Some 52% of the companies in the Fortune 500 at the turn of the century are gone today

Some 52% of the companies in the Fortune 500 at the turn of the century are gone today

Retail's history is littered with stories about disruptive change and retailers that couldn't keep up. It's time to take a deeper look at why, and to reflect on the common practices that are holding us back from truly meaningful change.

Spend enough time reading business news or LinkedIn and you'll eventually come across a post that looks like this:

  • Netflix didn't kill Blockbuster; Blockbuster killed itself with ridiculous late fees.
  • Uber didn't kill the taxi industry; the taxi industry killed itself with limited services and industry-controlled fares.
  • It isn't technology that disrupted industries; poor customer-centricity did.

Here's the thing: by the time these lessons become viral, it's already too late.

These sentiments are widely shared in social media, and for a good reason. They're parables. They're blunt, overly simplified stories meant to illustrate some sort of moral high ground about why the old way was no good and the new way is the truth. In the above examples, it puts the blame right back on these disrupted industries for forgetting what got them there in the first place: the customer. But it's worth taking it one step further. It isn't just a lack of customer centricity that's brought so many businesses down in recent years. Complacency plays a big part, too.

The biggest sin for any industry leader is the belief that what they're doing right now will still be relevant in a couple of years

The biggest sin for any industry leader is the belief that what they're doing right now will still be relevant in a couple of years. Sure, thinking of the business above the customers was the final nail in the coffin. But at some point, all those businesses grew into giants by having something that perfectly lined up with consumers at the time.

For example, Blockbuster was the best and easiest way to take home a movie. Taxis were way better than taking a bus when you didn't have a car of your own. Sears was the original Amazon, putting a catalogue of tens of thousands of items in a customer's hands – killing mom and pop stores with limited inventory and bad prices. All those business models worked at the time, so you can't totally blame them for letting it get to their heads. However, complacency is a killer.

The bigger the business, the harder the fall

Some 52% of the companies in the Fortune 500 at the turn of the century are gone today. The rise of digital technology and connected consumers has left many incumbents on their heels, with no real strategy to drive meaningful change.

Businesses are too busy keeping the lights on today to plan for a future in which they'll still be relevant. And it's bringing them down

In a recent survey of 91 executives at companies with revenue greater than $1 billion, little more than one-third of companies felt confident they could achieve transformation in the next five to ten years. Why? It's not for lack of good ideas or a talented workforce. Instead, 40% of executives felt day-to-day decisions undermined their company's strategy to change, while 24% felt their company lacked a coherent vision of the future. In other words, these businesses are too busy keeping the lights on today to plan for a future in which they'll still be relevant. And it's bringing them down.

The problem with disruption is that it comes from the places you'd least expect – and it never happens at a convenient time. We often oversimplify it in viral LinkedIn posts or socially shareable stories. The failed companies in today's ghost stories probably thought what they were doing was what the customer wanted – because that's what worked in the first place. But the customer has evolved. Yes, the customer is the centre of the universe, but they always kind of have been.

Movie rental late fees were the product of the time – Blockbuster couldn't carry unlimited physical assets in a store and that was its way of dealing with demand. The difference between customer service at a traditional retailer versus customer experience at Amazon is hard to measure. Amazon didn't get where it did with an army of knowledgeable sales associates, but with inventory and a distribution model that ensured a product was available when and where the customer wanted it.

You'd be hard pressed to find someone from the hospitality industry who says the customer is not important. But what they couldn't control was the power customers have gained from internet searches, review sites and price aggregators. Services like Uber, Seamless, Airbnb and eBay almost totally take out the middle man – providing greater transparency on price, service level and availability. Their rise was a symptom of the archaic practices and the unfriendly customer positioning of traditional industry powers that failed to understand the democratising nature of the internet.

It's not that businesses forgot about their customers so much as they forgot that customers naturally evolve. And the pace only sped up once we all started carrying internet-connected devices with us everywhere. Settling for the status quo was the killer. You can't solve today's (much less tomorrow's) problems with yesterday's solutions.

Retail's history is littered with stories about disruptive change and retailers that couldn't keep up. It's time to take a deeper look at why, and to reflect on the common practices that are holding us back from truly meaningful change.

Some of the best retailers today are also technology companies – they turn data into insight and provide the experiences and services customers have come to expect through the rise of internet services and mobile devices. They also understand that few retailers can accomplish this transformation alone, and they don't let yesterday's technology hold them back.

Wait too long, however, and that transformation could easily pass you by. Don't become another parable of retail's failed past.

About the author: Corey Tollefson is senior vice president and general manager at Infor Retail.