Why market leaders still fall: lessons from the Walkman

In short: past success does not guarantee future success. Market leaders rarely fall for lack of effort. They fall through overconfidence, blindness to new trends and organisations too big to change direction.

The Walkman story

Many of us dreamed of owning a Walkman as children, and the brand everyone remembers is Sony. Over its life it sold more than two hundred million units, and it still ended up as history.

Was the design poor? No. Was it too expensive? No. Was the quality bad? Certainly not. Did Sony stop trying? No. A new technology called MP3 arrived, and past effort no longer had anything to do with future success.

The leader is rarely beaten by number two

Leading brands are seldom overtaken by the runner-up. More often an outsider arrives from nowhere and catches them off guard. Three causes recur:

• Overconfidence: believing what worked before will keep working.
• Missing the trend: dismissing a new technology when it first appears.
• A heavy organisation: the bigger the company, the slower it changes, until it is too late.

Good news for small businesses

The future is not big fish eating small fish, or strong eating weak. It is fast fish eating slow fish. Large companies usually turn slowly, so a small business that adopts a new approach a step earlier can redraw the map.

A quick self-check

1. Am I still doing things the way I did five years ago?
2. Which new approaches have I dismissed as "not for us"?
3. If I started again today, would I run the business the same way?

Being the biggest on your street gives you no real advantage. Speed of change does.

Adapted from Dave Tan's book How High Should Your Customer Retention Rate Be? (2014, in Chinese), updated for today. About the book

Author: Dr. Dave Tan, DBA — Founder of Vital Design, Doctor of Business Administration (DBA). A business consultant to salons and SMEs since 2003, and author of a book on salon management.