Borders – April Fools Day cautionary tale

Innovation consulting

The bookstore giant Borders at one time operated over 500 stores and employed 20,000 people.  From these highs, the company crashed quickly – so quickly that most people had no idea it was going under until it did. The debts were high, and the income wasn’t high enough. No one, including publishers, wanted the bookstore to die, but it couldn’t be resuscitated.


What Happened to Borders

It started in the 1970s in Ann Arbor. Tom and Louis Borders created an inventory tracking system that was as intelligent as computer systems allowed at the time. In addition to their books, the Borders’ brothers licensed out their inventory system starting in the 1980s. This enabled them to expand their store into Michigan and Philadelphia.  From their they launched nationwide.

In 1991, Borders was sold to KMart, who was interested in both their stores and their inventory system. This was the start of the end. KMart was already on the way out themselves, and they ultimately brought Borders down with them.

To compound the situation, competitor Barnes & Noble started to take the industry by storm. Amazon also entered the scene with its online bookstore. That’s when Borders made their final mistakes.  When Amazon started selling books online, Borders should have followed its lead. Instead, the brand expanded into the UK and Singapore. It wasn’t long before Borders started to disappear from the United States as one store after another closed its doors forever. It wasn’t long before the same thing happened to international stores.

Not launching Borders online wasn’t the only technological downfall the company made, they also ignored the use of technology inside their stores. As other bookstores and coffee shops offered free Wi-Fi, Borders neglected to add this capability.

When it came to implementing multi-platform options, such as eBooks and downloadable audio, the company hesitated. They were resistant to change, especially changes having to do with technology.

Borders, like so many other companies unsure about the increasing pace of change, missed the chance to enter the 21st century. Despite Borders being the first to come out with an inventory system, they failed to keep the momentum. When they decided to sell to KMart (another retailer that seemed to fail at innovative growth), the company didn’t embrace the changing industry.


What We Can Learn from Borders

The ultimate cause of Borders’ downfall was a failure to innovate. They didn’t see the indications, or take action on them, when it came time to leverage the Internet for sales. They didn’t bring the Internet into their stores. They wanted the brick and mortar stores to remain just as they were in the 70s, 80s and 90s.  Ironically for a company who launched on the strength of their inventory tracking system, Borders stuck their head in the sand on new technological changes early this century. They failed to understand that the Internet was going to disrupt the whole world.

Borders is yet another cautionary tale for companies today across all industries. “Staying current” with technology sometimes goes beyond just upgrading system versions and ensuring capacity for growth; in times of real disruption, a mindset of Innovation is critical.  Re-evaluations are needed of a company’s supply chain, delivery chain, pricing strategy, and overall business model; this analysis must be done in light of new technology capabilities, but its scope must go beyond technology to encompass the entirety of a company’s strategy.

In many ways, there has never been a more dangerous time to lead a company.  The pace of change has never been higher, and most CEOs struggle to grasp what is possible and feasible with technology.

On the other hand, there has never been a more exciting time to lead a company.  Leaders who have the vision – or who engage the right expert consultants with that vision – to see how technology can be used to drive revenue or even to disrupt an industry have a broader array of options and more opportunities for effectual IT investment than in any point in history.  The benefits of vision, and of being first/early to move, have never been greater.

Companies like Borders are mile markers for all leaders on the journey, and we hope their cautionary tale encourages you to ask these questions for your company.