Today, Kristine Kathryn Rusch published a blog post about the bankruptcy of Sears, comparing it to Amazon. She thinks that Amazon will also go bankrupt, and probably within the next few years.
I read Kristine’s blog regularly, because she’s both interesting and knowledgeable. But this time, I think she’s – well, not necessarily wrong, more over-egging the pudding.
Not being American, I don’t have any happy memories of the Sears catalogue (we had Littlewoods, and, reading between the lines, I don’t think it’s the same thing at all). Sears started out selling one product (like Amazon) by mail order, then diversified and expanded (like Amazon), became one of the biggest retailers in America (like Amazon), and then folded… like Amazon?
Jeff Bezos has apparently said that he thinks one day Amazon will go bankrupt.
Kristine says the lifespan of a company is about thirty years.
My take on this is as follows…
A company does not have a natural lifespan: it can be immortal. The oldest continually-operating company in the world was started in 578AD. So it’s been operating continuously for over 1400 years. There are apparently over 5,500 companies in the world that have been operating for more than 200 years, of which the majority (over 3,000) are in Japan. But the tenth-oldest company in the world (the Bingley Arms, est. 953AD) and the eighteenth-oldest (Otterton Mill, est. 1068AD) are both in the UK.
So what allows a company to survive?
If Kristine’s assertion that the lifespan of a company is usually about thirty years (if it gets off the ground properly) is correct, then I would say that the reason a lot of companies fail at the thirty-year point is the retirement of their founder. To take an example, there was a lot of discussion about how Apple would survive after the death of Steve Jobs. To build a company that lasts thirty years, you have to have vision, guts, and ability – and to keep a company running for another thirty years, you need the same. How many companies are fortunate enough to either have a successor who has those qualities, or an easy enough business climate that a lack of those qualities isn’t an immediate disaster?
The second factor in company survival is related to the first: it’s the ability to adapt to changing market conditions.
I think Japan has such a sizeable proportion of very old companies because Japanese culture places a much higher value on tradition than many western cultures, and also they have not had any major social upheavals. I would bet that until the Chinese Revolution, there were a lot of very old Chinese companies, too. These very old Japanese companies simply haven’t had to face the extreme changes in the market that western companies have.
Kristine sees the failure of Sears and extrapolates forward in time to the failure of Amazon. I see the failure of Sears, and ask why do I have an Amazon Kindle and not a Sears Kindle? On the face of it, Sears was ideally placed to take advantage of the advent of online shopping: they already had the infrastructure in place and the mailing list of customers – all they had to do was encourage their customers to transfer their shopping from a paper catalogue to a website, and hey presto, no market niche for Amazon.
But they didn’t.
I would suggest that it’s because their top management failed to spot the change in their market conditions until Amazon not only had its feet in the door, but had its coat off, and was sitting down at the table eating Sears’s lunch. Even then, Sears could have clawed back their customers from Amazon, but I would guess that Sears banked far too much on customer loyalty and the tradition behind their famous catalogue.
They didn’t realise that there is no such thing as customer loyalty. Customers go where they can most easily (and cheaply) get what they want – and increasingly, that’s now Amazon.
In short, Sears failed to adapt to new market conditions, and now they’re paying the price for it.
To go back to Jeff Bezos and his statement about Amazon’s probable demise: I would interpret that more as a warning, and as an indication that Bezos knows very well that unless Amazon adapts it, too, will die.
So far, Amazon has shown itself to be extremely good at adapting to changing market conditions, and it seems likely that with Bezos at the helm, it will continue in that vein. After Bezos retires? Who knows.
But, if you aren’t the CEO of a multinational company, how is this relevant?
It’s relevant because market forces apply to all businesses – including indie authors. There are trends in fiction, and trends in style of writing. There’s no point slavishly trying to jump on every passing bandwagon, but you can’t afford to ignore the major trends like the rise of urban fantasy and the (relative) decline of epic fantasy – or the trend for sharper, simpler language rather than the purple prose of the ’70s.
In indie publishing, skimpy proof-reading and homemade covers might have been enough ten years ago, but not any more.
Adapt or die.
What do you think?