Why Do Big Companies Decline

A week ago i was asked on Quora “Why do some big companies decline even if they have a big mission, good core values, and a good corporate culture?“. 

Given that it’s a popular questions i’ve been asked many times, i thought i’d share my answer here:

Many companies decline since they loose the “edge” that got them to be big in the first place and fail to adapt to the changing landscape.

Take Kodak as an example. Kodak became a big company due to its imaging business, mainly selling cameras and film paper.
Although Kodak was the first to develop a digital camera in 1975, the product was killed as the company faired it would cannibalize its traditional business. Fast forward 30+ years and in 2013 Kodak files for bankrupancy as it failed to transform its business to digital fast enough.

Another example – Disney: In 1983 Disney fired John Lasseter for trying to promote Disney to produce a computer animated film. John went to Pixar and produced Toy Story, Finding Nemo and other blockbusters. In 2006 Disney bought Pixar for $7B. John was exactly the kind of guy Disney Disney needed to keep its edge and spirit of innovation. As companies grow guys like John Lasseter become outliers.

Similar stories can be written about Nokia and BlackBerry, two companies that once dominated the mobile phones market. Both dominated the mobile OS market in the early 2000 but failed to adapt to the transition to touch screens and the iPhone rush.

Blackberry and Nokia's market cap

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About shanishoham

After 14 years of General Management and incubating/scaling new businesses & organizations for enterprises (established a $55M mobile business and a $100M/400 employees global division), I became an investor Today I’m a board member/mentor with 5 incubators & micro-VCs and involved with many other private & public incubators around the world. I also founded a VC firm named 2020 and I'm a member with a number of angel groups so i get to see & work with many startups, innovation centers and other parties across the ecosystem. I’m an alumnus of the Stanford Graduate School of business - Sloan Master in Management program, a 10 months intensive program for 57 carefully selected experienced Executives and leaders from all around the world.

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