Tuesday's Tip: Seven Universal Factors Why Technology Firms Fail

January 10, 2017

Hubris Drives Most Tech Firm Failures

After observing the technology industry for two decades, one can't help but identify a recurring theme - the beginning of the end of a technology vendor.   While most firms do not endure a mass failure and come back to life like Apple did with Steve Jobs or transform business models as IBM did under Lou Gerstner, Constellation often sees early signs when a technology vendor is in trouble.  The factors that take shape often manifest for years but are apparent.  While the tectonic shift of technology trends, business models, and non-traditional competitors play a key role, seven universal factors stem from hubris by management.
These seven universal VICEMAP failures include (see Figure 1):

  1. Value.  Customers no longer perceive nor receive value for goods and services.  ERP vendors in the late 1990's and early 2000's would buy each other up and hold customers hostage on maintenance without delivering new updates and key features.  Reliance on marketing over product or service to cover up deficiencies is a common failure strategy.
  2. Innovation. Vendors who fail to move to new platforms, slow the pace and quality of innovation, or not adapt to new trends would fail to make the transition to the next era.  In many cases, the pile of technical debt from failing to innovate holds back the vendor's ability to innovate.  Slashing of R&D and innovation budgets, departure of key founders and executives, and the failure to attract new talent signify impending failure.
  3. Cause. Forgetting the mission of the vendor can quickly impact brand value and future direction.  Searching for the "why" and a constant change of tag lines and logos is a telltale sign.
  4. Ecosystem. Under developing a community of customers and partners hinders growth and success.  The vendor should find ways to reduce the friction in working with partners and to empower customers to become advocates.
  5. Meritocracy.  Talent requires recognition of accomplishment and reward for outcomes.  An over correctional shift to hiring for political correctness over talent and the failure to promote internal talent starts the decline.
  6. Adoption. One of the most significant factors to customer success is adoption.  Hard to use products, failure to accommodate customer requests often lead to declining adoption and usage.
  7. Profitability.  The shift from market share to profitability per sale is a requirement for success.  However, a decreasing profit per sale means that competitors have more money to invest and innovate.

Figure 1. Seven Universal Management Hubris Failures (VICEMAP)

The Bottom Line: Failure Is Preventable

As a client advocate, the role of an industry analyst requires a critical evaluation of a technology vendor's viability.  Viability rests on the management talent and life cycle of an organization.  Early startups focus on attracting the right talent.  Well funded startups focus on developing the right products.  IPO'd companies focus on growing the customer market share.  Legacy tech vendors focus on financial engineering.   While each of these stages have different goals, the seven universal factors apply throughout the life cycle.  In fact, failure in any two of these seven factors hint at decline.  Failure in more than four factors highlight a severe risk.  Failure in more than five hasten the decline to an irreversible recovery.   This framework powers Constellation's view on how well a vendor will succeed and align with a buy-side client's overall technology and business strategy.

Your POV.

Have you evaluated your vendor's viability in your strategic plan?  Do you have the right framework for analysis?  Would you like to join a network of other early adopters?  Are you in the midst of digital transformation and want to ensure you are working with the right vendors?  Learn how non-digital organizations can disrupt digital businesses in the best-selling Harvard Business Review Press book Disrupting Digital. 
Join like minded folks at the Constellation Executive Network. 
Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Digital Business transformation efforts. Here’s how we can assist:
  • Developing your digital business strategy
  • Connecting with other pioneers
  • Sharing best practices
  • Vendor selection
  • Implementation partner selection
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

Resources And Related Research

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy,stay tuned for the full client list on the Constellation Research website.
* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.
Copyright © 2001 -2017 R Wang and Insider Associates, LLC All rights reserved.
Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Customer Experience

Cupertino Ray Wang Ray R Wang @harvardbiz #digital #disruptingdigital Apps Strategy Boardroom Priorities Brand Promises CDO CEO Chief Digital Officer Chief Executive Officer Chief Financial Officer Chief HR Officer Chief Information Officer Chief Marketing Officer Chief People Officer Chief Technology Officer CIO CMO CTO Data to Decisions digital artisans Digital Business Digital CXO's Digital Disruption Digital Proficiency digital strategy digital transformation DigitalBiz digitaltransformation disrupting digital Disrupting Digital Business disruptive disruptive business models Disruptive Tech Life Cycle disruptive technology enterprise applications enterprise apps Enterprise apps strategy Enterprise Software Intention Driven mass personalization Mass Personalization At Scale Monday's Musings network economy News Analysis P2P P2P Networks People to People R "Ray" Wang; rwang0 Software Insider SoftwareInsider #WEF Attention Economy CHRO Constellation Research CXO Economics Economy Global Economy Harvard Business Review Press World Economic Forum #Davos2016 #WEFTalks cfo Chief Creative Officer Chief Data Officer Chief Information Security Officer Chief Procurement Officer Chief Revenue Officer Chief Sales Officer Chief Security Officer Chief Service Officer Davos Fourth Industrial Revolution @FT artificial intelligence man vs machine Wipro event report Featured future of work finance Transformation of Finance health healthcare #ENV16 2016 Big Data blockchain blockchain technology bots business disruption business transformation chatbots Chris Capossela Cloud Cloud Platform Consumer Tech Conversations as a Platform Cortana crm; CustExp customer engagement customer experience customer relationship management digital assistants financial services Lillian Rincon machine learning Microsoft Microsoft Delve Microsoft Dynamics Microsoft Envision Microsoft Office Microsoft Office 365 Natalie McCullough Office Graph People Analytics Satya Nadella user conference user event vendor events vendor strategy Volometrix ad networks audience acquisition audience development Brand brand promise brand strategy content content management creative to commerce customer care customer service CXM data driven digital commerce Digital Marketing Digital Marketing Transformation disruptive technologies Engagement marketing marketing agencies marketing automation marketing execution Marketing Strategy Peer to Peer Programmatic ROI Chief Operating Officer COO accounting appsexchange cloud computing Enterprise Resource Planning ERP financial management FinancialForce Research Summary NetSuite PaaS platform as a service user experience ux analytics data quality data services data stewardship master data Reltio big ideas DoubleDutch event marketing live engagement marketing AI Cognitive Computing HOLMES Wipro HOLMES #IOT Chief Customer Officer CX CXP Internet of Things Big Data Business Models data 2XU acquisition acquisitions adidas Adobe Amazon Amazon Web Services American Golf Anya Hindmarch AppExchange Avangate Avenue B2B B2C B2C E-commerce Bare Escentuals Brooks Brooks Brothers Browns Burton Callaway campaign to commerce carters's Clarins Cloud Wars Cole Haan Columbia Commerce Commerce Cloud content management system Converse Corporate Social Responsibility Cortefiel Crabtree & Evelyn crocs customer relationship management (CRM) Deckers Brands Demandware Digital River e-commerce ecco Elastic Path EMU Australia Ethan Allen Fila Gaiam Godiva GoPro Gore HotTopic House of Fraser Hurley IBM IBM Smarter Commerce Jack Wolfskin Jewlery Television JoAnn Karstad kate spade Kiehl's L'Oreal Labelux Lacoste Lancome Land's End Liebeskind Life is Good London Drugs Lush Fresh M. Gemi M&S Marc O'Polo Matrix Commerce mergers mergers and acquisitions Michael Hill Micheal's mothercare Mountain Hard Wear NewBalance Nine West OVS Pacsun Panasonic Pandora PartyCity Pentland Perry Ellis Picard Pier1 Imports Poppin Puma Quicksilver r Samsonite Reitmans Rituals Rockport Roots S.Olive Scotch & Soda Shopify Skis.com Skullcandy Sleepys Solstice Sorel Space.NK Speedo Stoenwall Kitchen Tory Burch Traeger Trina Turk True Religion UGG Urban Decay Vibram Vineyard Vines analysis BREXIT CoIT CoIT and the New CSuite Corporate Digital Divide Digital Divide Digital privacy Digital safety Next Gen Customer Experience Next Gen CXP PESTEL Technology Optimization Christian right Domestic gun violence gun violence Hate speech Hollywood Violence Hollywood’s influence Homophobia Islamic terrorism Islamic Terrrism Isolationism of 2nd generation Muslims jobs Lack of jobs Mental health coverage orlando Personal Log Pulse radical islamic terror religious right society Video game violence Cloud suites Oracle DemandCaster manufacturing Manufacturing Cloud Microsoft Dynamics AX MPS Plex Plex Systems s&op supply chain supply chain orchestration supply chain planning suppy chain management co creation co innovation Consumerization of IT design phase design thinking disrputing digital Enterprise Business Apps Enterprise Business Apps Vendors Infor Infor Digital board room C-Suite Chief Collaboration Officer early adopters future future of business Futurist Futurist framework enterprise mobile Enterprise Mobile Management mobile Mobile Biz mobile device management Mobile Enterprise mobile experience Mobile Management Mobile OS Mobile Security Mobile strategy Mobility Samsung Samsung Galaxy Samsung Galaxy Note7 alibaba Apple Augmented Humanity Baidu Facebook Google QQ recommendation engines sina tabao Tuesday's Tip Yahoo! Yandex @msignite Adobe Marketing Club alliances data models Marketing Cloud MIcroosft Cortana Analytics Suite Microsoft Azure Microsoft Dynamics 365 Microsoft Ignite partners partnerships SalesForce.com Shantanu Narayen 3D Printing adaptive cyber security anticipatory analytics API Management API Orchestration AstroChart Augemented Reality autonomous vehicles bio batteries communications platforms complex event processing crypto currencies data lakes digital monetization drones faceted search flexible displays fog computing IOT infrastructure IOT smart services Low code platforms Micro-services architecture mobile apps neural networks No code platforms Social Business stem cells Unified Communications universal digital identities Virtual agents virtual reality Wearables agile dev ops BPO business process outsourcing business trends Corporate Strategy Corporate Vision coworking spaces CSR Customer Success Management Data2Decisions demand driven networks digital ecosystem networks digital ethics enterprise strategy Gamification gig economy inclusion programs innovation centers job sharing robotic process automation sales by design situational awareness business impact business strategy Corporate Vision And Strategy Donald J Trump Economic Elections 2016 Environmental Legislative Political Societal Technological Washington DC Amazon EC2 Cisco Cloud options Cloud Security Data center DCIM hyperscale data centers IaaS infrastructure Infrastructure as a Service Microsoft Azure Services Platform open compute project Private Cloud Private clouds public cloud SDDC Trends Amazon.com cadence digital exhaust digital footprint immersive experiences orchestration of trust value exchange #Davos17 #Davos2017 #WEF17 #WEF2017 Dynamic Leadership leadership strategy 2017 adoption cause innovation meritocracy partner ecosystems Software Ecosystems software trends software vendors technology adoption technology budgets technology vendors user strategy value Vendor Selection VICEMAP