The average Fortune 500 company now lasts less than 18 years. In 1955, it was 75 years. Most companies from the 1955 Fortune 500 list are now gone. They went bankrupt, merged or dropped in rankings.
There are reasons for the shorter company lifespan. One is fast technological change. that fail to innovate fall behind competitors. Another is globalization. Firms unable to compete globally can fail.
Innovation is now vital for survival. Companies that do not innovate will be replaced by ones that do. Staying innovative is critical for organizations. They must future-proof against disruption.
The pace of change is fast today. Companies that refuse to evolve will struggle. They will be surpassed by innovative competitors. To endure, businesses must keep innovating and adapting. They require constant vigilance to avoid failure.
Management consulting firm McKinsey predicts severe turnover ahead. By 2027, 75% of today’s S&P 500 companies will likely vanish.
Here is the list of 15 Companies that failed to innovate. Their downfall shows companies must evolve or die.
Table of Contents
Kodak
Kodak failed to adapt to digital photography. Though they invented the first digital camera in 1975, Kodak stuck with film. They did not change their business for the new technology. Digital photography had lower profits than the film did. But Kodak was slow to restructure.
Meanwhile, competitors like Canon and Nikon excelled at digital cameras. Their more advanced features beat Kodak’s cameras. In 2001, Kodak acquired the photo-sharing site Ofoto to try catching up digitally. However, they failed to leverage their strong brand into new areas.
Kodak’s management failed to steer the company through disruption. They clung to the declining film business for too long. Adaptation to digital lagged badly. This allowed rivals to grab market share as film collapsed.
After years of losses, Kodak declared bankruptcy in 2012. They exited the camera business and focused on digital printing. Kodak also sold many patents to raise cash. They shifted to commercial printing technology and supplies. But the company is a shadow of its former self. Failure to innovate destroyed a photography giant.
MySpace
MySpace lost its social media lead by failing to innovate. Launched in 2003, it quickly became the top social platform. But MySpace did not add new features to improve user experience. Meanwhile, Facebook focused heavily on innovation. It introduced the news feed and kept improving features. Users engaged more on Facebook’s evolving platform.
Rupert Murdoch’s News Corp bought MySpace in 2005 for $580 million. But they did not successfully manage it. MySpace failed to understand social media trends. It allowed security issues, data breaches and spam accounts. The site became messy and buggy. MySpace tried launching a redesigned version in 2010. But by then Facebook had dominated the market.
In 2011, News Corp sold MySpace at a huge loss for just $35 million. Rapid innovation fueled Facebook’s rise. Stagnation and lack of innovation destroyed MySpace’s early advantage. MySpace serves as a cautionary tale of lost opportunities.
Blockbuster
Blockbuster dominated the video rental industry during the 1990s. It had over 9,000 stores and massive brand recognition. But Blockbuster did not adapt well to technological change. The rise of on-demand streaming video services threatened its business model.
Blockbuster tried imitating Netflix’s DVD-by-mail service in 2004. But it failed to create a competitive online platform. Meanwhile, Netflix and others kept innovating their streaming technology and content. Blockbuster’s CEO famously dismissed Netflix as no threat.
Redbox kiosks also disrupted Blockbuster’s retail stores. Blockbuster tried adding kiosks but it was too late. By 2010, customers had better rental options. Blockbuster filed for bankruptcy as losses mounted.
Blockbuster failed to evolve with industry changes. It clung to physical stores and did not embrace the digital shift. Innovative services like Netflix displaced Blockbuster. Its leaders underestimated disruption from new technologies. Blockbuster serves as a classic case of innovative inertia.
Polaroid
Polaroid was founded in 1937 by Edwin Land. It pioneered instant cameras and film, starting in 1948. For decades, its technology dominated photography. But Polaroid failed to adapt to the digital revolution.
The company dismissed the threat of digital cameras. It prioritized film-based products too long. Meanwhile, competitors like Canon and Nikon created advanced digital cameras. These offered superior image quality over Polaroid’s analog instant cameras. Polaroid finally launched digital cameras in 1996. But the quality was poor and digital technology outdated. By this point, digital cameras had left Polaroid far behind.
Polaroid went bankrupt twice in the 2000s. The instant film business collapsed as digital became dominant. Polaroid clung to an obsolete business model for too long. It failed to innovate despite clear threats. This case symbolizes the disruption innovative changes can unleash on incumbents.
RadioShack
RadioShack was founded in 1921 and once led the DIY electronics retail market. But it failed to adapt its business model. RadioShack did not successfully transition from a hobbyist brand to mainstream consumer electronics. Big box stores offered lower prices and a wider selection. Online retailers also provided cheaper and more convenient options.
RadioShack was slow to close underperforming locations. It filed for bankruptcy in 2015 after years of losses. By then, RadioShack had lost relevance with customers. Its inventory was also unfocused and lacked clear direction in what electronics to offer consumers. Trying to be everything to everyone spread RadioShack too thin.
The inability to evolve its outdated brand image and retail strategy hurt RadioShack. It clung too long to what once made it successful. RadioShack serves as a classic middleman retailer made obsolete by shifting consumer preferences.
Xerox
Xerox pioneered the photocopier market after its founding in 1906. But it did not stay competitive as technology changed. Xerox was too focused on copiers. It failed to diversify into new business lines. This left Xerox vulnerable to digital disruption in printing and imaging.
By the 1980s, competitors like Canon and HP outmatched Xerox. They innovated into new printer technologies while Xerox clung to copiers. Xerox also missed opportunities by relying on aging solutions like fax machines. Years of losses followed as digital advancements made Xerox’s offerings obsolete. Xerox tried restructuring but faded in relevance. In 2018, Fujifilm acquired a controlling stake after Xerox’s decline.
Xerox shows the risks of overdependence on legacy products. Companies must continually innovate and diversify. Xerox failed to adapt its business in time to avoid disruption.
General Motors
General Motors was once the largest automaker globally. But it filed bankruptcy in 2009 after years of decline. GM failed to innovate and adapt to market shifts.
Instead of focusing on improving products, GM relied on profits from its finance arm. It neglected investments in new technologies as competitors innovated. GM also did not adapt quickly as customer needs changed. Overseas automakers like Toyota gained US market share by offering more reliable, fuel-efficient cars. But GM clung to gas-guzzling SUVs and uninspiring designs. Its reputation suffered as quality lagged rivals.
After huge losses, GM required a government bailout in 2009. This led to today’s smaller GM emerging after bankruptcy. GM serves as a warning that market leaders must never stop improving products, adapting to consumers, and investing in the future. Even giants can quickly falter.
BlackBerry
BlackBerry once dominated the smartphone market, especially among business users. But it failed to adapt to changing consumer preferences.
When Apple’s iPhone launched in 2007, BlackBerry did not respond with its own touchscreen and app store until years later. Meanwhile, Google’s Android provided more choices. BlackBerry’s outdated devices rapidly lost appeal.
BlackBerry management moved too slowly to reinvent the company. They made poor decisions like not supporting third-party apps early on. This made it hard for developers to support BlackBerry. As bring-your-own-device policies grew, BlackBerry’s enterprise focus became less relevant. Consumers gravitated toward iPhones and Android devices with superior features.
BlackBerry failed to match rivals’ innovation and adapt to market shifts. By clinging to physical keyboards and its legacy business model for too long, BlackBerry lost its dominance.
Pet.com
Pets.com was an early online pet supplies retailer. It launched in 1998 during the dot-com bubble. Pets Dot Com quickly grew thanks to VC funding and memorable advertising. Its sock puppet mascot became famous. But the fundamentals behind Pets.com were weak.
The company lost money on low-margin pet food and supplies. Shipping heavy bags of pet food was also very expensive. Competitors like Amazon could offer lower prices using their scale. Pets.com’s business model simply did not work.
After an IPO in 2000, Pets.com stock plunged as losses mounted. Just 268 days after going public, Pets.com shut down in November 2000. Around $300 million of funding evaporated. Pets.com demonstrated the risks of pursuing hype over sustainable economics. The branding and ads were excellent. But the underlying business was fatally flawed. It remains a cautionary dot-com tale.
AOL
AOL pioneered the dial-up Internet in the 1990s. Millions got their first online experience through AOL. But AOL did not transition well to broadband as cable and DSL expanded. Dial-up became obsolete, so subscribers left.
AOL clung to its walled-off portal model too long as the open web grew. Google, Yahoo, and others surpassed the stale AOL portal. After acquiring Time Warner, AOL struggled as a content company. It took major write-downs on deteriorating assets like Myspace.
Unable to reinvent itself beyond dial-up roots, AOL faded from relevance. It failed to adapt its business in time. The AOL brand seemed stuck in the past as the Internet marched on. In 2015, Verizon acquired AOL mainly for ad tech, not subscribers. AOL serves as a classic case of how once-innovative companies can quickly become outdated without continual reinvention and evolution.
Palm
Palm pioneered the PDA market with devices like the Palm Pilot. However, Palm failed to innovate as the market evolved. When Apple released the touchscreen iPhone in 2007, Palm did not have touchscreen PDAs. Its devices seemed outdated overnight.
Palm’s management moved too slowly to adapt. They made poor choices like not launching an app store right away. This limited developer support compared to iOS and Android. As smartphones gained capabilities, consumers abandoned basic PDAs. Palm tried launching new smartphones like the Pre. But by then, iOS and Android dominated the market. Palm could not compete with their superior apps and wider device choices.
After years of losses, HP acquired Palm in 2010 for $1.2 billion. But smartphones had made standalone PDAs obsolete. Like Blackberry, Palm clung to legacy strengths like styluses too long. It failed to rapidly pivot to match the innovations of rivals.
Toys “R” Us
Toys “R” Us was once the largest toy retailer globally. But it struggled to adapt its brick-and-mortar model to online competition. In 2000, Toys “R” Us signed an exclusive deal to sell toys on Amazon’s new e-commerce site. However, Amazon allowed other toy vendors regardless. Toys “R” Us sued to exit the deal in 2004.
This prevented Toys “R” Us from developing its own online shopping presence early on. The company finally announced e-commerce investment plans in 2017, far too late. Fierce competition from Amazon and other online toy sellers had taken its toll.
Crushing debt of $1 billion from its leveraged buyout also hurt Toys “R” Us. In September 2017, it filed for bankruptcy while keeping stores open. Toys “R” Us failed to fully embrace e-commerce in time. This left it vulnerable to shifts toward online toy shopping.
Sears
Sears, once the top US retailer, collapsed due to a lack of innovation. Failing to adapt to e-commerce and modern shopping trends, it clung to physical stores as online sales increased.
Sears’ management reacted slowly to market shifts, making poor decisions like inadequately investing in stores and online capabilities. As a result, Sears could not compete as Amazon and Walmart offered lower prices and a wider selection online. While middle-class shoppers, Sears’ core customers, increasingly went online for deals, Sears’ web presence lagged behind rivals. Its stores grew old and unappealing.
After acquiring Kmart in 2005, Sears accelerated its decline, as its CEO invested little in revitalizing the brand. With billions in losses, Sears filed for bankruptcy in 2018, having failed to give shoppers reasons to visit and buy as shopping habits changed.
Pan Am
Pan Am was founded in 1927 and became America’s largest international airline. It pioneered innovations like computerized reservations and jumbo jets. However, Pan Am ultimately failed due to poor management and inability to evolve.
Pan Am invested heavily in its existing business model but not in new innovations. Deregulation in the late 1970s increased competition, but Pan Am did not adapt well. Its costs were higher than new entrants. Pan Am’s service quality also declined amid its financial struggles. Rather than restructure and improve, Pan Am made unsuccessful acquisitions. It filed for bankruptcy in 1991 after losing market share for years. Government policies also hurt Pan Am versus domestic airlines.
In the end, Pan Am clung too long to what worked before. It failed to innovate and lower costs when the industry landscape changed. This led to its downfall.
Compaq
Compaq was a leading PC manufacturer in the 1980s and 1990s. It made some of the first IBM PC-compatible computers by reverse engineering IBM’s model. But Compaq struggled to compete as the PC market evolved.
Compaq failed to match the direct-to-consumer model perfected by Dell. Dell’s build-to-order PCs were cheaper than Compaq’s mass-produced models sold through intermediaries. Compaq could not keep up in the price wars. Compaq also diversified into acquiring digital service businesses just as the tech bubble burst. These acquisitions added debt but not synergies.
By the early 2000s, Compaq’s sales and market share plunged as Dell pulled ahead. Compaq failed to adapt its strategy and operations. In 2002, HP acquired Compaq for $25 billion to gain its mass retailer presence.
But pricing pressures continued and HP eventually discontinued the Compaq brand. Compaq fell victim to changing PC market dynamics it could not navigate.
