Can Your Business Be Thrown off Track?
Ruotolo, Frank, Chief Executive (U.S.)
In 1991, Optical Data Corp. was sitting on top of the world. The New Jersey-based school media company had just won a landmark order from the state of Texas for its laser disc-based elementary science curriculum that placed it on the cutting edge of an education revolution. Less than three years later, the firm was on the verge of bankruptcy and searching desperately for new investors to keep it afloat. What went wrong?
While the company made several strategic blunders, two significant technological trends that its management did not anticipate threw its business plan off the track. First, Optical Data lost its technological advantage when the textbook publishers it competed against began offering their own laser discs. Second, it fell behind the curve on adopting CD-ROMs, which were starting to supplant the technology the company had built its fortunes upon.
The Optical Data story offers a classic example of how corporate "derailers" can halt an apparently successful company in its tracks. Technology failure-be it IT system breakdown, software bugs, sabotage, or catastrophe-could play havoc with customer confidence in a company. Right now, e-commerce via the Internet is the hottest business trend. …