Think back ten years. It’s 2003. Companies like Borders, Circuit City and Hostess have virtual monopolies over their respective industries, and the way things are going, nothing is about to change. GM isn’t just an automotive manufacturer, it’s an American institution, and Life, the iconic magazine that captured so many defining historical moments, is still found on coffee tables around the nation. In the eyes of the public, these companies had always been and would always be fixtures of American society. To the casual observer, there was no reason to believe that things would ever change. Things changed very rapidly, however, and over the following ten years, all three of these juggernauts declared bankruptcy, and it can all be attributed to a new theory known as “Digital Darwinism.”
Pioneered by well-known media strategist and bestselling author Brian Solis, Digital Darwinism explains why and how so many enormous companies are finding themselves in the red in today’s digital age. According to Solis, Digital Darwinism can loosely be defined as the perceived evolution of consumer behavior when society and technology evolve faster than a business’ ability to adapt.
In 2003, Borders had posted record profits, bolstered by its high sales of not just books, but DVDs and CDs. But at the same time, the e-reader was being introduced to massive fanfare and digital download services such as iTunes hit the mainstream. Seemingly overnight, the manner in which society consumed media began to shift to the digital end of the spectrum. What was Borders’ response? Essentially nothing. The enormous chain waited until 2010 to debut its own e-reader, well behind competitor Barnes & Noble, and it failed to find a way to shift its business model to emphasize the new digital market.
Borders wasn’t the only casualty. According to an article originally published by Forbes in 2011, 70 percent of all Fortune 500 companies were expected to turn over by this year. Today, only 71 of the original Fortune 500 companies from the original 1955 list are still solvent. Not only is that number shocking, it’s scary. Coming off of the 2008 financial crisis, in which we saw exactly what could happen to firms believed too big to fail, this is yet another reminder that the financial world is not nearly as fixed as it may seem.
It isn’t always easy to predict which business will fail and when. While it may seem now, in our age of Netflix and on-demand, that Blockbuster didn’t have a prayer of success, how could it have been predicted before the advent of streaming services? In an age where technological advances occur at an increasingly rapid pace, it’s impossible to know what drastic changes the next piece of tech may bring. As such, we can’t truly know who will go down next, but there are some ominous clouds on the horizon for certain companies.
There have been troubling developments for Facebook recently. While it’s too early to say that Facebook will become the next MySpace and simply fall off of the face of the earth, the demographic shifts in its customer base have some analysts scratching their heads. Younger consumers are increasingly shunning Facebook in favor of microblogging sites like Twitter and Tumblr and spending more time on complementary apps such as Instagram, Snapchat and Vine. Tech titan Apple has also hit a recent rough patch, posting enormous losses over the last year to the tune of a drop in stock prices of 44 percent, and has lost roughly $290 billion in market cap. Critics have lambasted the company in recent months for failing to produce any new or innovative products, as has been the company’s tradition. That combined with several high-profile failures, such as the disaster of the iPhone’s native Maps app, have contributed to a rising sense of doubt surrounding Apple in the years following the death of Steve Jobs.
Unfortunately, there is no clear-cut path to avoid falling victim to Digital Darwinism. However, there are a series of guidelines that Solis suggests all businesses adhere to if they wish to prolong their lifespan, and all of them center around one thing: consumer engagement. In order to avoid the pitfalls of Digital Darwinism, Solis recommends emphasizing a consumer experience, rather than just a product. This can be advanced by meaningful consumer interaction, proactive involvement in the latest technological trends, fostering consumer participation, and by selling not only a product, but a complementary message.
Naturally, this is all much more difficult than it sounds. If it wasn’t, many of the aforementioned companies would still be around today. As the pace of technology continues to increase, businesses must continue to reinvent themselves, or they too may fall victim to Digital Darwinism.
[Sources: BrianSolis.com, Forbes, VentureBeat, Bluewire Media, LinkedIn, BusinessInsurance.org, WallStCheatSheet.com]
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