6 Companies That Faced Adversity and Came Back Stronger
August 28, 2020 |
The C2FO Team
Even the most iconic companies have endured moments of uncertainty. Here’s how six of them overcame obstacles and positioned themselves for even greater success.
Whether in the movies or in real life, there’s nothing like a good comeback story.
The business world is full of them: once-proud companies that almost collapsed, then pulled themselves off of the mat, Rocky Balboa-style, to achieve even greater success.
Remember Eastman Kodak, the iconic maker of photographic film? The company experienced a long decline and was forced into bankruptcy as digital cameras became popular. But Kodak recently made headlines by landing a $765 million contract from the United States government to make pharmaceutical components — an entirely new business for the film company.
It’s too soon to tell if Kodak can reinvent itself — the government contract is on hold after allegations surfaced of insider trading of Kodak stock one day before the deal was announced. But the possible return of a venerable brand that was long given up for dead could be an inspiration to other companies that must also bounce back in the face of the COVID-19 pandemic.
Here are six classic examples of companies that responded to adversity by becoming stronger and more successful than ever before:
In one of the most famous business comeback stories of all time, Apple in 1997 was floundering after posting 12 consecutive years of financial losses. In a desperate move, Apple’s board of directors ousted CEO Gil Amelio and brought back co-founder Steve Jobs to attempt to resurrect the company.
One of Jobs’ first acts was to announce a five-year partnership with rival Microsoft, which pumped a $150 million investment into Apple that helped keep the company afloat. It was a rare moment of humility for the brash and confrontational Jobs, who said at the time, “We have to let go of this notion that for Apple to win, Microsoft has to lose.”
Of course, what followed was one of most impressive runs of innovation in the history of consumer products. The world is a different place today thanks to the iPhone, iPad, iMac and other Apple inventions. Without Steve Jobs returning to the company he helped start out of his garage, Apple might have become a distant memory.
The beloved Danish maker of plastic block sets has been a presence on toy shelves for decades. But there was a period of time when Lego was in serious danger of going under. In 2004, the company posted a loss of $174 million and was on the verge of bankruptcy.
That same year, Jorgen Vig Knudstorp became Lego’s first non-family CEO and immediately shifted the company’s focus back to its core products. Licensed Lego sets with movie franchises like Star Wars, Marvel and Indiana Jones led to an increase in US sales. At the same time, the introduction of new, story-heavy Lego kit brands like Ninjago appealed to a wider range of kids, as well as adults.
Of course, the game-changer was 2014’s The Lego Movie, a box office hit that solidified the Danish toy company as a cultural force. Three more Lego movies have followed, expanding the brand’s reach far beyond the toy aisle.
Ford Motor Co.
During the Great Recession of 2008-09, US automakers Chrysler and General Motors went bankrupt and received government bailout money in order to stay afloat. Ford turned down the bailout and was able to secure a line of credit, but the company’s ability to survive the economic crisis remained in doubt. Even before the recession, Henry Ford’s iconic company had lost 25% of its market share since 1990.
President and CEO Alan Mulally had a plan — The One Ford Plan. It entailed unifying the automaker’s global operations, transforming and simplifying its product lines, and transforming its company culture. Mulally created an environment where Ford executives could collaborate instead of wage turf battles, renegotiated an unfavorable contract with United Auto Workers and revitalized once-popular models like the Taurus and Focus with innovative technology.
In eight years, those changes not only saved Ford, they positioned it as an industry leader, ahead of its two US rivals that the government bailed out in 2009.
From the 1970s to the ‘90s, Delta rapidly expanded from a regional carrier to an international brand, becoming the first airline to book 100 million passengers in a single year in 1997. The company hit a rough patch in the early 2000s, declaring bankruptcy in 2005 due to rising fuel costs and the post-9/11 economy, and then fending off a hostile takeover by US Airways.
During and after bankruptcy reorganization, Delta retooled its route structure to improve on-time departures and spent $2 billion on improvements to the in-flight experience. CEO Ed Bastian introduced a new profit-sharing program for employees and helped expand Delta’s global reach with the acquisition of Northwest Airlines. In 2016, Delta paid out $1.5 billion in profit-sharing, the most in US history at the time.
Despite reporting losses due to the pandemic’s effect on air travel, the strategic moves Delta made in the aftermath of bankruptcy should sustain it as a market leader when air travel recovers in the coming years. The airline has also been a leader in COVID-19 safety, maintaining an empty middle seat, creating an executive position for “cleanliness,” and requiring all passengers to wear masks. “Our number one mission is restoring confidence in consumers in air travel again in the face of the pandemic,” Bastian told Time magazine in July.
In today’s era of binge-watching and streaming services, it’s easy to forget that Netflix got its start in the 1990s as an e-commerce DVD rental service competing against Blockbuster Video. When data speeds made it easier for consumers to download movies from the Internet in the early 2000s, Netflix officials realized that mailing out DVDs was not a sustainable business model. The company needed to transform itself, or suffer a demise similar to that of Blockbuster.
In 2007, Netflix unveiled its streaming service, along with a groundbreaking recommendation system that appealed to consumers’ tastes in entertainment. Fueled by explosive growth in digital subscribers, Netflix began offering original content with the debut of “House of Cards” in 2013
The one-time movie rental company has gone on to revolutionize the way that people engage with movies and TV shows. Today, Netflix serves more than 137 million customers worldwide and has paved the way for streaming service offerings by Amazon, Disney and Apple, to name a few.
In the 1990s and early 2000s, this 155-year-old Finish company had the best-selling mobile phone in the world. But when Apple created a new generation of smartphone with the iPhone in 2007, Nokia couldn’t keep up. In the past decade, its market share of the mobile phone market plummeted from more than 33% to less than 1%. In 2014, Nokia got out of the smartphone business, selling it to Microsoft for $7.2 billion.
Going into the 2020s, however, Nokia’s prospects look more promising. The company recently signed a licensing deal with a Foxconn spinoff that includes redesigns of classic Nokia features like the flip phone. More importantly, Finland’s largest company is rolling out end-to-end 5G solutions for telecom companies as it bets big on building the first modern-day cellular network. Its 5G patents means Nokia will collect $3.50 on every 5G smartphone sold.
After a rough time in the 2010s, there’s good reason to believe Nokia will be known for more over the next decade than just those old-school cell phones like your dad still uses.
The bottom line
Like it or not, economies shift and customer demands change. Companies that transcend generations have had their share of low points when they were forced to adapt to adversity. Those companies that have survived and even thrived are the ones that leaned into innovation and agility in coming up with new solutions for their customers. Sometimes, that has required a rebranding, a new product line and big changes to company culture.
Will Kodak join the all-time business comeback stories with its foray into pharmaceuticals? Time will tell. But in a changing world and a tumultuous economy, new ideas and an openness to reinvention are definitely good things.