Why successful businesses fail (and how to spot the trap early)

0:00 Why do successful businesses fail?

You can never get stuck in the mindset of “this is how we do things here.” And if you have someone in your company who says things like that, “this isn’t on brand for us,” you should launch them immediately. Those people are company killers.

Why do successful businesses fail? It happens all the time. People like to laugh about Blockbuster and Kodak and say how dumb the people running those companies were, and how if it were them, they would never make the same mistakes. But Blockbuster and Kodak? They’re not rare. Successful businesses fail all the time. But why?

0:32 How success sets the trap

A lot of the time, the answer is the success itself. That’s what sets the trap, and here’s how it works. When things are working, you stop asking why they’re working. Sales are good. People know your name. The phone’s ringing, so you just keep doing what you’ve been doing. Because why would you mess with it? It’s working. And that is actually the problem.

Because while you’re busy winning, somebody else is watching you. They’re looking at what you do, and they’re copying some things and improving on others, and they’re constantly trying new things. While you? You keep running the same playbook Bear Bryant handed you in 1956. So you don’t see them coming, because you’re not even looking. You’re looking at your own numbers, and your own numbers look great.

1:11 What is the success trap?

There’s actually a name for this. It’s called the success trap. The thing that made you successful is the very thing that could end up taking your company down if you’re not careful.

1:20 Front runner syndrome

Think of it like front runner syndrome. When you’re leading, you usually don’t worry too much about evolving or getting better. You’re already winning, so why change? The ones chasing you, though, it’s all they think about. How do we catch them? They’re working hard every day, trying to figure out why they’re losing and what they need to change. And you? You’re just coasting along, not even paying attention to who’s behind you.

I’m sure you’ve seen those videos of cocky runners leading races who start to coast, only to lose at the end because they got caught by someone who never stopped trying to chase them down. That’s how it happens.

1:52 Why Blockbuster passed on Netflix

Think about Blockbuster. At their peak, they had about 9,000 stores. Everybody in America owned a VCR, and Friday night meant a trip to Blockbuster. They didn’t think they needed to change a thing. They were busy, and nothing was going to change that, right?

Then in 2000, this little startup called Netflix came to them and offered to sell the whole company to them for $50 million, and Blockbuster laughed them out of the room. Ten years later, Blockbuster filed for bankruptcy. And Netflix? Now they’re the household name sitting at the top.

2:21 How small competitors take your customers

So one of your small competitors figures something out, and they grab a few of your customers. “No big deal,” you think. “They’re small potatoes. We didn’t need those customers anyway.” Then another competitor you completely ignored gets a few more customers, and then another one does the same.

They’re all doing things you don’t do, because they’re not worried about being “on brand,” and they’re not worried about how things have always been done here. They’re willing to try things because they’ve got nothing to lose.

And before you know it, the losses start piling up, and now you’re feeling it, and you’re wondering what the heck happened. Those leaks have now turned into a flood. And now you’re standing in knee-deep water, wondering when the levee broke and hoping you can just put some Flex Seal on the leak.

2:59 How WeightWatchers fell behind

WeightWatchers is another example of coasting at the top. For about 60 years they owned weight loss. They had more than 4 million members around the world. If you wanted to lose weight, WeightWatchers was typically who you called.

Then the weight loss drugs came along, and a bunch of newer companies like Hims and Ro and Noom built their whole businesses around them. They weren’t worried about how weight loss had always been done. They knew they couldn’t compete with WeightWatchers doing the same thing, so they did something different.

And WeightWatchers, they were far too slow to react. They didn’t make any moves until 2023, and by then the ones who had been chasing them were out front. And in 2025, WeightWatchers ended up filing for bankruptcy. Sixty years at the top, and they let the ones behind them figure it out first.

3:39 The success trap at a local business

You don’t have to be a famous brand to fall victim to the success trap either. It can happen to any successful business. It just might not be talked about around the country, but it’s no less painful.

Say you’re the best HVAC company in town. Your phone is ringing off the hook from referrals, so you never really worried about actually doing anything to market your business. You haven’t updated your website since that neighbor kid of yours built it on GeoCities. You’ve got no idea what a Google Business Profile is. And social media is something your nephew does. It’s not for a serious business like you. You don’t need any of that stuff. You’re already busy, so what you’re doing must be right.

Then one day, you see a competitor’s truck sitting in the driveway of one of your best customers. What the heck? Those guys are a joke. Why did my customer call them? So you park your F-150 extended cab at the office and get on the internet to look them up, and you see that they’ve been getting a bunch of great reviews, and you recognize some of the customers giving them reviews as customers of yours. You thought they were loyal.

They also show up first on Google Maps. Their website lets people book right on the site, and it’s easy to use, and it looks like it was actually made in the 21st century. So now you’re looking more closely at your numbers, and you notice that more than a few of your loyal customers canceled their annual service calls, and it’s starting to hit you. Maybe those loyal customers you’ve been taking for granted aren’t as loyal as you thought. Small potatoes, right? Until it isn’t.

4:57 Why the success trap happens slowly

And that’s why this success trap is so dangerous. Because it doesn’t happen all at once. It happens slowly. Bit by bit. It’s a customer here. It’s a job there. You don’t notice it because the phone is still ringing, so you’re not worried about it. And over time, those losses add up. They compound. And by the time you finally realize what’s going on, you’re the one behind, and you have to do the chasing.

5:18 Why doing more of the same doesn’t work

And what’s worse, you’ve completely lost the ability to think like you’re not the front runner. You don’t know what to do. So you do what many in your position do, the same thing that’s always worked before. Let’s just keep doing what we’ve always done, but do it harder. Same playbook. More effort. And that is the trap. Doing the old thing harder doesn’t fix it when the old thing is what stopped working and the people beating you are doing something completely different.

5:41 3 reasons successful businesses get stuck

So how does this happen? It’s usually three things.

First, you stop changing what works. The playbook got you here, so you protect it. You don’t test anything new because, hey, why mess with success? We’re the best in the business, so what we’re doing must be the right way. We don’t have to change anything, because we’re always going to be on top.

Second, you stop watching your competition. When you’re on top, you’re looking at your own numbers. You’re not looking at who’s coming up behind you. Why would you? Do they even have an Amex black card? We do, because we’re big and successful and they’re nobodies.

Third, you stop listening to your customers. They keep buying, so you assume you know what they want. But you stopped asking a long time ago. And what they really want has changed, and you had no idea. Then someone comes along offering the thing they really want, and those loyal customers you’ve always taken for granted are off with your competition, helping put their kids through college while you wonder how you’re going to make payroll next week.

6:34 How to stay ahead while you’re winning

So what do you do about it? You do the work while you’re still winning, not after it starts going wrong. You have to keep the attitude that you’re still losing the race. That hustle you had when you first started can never go away. The second it does and you become complacent, that’s the moment your competition starts gaining ground.

You’ve got to keep looking at your competition regularly. Pull up their websites, look at their reviews, their social media. What are their customers saying about them? What are they doing that you’re not? Are they doing anything?

And talk to your customers. When you first started, I bet you talked to your customers regularly because you were grateful for the business. Over time and years of success, that’s led you to believe that you know your customers better than anyone. But do you still? Talk to them and find out. Ask them why they buy from you and not someone else. Have you lost people? Find out why. Your customers are your most valuable source of feedback.

And finally, while you’re on top, never stop innovating. You can never act like you’ve won the race, because until you sell the business or shut it down, the race is never over. You’ve got to keep trying new things.

7:37 Who the company killers are

You can never get stuck in the mindset of “this is how we do things here.” And if you have someone in your company who says things like that, “this isn’t on brand for us,” you should launch them immediately. Those people are company killers. They kill innovation and improvement. They think they’re protecting you, but what they’re really doing is helping you die slowly.

7:52 Don’t let winning make you comfortable

So why do successful businesses fail? Because they stop doing the things that made them a success in the first place. Don’t let winning make you comfortable.

If you’re winning and you want to stay there, that’s what we do. Reach out to us. We’d love to help keep you on top.