Myspace And Its` Reasons To Become A Successful Company
How the mighty fall and why some companies never give in a prescribed book by Jim Collins delves into the reasons why some companies go from being major successes to equally major blunders. Jim Collins further details the 5 stages of decline namely; Hubris born of success, the undisciplined pursuit of more, the denial of risk and peril, Grasping for salvation, and Capitulation to irrelevance or death. In that order.
These 5 stages are meant to drive forward his point that the demise of a successful business, apart from factors such as the change in economic environments or even misfortune, is rather due to bad leadership within the organization which often steers such companies down unfavorable routes. This includes being over-confident, focusing all energy on non-core activities, forgetting the true foundations of their success, etc. creating an outcome where that success is taken for granted. Therefore, the book is meant to educate companies on the types of leaders a business needs to thrive to become in order to reach and maintain success.
A Brief Overview of the Chosen Company (MySpace)
MySpace is an American social networking website. At its peak (2005 to 2008) it was the largest social networking site in the world. It started in August of 2003 when several eUniverse employees who all had Friendster accounts saw potential in its social networking features. MySpace allowed (and encouraged) recording artists to promote themselves as well as their music using the site. Users were able to create profiles, where people can keep in touch with their friends, families and “meet” new people. All this resulted in the start-up soon becoming the leader of the pack in the social networking space and especially popular amongst the youth of the time.
However, MySpace was doomed from the beginning because its founders were all in the marketing and industry sectors and so their views already differed greatly from those of their competitors. In addition, it’s said that MySpace ignored users’ complaints about its interface. Their strategy was to rather focus on their strength, which was of course marketing and in doing so they fell behind on technical innovation. By the time they realised their mistake and were trying to remedy it, it was too late.
FACTORS THAT LED TO LACK OF INNOVATION
- Selfishness – MySpace believed in doing everything themselves and chose not to allow any third parties to create apps on their site. They declined to purchase Facebook at the time, only to realize their mistake a year after Facebook had allowed developers such as Zynga to create apps like Farmville and Cityville on its site. Thus contributing to its success
- Technological developments – they were slow to adopt technologies such as Ajax, which enables users to send messages without having to open a new browser, import e-mails address books into friends list, and lastly instant messaging.
- Lack of understanding about itself – MySpace was not created by technology gurus but rather people in the entertainment industry, hence they failed to adapt to changes within their market and fell short in competing with its competitors. That led the site into becoming a social entertainment destination than a social network.
- Lack of control – after the acquisition of MySpace by NewsCorp in 2005, the site focused more on revenues than user experience. The executives got the pressure to make more profits from the site immediately whilst sites like Facebook accepted early losses so to invest for the future. In short, they held minimal financial control.
- Changing customer needs and availability of information – lack of research, consistency as well as their inability to adapt and appeal to their original market has led to the loss of loyalty from its users. They were unable to keep up with their ever-ageing audience, in doing so it created a pathway for competitors to steal its users.
In summary, the following points explain how a competitor, namely Facebook, thrived in contrast to MySpace:
- Whilst MySpace refused outside developers, Facebook allowed third-party developers to create apps on their site. These apps allowed Facebook to take a lead in the market. These forward-thinking apps included poking and uploading images placing Facebook ahead of its time.
- Facebook saw its threats as opportunities as it went head to head with its competitors. Making use of a strategy to not only imitate their competitors’ best features but by outsmarting them through better product and quality in order to stay relevant. Facebook copied the obsession with product quality and home-grown technology infrastructure from Google which ultimately attracted more users for Facebook.
- MySpace failed to prevail in technological developments, Facebook’s forward way of thinking allowed it to move from its standard website to a more advanced application accessed on a mobile phone. This included having easy access to Facebook that is constantly upgraded, enabling the development of features such as the newsfeed, instant messaging, voice and video calls as well as the ability to like, follow and subscribe in order to make use of the marketplace.
- Facebook understood its target market and knew how to appeal to them. Public relations was well handled expertly by its founder Mark Zuckerberg who constantly succeeded in developing his product in a way that kept users interested. The outcome, therefore, considered Facebook to be an easy to use safer social networking platform in comparison to MySpace.
- It’s a basic easy to use application that makes it accessible to anyone. Its huge number of features, interface adjustments and lifted registrations restrictions allow it to not only retain its position as a market leader and the most popular social network but earns over 2.4 billion monthly active loyal users
LESSONS TO BE LEARNT
Referring back to ‘How the Mighty Fall’, Jim Collins mentions how he has been privy to seeing institutional decline and likening it to a staged disease: harder to detect but easier to cure in the earlier stage. MySpace did try to keep up with the market that it was competing in, albeit a little late. It is said that several factors likely triggered their decline, but one major factor was their inability to implement new innovations to keep up with the moving times. Hence, thorough research of innovative ways and methods is ever crucial to compete with other massive social networking sites like Facebook. Yes, no company should downplay their good work and success but there seems to be a common error that all ‘Fallen Giants’ make, and that error is that they overestimate their merit and capabilities. And to quote Jim, (Collins, 2009, p. 49) “…success stems in large part from luck or fortuitous circumstance.” With that being said, companies should always be on their toes, seeking new and creative ways to remain the best in what they do. In as much as they should always be open-minded, they must ensure that they do not stray away from what sets them apart from everyone else; keeping firm discipline to what led them to greatness in the first place.