Business

We’ve often talked here about businesses and other kinds of organizations that missed the turn…that failed to react intelligently to market or technology changes and disappeared (or at least suffered great harm)…or, in the case of military organizations, went down to defeat.  Sears failed to take advantage of the excellent fit that the Internet could have offered with their direct mail strengths.  The French Army of 1940 was so focused on the lessons of World War I that they failed to understand the tactics that would be used against them in the coming war.  None of the traditional US steam locomotive manufacturers became a force in the diesel-electric market.  The big integrated steel producers failed to exploit mini-mill technology.  And so on.

In this post & discussion, I’d like to look at this phenomenon from a different angle….what are some examples of organizations that did successfully make the turn, and/or revived themselves after being overwhelmed with internal as well as external problems?

To start things off, here are some examples that seem to fit:

Studebaker–this company was originally a manufacturer of horse-drawn wagons and carriages.  The ‘buggy whip industry’ is used as an archetypal example of an industry that was highly vulnerable to the mechanically powered automobile and failed to exist because of its failure to recognize and act on this vulnerability. (Why do people talk about buggy whip makers, rather than just buggy makers, I wonder?)   But Studebaker did enter the auto business, with electric cars in 1902 and gasoline vehicles in 1904.  Although never a dominant player in the US auto market, the company did manufacture and sell cars until 1963.  (It was also a significant supplier of military vehicles and other items during World War II.)

IBM was overwhelmingly dominant in the era of punched-card data processing…it was by no means inevitable that it would successfully make the transition to electronic computers, or at least would make this transition in a manner comprehensive enough to ensure its future.  Companies such as UNIVAC were more focused on electronics. It is easy to imagine an alternate history in which  IBM chose to exploit electronic computation only for the niche of scientific & engineering calculation, leaving business data processing to traditional punched card methods…but that’s not what happened.

American Express started out in 1850 as a package delivery company, focusing on transportation within New York State.  Fortunately for them, they expanded beyond this focus with the introduction of products such as money orders and travelers checks…I say ‘fortunately for them’, because in 1918, the federal government nationalized the major express carriers and expropriated their property.

Corning started in 1851 but made its mark as a manufacturer of glass bulbs for Edison’s lamps–by 1808, bulbs accounted for half Corning’s business.  This seems like the kind of business that would have been highly susceptible to replacement via vertical integration by GE and the other lightbulb companies which were its customers.  But in 1915, the company came up with Pyrex, and in 1952 the accidental overheating of a piece of photosensitive glass led to the creation of CorningWare.  And in the 1970s, Corning pioneered the use of fiber optic cables for data transmission.

Apple, in the late 1990s, did not look like it had a great future.  The company’s desktop products were doing poorly against PC-type products.  Many experts believed that Apple should get out of the hardware business entirely and merely license its software to other manufacturers, as Microsoft had done with Windows, and, indeed, some licensing deals were struck. But Apple’s future would turn out not to lie in pure software but in software tightly integrated with proprietary hardware, especially with handheld devices.

The Royal Navy, in 1797, suffered from serious internal problems.  The service was rocked by two mutinies–one at Spithead and the other at the Nore.  The Spithead mutiny was mainly about a demand for improved living conditions, due in part to the fact that pay rates had not increased to keep up with inflation.  The Nore mutiny was more far-reaching in its demands, including demands that the King dissolve Parliament and make immediate peace with France.  There was apparently also some involvement by Irish separatists.

Yet these mutinies preceded by only 8 years the great naval victory at Trafalgar.  It seens unlikely that an angry, demoralized, and radicalized force of sailors could have achieved such a victory or enabled Britain’ s “ruling of the waves” for the next 100-plus years.  The willingness of the naval authorities to make needed changes (increased pay, abolition of the ‘commissions’ that ships’ pursers had traditionally been allowed to take for themselves), surely made a difference, along with a combination of conciliation and limit-setting.  (All of the Spithead mutineers received a royal pardon; at the Nore, 29 mutineers were hanged and an equal number imprisoned; some were transported to Australia…however, most Nore mutineers were not punished at all, which was lenient by the standards of the time.)

Speaking of Britain….following the withdrawal at Dunkirk in 1940, the future of that country…and of western civilization…looked dark indeed.  Writing in exile from Brazil, the French writer Bernanos wrote in December of that year:

No one knows better than I do that, in the course of centuries, all the great stories of the world end by becoming children’s tales. But this particular one (the story of England’s resistance–ed) has started its life as such, has become a children’s tale on the very threshold of its existence. It mean that we can at once recognize in it the threefold visible sign of its nature. it has deceived the anticipations of the wise, it has humiliated the weak-hearted, it has staggered the fools. Last June all these folk from one end of the world to the other, no matter what the color of their skins, were shaking their heads. Never had they been so old, never had they been so proud of being old. All the figures that they had swallowed in the course of their miserable lives as a safeguard against the highly improbable activity of their emotions had choked the channels of circulation..They were ready to prove that with the Armistice of Rethondes the continuance of the war had become a mathematical impossibility…Some chuckled with satisfaction at the thought, but they were not the most dangerous…Others threatened us with the infection of pity…”Alone against the world,” they said. “Why, what is that but a tale for children?” And that is precisely what it was–a tale for children. Hurrah for the children of England! 

Men of England, at this very moment you are writing what public speakers like to describe in their jargon as one of the “greatest pages of history”….At this moment you English are writing one of the greatest pages of history, but I am quite sure that when you started, you meant it as a fairy tale for children. “Once upon a time there was a little island, and in that island there was a people in arms against the world…” Faced with such an opening as that, what old cunning fox of politics or business would not have shrugged his shoulders and closed the book?

Britain and its allied did of coure prevail, and at the end of World War II, the enemy countries of Germany and Japan were physically and economically crushed. Their populations were near starvation, and they were viewed around the world as moral pariahs, a status that they had richly earned.

But both countries were able to recover, grow, and prosper economically and to establish reasonably stable democratic governments.  How long this will continue, given the low fertility rates (particularly in the case of Japan) and the suicidal energy policies (particularly in the case of Germany) remains to be seen, but both countries have had a pretty good run over the past 70+ years, probably much better than would have been foreseen by most people at the time.

What other examples of resilience and renewal can you think of?