Quote:
Originally Posted by jbcohen
I would like to see what you all think about this theroy: When technology shifts everyone goes back to zero and past sucessess guaranty nothing. What happended with Borders is simply that technology started to shift on them and they were unable to keep up with the times.
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While this is sometimes true, I don't think that it's always true, and I specifically don't think that it was true in the case of Borders. Mismanagement and vast overexpansion in the '90's (B&N had the overexpansion problem, too) weakened Borders so that they became unable to compete with B&N and Amazon. E-books didn't cause their downfall and would have come too late to save them, although they may help B&N.
But technology shifts all the time, and any company that is 30 years old has dealt with this. But (except as below) existing companies are usually in a better position to capitalize on changes.
Technology has changed a lot since GE was founded, but it has managed to manage the technological change. There has been a lot of change since Apple and MS were founded in the 70's, but both companies have survived, even though they are quite different than they were back then. Even Standard Oil survived the change from whale oil (its original product) to petroleum. For that matter, Amazon managed the transition to e-books; it didn't start as an e-book company, and it wasn't the first to the race, but it has done well, obviously. As has B&N's e-book division. There's no intrinsic reason why Amazon had to move before, say, Borders. In fact, Borders switching to e-books would have been a classic "I'm losing against Amazon and B&N, so I'm going to compete in a new area that will use my expertise." (I.e., what Apple did with the iPod when SJ realized that they could do more than just beat their heads against Windows).
The Exception.
While existing companies can usually deal with technological change, this isn't the case when the change is so profound that their previous skills have no relevance. Even if horse trainers were prescient about the development of the automobile, there was nothing that they could do to compete in this area because none of their skills would translate into manufacturing.
The same thing happened to Kodak. Kodak was basically a chemical company with expertise in film, although they did make a few low-end cameras. When digital cameras made film obsolete, Kodak's business was over. But this wasn't the kind of change that Kodak could have dealt with even if they had seen it coming. They weren't a *real* camera company, and they had no expertise in electronics. But not all old-guard companies were washed away in the flood - higher end camera companies (Canon, Nikon, Olympus) *were* able to compete in the digital area because their expertise concerning lenses and light still counted...they just needed to get the electronics from someone else [Canon and Nikon are best thought of as lens manufacturers who happen to sell cameras]. But they had always gotten the film from others, too. Electronic companies (Sony, Panasonic) were able to use their electronics background to get into the market, although for their better products they had to rely on old-school camera [lens] manufacturers for their products - I think Sony usesZeiss lenses and Panasonic uses Leica.
TL;DR
You can't generalize about technological change...