I always wonder what it is about businesses that seem unable to do just about anything to turn themselves around versus more successful ones. Simply the guy at the helm? The corporate culture? A too-entrenched bureaucracy? How does a single company make bad decision after bad decision so persistently?
This is a truly fascinating question. I have a theory that a company like Sega can't turn around because
- a) they have drank too much of their own koolaid to maybe do something different and
- b) they experienced enough success doing things the way that they did that anything less than the same success is considered a failure. Lastly
- c) It takes time for success and failure, when your buisness isn't shooting in to space like a rocket, when do you decide that you're failing? Do you give your teams time? Or do you just look at the competition and shut it down?
For example with a, they seemed to be at a juncture where they had to partner on hardware, stop doing hardware, or like triple down on hardware and maybe get some outside investment to do that. They had made money with hardware in the past, simply cutting that off or partnering with a sony (that had a wonderful Nintendo partnership) had to be a very tough decision. Then the question is, if they only do software, is there any chance that they will have the successes that they had had before? I suspect by the time they could legitimately talk about that, the answer was decisively 'no' and Sony and MS had already begun to build some of their own franchises and were really starting to roll. They would have had to be willing to acknowledge that there was going to be a "new normal" and that it was normal for them to make a lot less money.
Some of those questions are hard, I was at IBM in the mid 90s and it was because the people running things weren't involved with the history of things that they were able to make some of those hard choices. It's easy to stand on the side and say what Sega should have done, it's different when you built the genesis and watched it make money.