Innovation Success and
Failure in America
Innovation FAILURE
Borders: The Beginning
• 1971 – Tom and Luis Borders open the first store in Ann
Arbor, Michigan
– One of the first book megastores
– Offered impressive variety of products
– Inventory system could predict consumer purchases
• 1992 – Kmart acquires Borders and merges it with
Waldenbooks
• 1997 – Borders goes international (Singapore, the UK,
Ireland, Australia, and New Zealand)
• 1998 – Company launches Borders Online, establishes
Borders (UK) Ltd
• 2001 – Borders outsources online operations to Amazon
• 2004 – Company agrees to have Seattle’s Best Coffee
operate cafes in its U.S. stores
The Last Years
• 2006 – Borders turns a
profit for the last time
• 2007 – 2008 – Company
closes or sells all foreign
stores
• 2009 – Borders offers
free wi-fi in stores
• 2010 – Company creates
eBook store
• 2011 – Borders files for
bankruptcy, closes stores,
liquidates assets
Positive Moves By Borders
• Large inventory
• Excellent inventory
system
• Borders Online
• Self-service kiosks
• Borders Reward Card
• Agreement with
Seattle’s Best Coffee
• Free wi-fi
Borders
Barnes and Noble
• Focused on variety
• Used software to determine
which books to sell
• Invested in CDs/DVDs
• Third party e-reader
• Expanded physical plant
• Refurbished stores
• Outsourced online sales
operation to Amazon
• Focused on lowest price
• Sold best-sellers and bargain
books Invested in online sales
• Developed own e-reader
(Nook) years before Borders
hopped on board
• Handled own online sales
operation
• Offered eBooks almost one
year earlier
• Offered free wi-fi 6 years
earlier
So why did they fail?
• Product
– Delayed introduction of ereaders, website and online
retail, wi-fi
– Mistake of focusing on
CDs/DVDs
• Price
• Target Market
– Mass marketing, no
direction
• Differentiation
– Products didn’t stand out
from Barnes and Noble or
Amazon products
– Higher than prices of
competitors
• Place
– Outsourced online sales
operation to competitor
Amazon
– Too many stores that were
too large
Borders didn’t pay
attention to the changes
in the market until it was
too late to introduce new
and successful products.