The Blackberry phone went from controlling 50 percent of the US Smartphone market share, 20 percent of the global market, and selling over 50 million devices a year to zero percent in a few short years. What went wrong?
In the 1990s, bandwidth was very limited for data transmission. Mike Lazaridis, the founder of RIM, the company that made the Blackberry, leveraged his understanding of this limitation to build the Blackberry. With this innovation, Blackberry was able to do what other mobile phone companies could achieve. However, this knowledge would later turn out to the companies disadvantage. When Steve Jobs announced the iPhone in 2007 – a mini-computer, a web browser, and an email all in one device, Blackberry founder looked at the announcement and said, “this is an impossibility; the networks wouldn’t be able to carry this. It’s illogical that anyone would even propose this”.
Well, Mike was right. The first iPhone didn’t work properly and caused a lot of dissatisfaction from customers. However, with further innovation, the iPhone got better. And Mike became very wrong. Before Blackberry creators would understand what was going on, they were now playing catch up to the Apple and Android phones.
The company’s leadership was too arrogant to view the iPhone as a competitor. They underestimated the innovation that was going on in the phone industry and was too slow to change. The result was the fall of a giant.
You will find a similar scenario with what happened between MySpace and Facebook; Kodak and digital Cameras. So what does all this have to do with why 8 out of 10 businesses fail?
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The problem isn’t the business
I have to admit that there are many factors that contribute to why businesses fail; like unfavorable market conditions, difficulty of doing business and other external causes that may not be within the control of the business owners. However, the number one reason why majority of businesses fail is the business owner.
Most people think of themselves as one single predictable personality. We fell for the personality tests and believed we are a certain way and cannot be anyone else but who nature made us to be. However, every human being has a combination of personalities.
From the business perspective, as is with the scope of this video, Michael Gerber, author of E-Myth Revisited, believes that inside, everyone has different business personalities. We are made of a number of battling personalities; part entrepreneur, part manager and part technician. And the reason business owners struggle is because they assume one aspect of their personality.
The entrepreneur in you wants to come up with new ideas and get new products to the market. He is the innovator, constantly looking out for new opportunities. Sometimes this opportunity chasing creates confusion and frustration in getting people along. Without the entrepreneur, there will be no innovation.
The manager in you is pragmatic and seeks out for order and predictability. She is more atuned to fixing problems. As the entrepreneur innovates and creates new things, the manager arranges things into organized order. Without the manager the business will never function as a system.
The technician in you is the one who gets the work of creating the products or service done. He loves controlling the work flow and getting things done. He wants to avoid all the distractions and get to work creating the best product. He is however, frustrated with the constantly changing ideas the entrepreneur keeps reeling out. And the managers meddling in his work flow. Without the technician, nothing in the business will ever be done.
Although the three personalities seem to be at conflict with each other, any business that would succeed must employ the strength of each of them. You don’t have to get this personality from one person. But since majority of small businesses are started by an owner, it is often rare to have one person fully developed in all three personalities because the average small business owner is approximately 10% entrepreneur, 20% manager and 70% technician. This heavy leaning towards one personality is why 8 out of 10 businesses fail within the first 5 years. Those that fail much later like RIM, MySpace and Kodak, do so because they allowed the manager and technician side of the business to overshadow the entrepreneur.
As Michael Gerber puts it, “The problem isn’t your business; it never has been. The problem is you”
Why the Problem is You
As a business owner and in life generally, I tend to hold myself accountable for my performance. If something is not working in my business, it is because there is something I don’t know, something I’m not doing or something I’m doing wrong. I have started businesses that failed; and when I look back, I recognize that I was the reason they fail either because of something I didn’t do or didn’t know. And if it’s because of something I didn’t know, then it is because I didn’t learn it.
For example, over six years ago, I met a Google employee at a conference on the potential of YouTube as the future of content distribution and consumption. I was excited about the potential and promised to incorporate video content as part of the company’s strategy. But I didn’t follow through with it. If we had started with YouTube by then, we would probably have achieved better results by now. Who am I to blame for that? Definitely, no one but myself.
You see, the success of a business depends to a large extent on the person or persons at the helm of affairs in the company. If you don’t grow, your business doesn’t grow. If you don’t push to embrace new marketing and market opportunities, the business stalls. If refuse to learn and continue to hold on to what worked in the past, like the founders of Blackberry, you will be wiped out by innovative competitors.
It’s easy to blame external factors for the reason why businesses; lack of capital, competition and other stuffs. You may be right in some cases. But the stuff of entrepreneurs is going out of their way to make something work. Take Elon Musk for example. He succeeded in some of the most difficult industries, even in Space industry that was considered reserved for Governments. The man had every reason in the world to walk away from all his businesses at different points. He would have still been congratulated for daring greatly. But he took responsibility at every near failure to salvage the company. He risked all his profit from PayPal in Tesla, SpaceX and SolarCity. Today, he has achieved what no man living or dead has ever dared to achieve.
You may not have the resolve of Elon Musk. But as business owners, there is the lesson of taking responsibility towards the success or failure of our business. Every business owner is responsible for how their business is run. And this ultimately impacts the success or failure of the business.
What can you do?
I believe the primary responsibility of every business owner is learning; studying about the past, and present. It’s not a coincidence that the most successful people are ardent readers. Bill Gate reads 50 books per year. Warren Buffet spends five to six hours per day reading. Elon Musk taught himself how to program, how to build an electric car and how to build a rocket. These people are literally products of self taught education. Not having time to enroll for courses is not an excuse. The more you can learn, the more you can earn.
The second thing you can do is to constantly look into the future. You will not be right about the future most of time. No one would have predicted a pandemic in 2020, for example. But you can always look ahead in your industry to see what most people cannot see. Blackberry didn’t see that mini-computers in your hand was the future; and that touch screen and apps were the future of mobile. Even when the possibility showed up, they ignored it. Kodak did not see Digital camera as the future of photography despite that it was invented by their employee. The company that acquired MySpace was too busy trying to recoup their investment and overlooked customer satisfaction. What these businesses had in common is that they became complacent in their success, and failed to see where the world was headed.
The world is more connected today than ever before. Hence it is relatively easy to keep up with trends and relevant industry innovations. You then have to be willing to act on the insights you gain. Instead of relying on only what you know, always be convinced that there is something you are yet to know. And never stop learning.