update technology and change with the times

We’ve highlighted 10 companies that had success but ultimately missed opportunities due to one or more oversights:


It’s a shame that future generations won’t be able to understand the soul-crushing experience of a sold-out Blockbuster movie. Aside from the endless parade of late fees, Blockbuster was a weekend night tradition for most families.

Then Netflix happened.

Netflix sent videos you would’ve rented through Blockbuster straight to your home without due dates or late fees. Blockbuster was unconcerned and even had the opportunity to buy Netflix for $50 million in 2000. They decided to meander along and not change a thing for the next four years while Netflix became more and more popular, and eventually went from a mail-order service to a streaming one.

In 2004 Netflix finally offered an online option, but it was too late.

On September 23, 2010 Blockbuster filed for bankruptcy. But I still have a VHS tape that has their “Please be kind, rewind” slogan, just as a precious memento.


In 1959, Xerox launched the Xerox 914 photocopier revolutionized the document-copying industry.

According to Wikipedia: “One of the most successful Xerox products ever, a 914 model could make 100,000 copies per month (one copy every 26.4 seconds, or ~136 copies/hour.)”

But most everyone knows the story of PARC (or the Palo Alto Research Center). PARC’s inventions include the mouse, the laser printer, and a windows/icon-based user interface (sound familiar?).And they gave it away. For years , Xerox management did absolutely nothing with their cutting-edge inventions and continued to profit off of the 914 photocopier.

Meanwhile, Apple, Microsoft and Hewlett-Packard ”borrowed” their technology and made billions off of it.

Borders Books

When Borders Books launched its first store in Ann Arbor, Michigan in 1971, the world was a different place. A kindle was a pile of sticks used to start a fire, and a nook was that tiny part of the kitchen in the corner where you eat breakfast.

40 years later, you can read books on your phone, on a tablet or via the web. And Borders’ competitors (Amazon and Barnes and Noble, to a lesser extent), saw this trend. They launched tablet devices to strengthen their relationship with readers.

On the other hand, Borders didn’t adopt any of new technologies (and according to this Time article, focused on music sales). In doing so, they wrote their obituary.


Do you remember your first “CrackBerry?” There was a time when the primary mode of business communication was BBM and everyone wanted to know your PIN. It was the phone to have in the mid- to late-2000’s (in 2007 it had more than half of the marketshare of phones in the US.)

But on June 29, 2007 the iPhone was released.

At first, Blackberry ignored touch screen based technology insisting their phones would remain the de-facto standard for enterprises especially since the iPhone struggled early with solid enterprise email security. But by dominating in the consumer market and slowly promoting Bring Your Own Device (BYOD) standards within companies, Apple redefines the market and left Blackberry stumbling and blinded by their own success.

Their initial inaction snowballed into a succession of failed attempts to innovate. Blackberry currently has 0.8% of the Smartphone market share according to IDC.

Rumor has it that they are now working on a Siri-Like feature called Blackberry Assistant. They might be a little bit behind the curve on that one.


In 2005, Yahoo owned 21% of the online advertising market, #1 among all players. Yet today, they’re struggling maintain their #4 position behind Google, Facebook and Microsoft.

In fact, Yahoo could’ve done just about anything differently and they could still be #1. First, their desire to be an online portal instead of a dominant search player led them to outsource their search engine to Microsoft Bing.

They were supposed to be what Google ended up being but got distracted along the way. They didn’t see the importance of search and instead focused on becoming a media giant.

Just a few of their missed innovations:

  • Google. In 2002 there was reportedly a deal struck for Yahoo to buy Google for $5 billion dollars. Then CEO Terry Semel refused to shell out the cash and the deal was squashed.
  • DoubleClick. DoubleClick was the dominant player in display ads throughout the late ‘90s and early 2000’s. Buying DoubleClick would’ve helped Yahoo strengthen their display ads as Google was gaining on them. Unfortunately they didn’t move quick enough and Google pounced on this opportunity.
  • Facebook. In 2006, Yahoo had a deal to buy the company for $1 billion. They then lowered their offer and Mark Zuckerburg backed out. Facebook is now valued x150 times their original asking price. Whoops.

Being a technology giant requires strategic mergers and acquisitions (and the innovative ideas they bring). Had a few of these situations gone differently, we might be “yahooing” instead of “googling.”

United States Postal Service

UPS, FedEx and not mention email—and the USPS has sat by and done just about nothing. If you Google “USPS” you will find approximately 10,000+ articles on why it can’t be saved. The market shifted and unfortunately due to government regulations the USPS was stuck.

And thus USPS is overshadowed by UPS and FedEx, left only to deliver some bills that aren’t paperless and wedding invitations.


In the last 10 years who has actually taken a serious Polaroid? Yeah they’re cool to have around at birthday parties as something out of the ordinary, but convenience is the name of the game for everyday use.

They started out as an innovative brand that brought instant photography into the playing field. However, Polaroid didn’t realize that digital cameras were going to be the way of the future and once they did it was way too late. Film photography is now a niche field at best and Polaroid filed for bankruptcy in 2001.


MySpace was born and died all very quickly. It goes to show you how important the evolution of user experience is, seeing as how Facebook swooped in where Myspace had already made decent ground.

Here is one graph showing Google Trends of Myspace over the years:

Myspace Interest Overtime.PNG

Now here is that same time period with Facebook included:

Myspace and Facebook.PNG

Looks pretty comical in comparison.

Facebook saw what Myspace didn’t: people need to connect on more than one level—through shared interests and groups (not just random bands trying to get signed.) And so, everyone migrated over to Facebook and never looked back.

However, they do have over a million likes on Facebook but that’s mostly people shell shocked that they’re still around.


Why change the perfection that is the Twinkie? It was something that you could find in every child’s lunchbox in the 1970’s. Unfortunately, times change and so do eating habits—“eat clean, train mean.” Hostess continued to churn out highly processed foods that aren’t bought as often in this healthy eating craze.

Hostess made two major errors in the last 20 years: failure to innovate new and healthier foods and marketing that didn’t even attempt to make their brand relevant. Hostess closed its doors in 2012 after two bankruptcies (and the eBay mad-dash started for Twinkies) and then re-opened as a new company Hostess Brands, LLC. Hopefully the third time’s the charm. Whole wheat Ding Dongs anyone?

The Entire Publishing Industry

We’ve been watching for awhile as publishers desperately cling to the prospects of print sales. It’s very clear that it’s not going to happen and electronic print is the way of the future (duh.) Instead of embracing the digital generation, publishers have been dragging their heels trying to slow it—wasting both time and money in the process.

While they’re over there fighting a losing battle, the market has shifted. People no longer look in the classifieds for jobs. Instead, they log in to LinkedIn or browse Craigslist for listings. If the public wants to catch up on the news they can get their updates from the web or their mobile phone. The New York Times crossword puzzle is a thing of the past (there’s an app for that!)

Revenue in the industry is expected to decline at an average rate of 4.2 percent per year for the next five years according to IBISWorld. The newspaper and publishing industry can combat these losses using paywalls through application stores across various platforms.

These companies used to be considered some of the brightest in their industry but their failure to innovate led to their ultimate (or eventual) demise. Tunnel vision (or Big Company Syndrome) is common today. When companies are successful quickly, they assume that they should just keep doing what they’re doing and it will be fine. Which isn’t completely untrue, you should definitely champion your best products. But what separates good companies from the best companies is innovation and always trying to find ways to improve.


Don't let this happen to your organization. Companies of all sizes can benefit from innovation management, learn more about managing ideas in our free Ebook:
The Definitive Guide to Innovation and Idea Management Platforms


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