Atari 2600
In 1980 this was the hottest thing on the market.
Atari sold 2 million units that year.
Customers couldn’t get enough of them. They wanted to play Space Invaders! Sales of the 2600 doubled in each of the next two years.
And, in 1983, Atari was included by Bob Peters as one the 43 case studies of “excellent” organizations in the book, “In Search of Excellence.”
And the next year Atari reported a loss of $600 million. And the year after that they were split in two divisions, Atari Games Corp, and Atari Corporation. Atari games was sold again and eventually shut down and went out of business. Atari Corp. still exists but has never regained their leading position. The “excellent”company that pioneered home video games failed. How is that possible?
The book “How The Mighty Fall” by Jim Collins provides some explanation of how companies like Atari can go from Great to good to broke.
The hubris born of success can create a climate where everyone believes they can do no wrong. (“I’m saying that when the President does it, it’s *not* illegal!” – R.M.Nixon) The undisciplined pursuit of more with it’s false assumption that since we’re so great bigger must be better. And the denial of risk and peril which leads fools to rush in where the brave (and wise) dare not go.
How did this happen to Atari? In 1976, they were acquired by Time Warner and got a new leader. A leader who focused only on the bottom line. A leader who thought innovation and excellence were costs that could be cut. A leader who set them on the path of decline.
What kind of leader are you?
