The next Blockbuster Video: companies ignoring remote work
More than half of 2000's Fortune 500 are out of business. See why companies ignoring remote work will join them in the corporate graveyard.
In 2000, as the internet and economy boomed, the dot-com bubble reached its peak. Companies that thrived in the pre-digital era dominated the Fortune 500 list back then. But, 52% of the companies on the 2000 Fortune 500 list are dead.
Companies on today’s Fortune 500 list are at a similar crossroads. Not only is digital transformation happening even more rapidly than in 2000, but workforce transformation is happening at an even faster rate. So what can the previous corporate mass extinction event of the early 2000s teach us about thriving in today's business climate? Let’s take a look.
What caused businesses to fail?
Companies that failed after the year 2000 did so for many different reasons; nevertheless, a common denominator was an unwillingness or inability to grasp digital transformation trends. This resulted in younger, more agile companies that were more attuned to the direction of the market creating business models that were better aligned with buyer needs.
Blockbuster
The most famous example from this era is Blockbuster. In the late 1990s, Blockbuster had more than 9,000 locations worldwide, making it the dominant video rental chain. Nevertheless, they did not foresee the rise of digital media and streaming services, and they didn’t make the necessary technological investments to remain competitive. Of course, Netflix was established in 1997, starting as a DVD-by-mail rental service. But, they had the vision to understand the impact the internet was going to have on the way we watch TV and movies. They invested heavily technology, and now they have a platform that is both more convenient and cheaper than going to a video store to rent a movie. Blockbuster has completely collapsed, Netflix now has over 200 million paying customers around the world.
Kodak
Kodak is another cautionary tale. For more than a century, Kodak was the undisputed leader in the production of photographic film. Of course, this industry saw rapid transformation with the introduction of camera-enabled smart phones. Consumers became less reliant on printed pictures, favoring easily captured and shareable digital images. While this was happening, firms like Canon and Nikon saw the writing on the wall and made substantial investments in digital technology. As a result of failing to adapt to the digital age, Kodak declared bankruptcy in 2012.
Borders
Borders, a once-thriving bookshop chain that declared bankruptcy in 2011 is a third example. Borders did not make the technological investments necessary to compete with companies like Amazon because it did not foresee the rise of e-commerce and online book sales. Amazon, meanwhile, was established in 1994 after its founders anticipated the growth of online shopping. They put a lot of money into technology and created a system that beats brick-and-mortar bookstores in both convenience and price. Amazon has become one of the world's most valuable firms while Borders has closed its doors.
The common line in all of their obituaries
The underlying denominator among these businesses is a refusal to adapt to changing market conditions by investing in cutting-edge technologies. They lagged behind the competition because they couldn't adjust to the new circumstances.
So why is this important? At the time, it seemed incomprehensible that these market-leading companies would ever go out of business. But markets, consumer needs, and employee needs shift fast. These now-relics of the past are shining examples that if you don’t evolve with the times, it doesn’t matter that you’re in the Fortune 500 - you’re just as likely to die as a brand new startup.
It’s also clear that remote work’s exploding popularity isn’t a fad - it’s the future of work. So, companies that don't embrace the concept of remote work will soon find themselves left behind.
Why remote work is creating a crossroads for companies everywhere
The most talented workers increasingly favor remote work. According to a poll taken by Buffer in 2021, nearly all telecommuters (98%) hope to spend at least some of their working lives in this arrangement. There are many upsides to working remotely, including:
Freedom
One of the primary benefits of remote work is the freedom it gives workers to choose their own schedules and do their tasks from wherever they happen to be. Those whose personal lives or professional obligations prevent them from spending time in a conventional workplace environment may appreciate this perk.
Flexibility
Remote workers have more flexibility in their schedules and can avoid time-consuming commutes, allowing them to better balance their professional and personal lives. Remote workers report better mental health and more satisfaction with their job as a result.
Better finances
There is also a financial benefit because employees can save money on travel, meals, and other costs if they don't have to go into the office every day. Those who are on a strict budget or who reside in pricey cities may find this to be very appealing.
Higher productivity
The number four benefit is that remote workers are more productive than their in-office counterparts, according to numerous studies. This is because they are not subject to the same kinds of interruptions and diversions that people usually experience while working in an office.
These are just some of the many reasons why top-tier candidates are passing over firms that don't provide remote working opportunities. Companies that understand and embrace the value of remote work have a competitive advantage in attracting and retaining the best employees.
Why not allowing remote work is a competitive disadvantage
Businesses that don’t empower their employees to work remotely are at a considerable disadvantage when it comes to attracting and retaining top talent.
To begin, it is generally accepted that the best talent is also the most innovative, creative, and productive. These workers are highly sought after because of their capacity to think creatively and come up with novel approaches to old challenges. Businesses run the danger of falling behind in terms of innovation and progress if they are unable to attract such people.
Second, top performers are more likely to foster a positive corporate culture and motivate their peers to provide 100%. Increased levels of productivity and job satisfaction are a direct result of a more involved and enthusiastic workforce. Of course, remote work increases employee happiness by 20%. When businesses struggle to draw in top talent, they risk having a less invested and motivated team, which can have a detrimental effect on profits.
Thirdly, top talent is usually well-equipped with experience and education. Not being able to hire these people means missing out on an opportunity to get knowledge and expertise from the industry's top performers.
Finally, higher employee turnover rates may result from a company's failure to hire the greatest people. Workers who don't feel like their contributions are being valued or that they're being given room to advance in their careers may be more likely to go elsewhere for work. For businesses, this can mean spending time and money on finding and retraining replacement workers. And with the average cost to hire a new employee at $4,700, high turnover can be a real drain on the bottom line.
Remote-first companies disrupting the talent marketplace
Younger, more adaptable startups are more in tune with the needs of the modern workforce, and this is reflected in the fact that companies created after the year 2000 are more likely to support remote work. Some companies founded after the year 2000 that recognize the benefits of remote workers and actively encourage it include:
GitLab was created in 2011 as a web-based Git repository manager, and its 1,300 or so remote employees come from more than 65 different countries. They encourage a work-life balance for their employees and have an open, remote work environment. GitLab has been able to rapidly expand thanks to the efforts of their talented remote workforce. After instituting these measures, they have seen a decrease in turnover of 25% and an increase in productivity of 10%.
Zapier, founded in 2011, is a web automation platform with over 300 remote employees located in over 20 countries. They've been able to assemble a formidable group because to their culture of trust and adaptability. As they are not constrained by location, Zapier has been able to increase productivity and efficiency thanks to remote labor. Since enforcing policies that allow workers to do some or all of their jobs from afar, they have seen a 20% boost in output and a 50% decrease in attrition.
InVision was launched in 2011, and it is a digital product design platform with approximately 1,500 remote employees located in 20 countries. By allowing employees to work from home, InVision has gained access to a larger pool of qualified candidates and has been more responsive to customer needs. Adopting flexible work styles has made a major positive impact to their business as they've seen a 15% boost in output and a 20% rise in staff retention.
These situations illustrate the value of remote labor for businesses of all sizes and in a variety of fields. Companies that allow employees to work remotely can tap into a global pool of top talent and create a more dynamic, high-performing workforce. They are more productive and efficient since they are not restricted by physical location. Companies that don't embrace remote work will fall behind in today's competitive global economy.
Conclusion
As evidenced by the mass extinction event of the early 200s, no business is immune from failing if they don’t adapt to current business trends. Businesses that don't embrace remote work may soon disappear completely. Companies that miss the trend toward remote work will go the way of those that missed the trend toward digital transformation and ultimately fail. Companies that allow workers to work remotely will have a clear and distinct advantage when recruiting and retaining top talent.
Remote work is now a must for any company that values innovation, financial growth, and competitive differentiation. Younger, more adaptable startups are more in tune with the needs of the modern workforce, and this is reflected in the fact that companies created after the year 2000 are more likely to support remote work. Every organization should now see the value in allowing employees to work remotely and institute procedures to facilitate it. Those who are open to working from a distance will succeed in today's competitive global economy.