By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals, Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. Tel. 309-532-8466 -
The year is 1978 and an exciting, new company has just been launched by a 29-year-old wunderkind engineer named Dennis Hayes. That company was the Hayes Corporation, and its principal product was to become integral to the burgeoning personal computer industry and gave significant impetus to the Internet explosion. That product was the now ubiquitous modem.
Earlier this year the Hayes Corporation quietly closed its doors. It went out with a whimper, not a bang. Forever. What happened? How did a company whose principal product so quickly became and so long remained the "industry standard" simply fade away into obscurity, destined to become no more than a mere footnote in the history of the computer industry?
Industry observers have already begun their post-mortem analyses, of course. Sales simply didn’t keep pace with research and development efforts. The marketplace changed too rapidly for Hayes to keep pace. The company was unable to obtain adequate funding.
Regardless of the reasons (a cynic might say "excuses") cited for the ultimate failure of this once great, innovative company, it nonetheless is "dead" and obviously will remain so. At the risk of being accused of oversimplification, we believe this company’s "death," as is so often the case with most failed companies, can be attributed largely to one simple fact: company management took its eye off the ball. What’s the evidence of this? Consider some of the company’s key activities during its final full year of existence, as evidenced by a chronology listed on its own Web site, www.hayes.com:
1/26 – Hayes Corporation Completes Comprehensive Restructuring Program
9/14 – Hayes Appoints New Vice President of Sales for the Americas
10/20 – Hayes Corporation Appoints New Chairman of Board of Directors
In our experience, as well as in the experience of substantial numbers of other knowledgeable marketers, the "keywords" in these developments more often than not herald the beginning of the end for a company. "Restructuring," "New Vice President of Sales," "New Chairman." Show us a company that is in the throes of "restructuring" or appointing new leadership (particularly at the top and in such key position as sales or marketing) and we’ll show you a company that has usually, though certainly not always, become a "ship without a rudder."
Why is this usually true? We believe it’s because such activities generally have an inward focus to them, and not the far more important outward focus, i.e., a focus on the customer, the end-user. That is to say, if a company is losing market share, or not keeping up with marketplace developments (whatever they may be) it’s usually the direct result of the company’s having lost touch with its customer base.
To be sure, this could be the direct (or indirect) result of a company’s internal structure and/or its leadership, but simply fixing one side of the equation, i.e., the internal structure and/or the leadership, and not even addressing the other, i.e., having lost touch with customers, is a dead-on recipe for ultimate failure.
It appears to us that this is what happened to Hayes Corporation. The company simply didn’t keep up with rapid developments in the industry, it lost track of what was important to customers and chose to focus instead on what was important to the company.
Smug observers in other industries will merely dismiss the Hayes story as simply the latest casualty in an industry known for "Roman candle" companies. Our industry, they will tell themselves, is "different," it’s a "mature" industry and we’ll be protected. But they really are only fooling themselves.
While the Hayes Corporation story has many unique aspects to it, it also illustrates many aspects that are universal to business. The most important aspect, to us, is that no company¾in spite of its "pre-eminence" in a particular industry segment¾will ever be immune from failure. Any company, no matter its size or past success record, can quickly and easily be brought to the precipice if it focuses more on what’s important to the company than what’s important to its customers.
Ask IBM. Ask Apple. Ask AT&T. All of these companies were brought (with frightening speed, in some cases) to the precipice in recent years. All have survived at this writing, but as they teetered on the precipice of the forbidding chasm, they certainly were provided with a sobering, breathtaking experience.
Still think your company is immune to ultimate failure? You might want to think again.