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MARK EVANS

Digg’s demise demonstrates dangers of complacency Add to ...

Last month, Digg was sold for $500,000 to Betaworks.

It marked another disappointing chapter for Digg, which was once one of the most popular online news aggregators. The company raised $40-million in venture capital, and it was valued at $200-million to $300-million.

So what caused Digg’s demise, and what can entrepreneurs learn from it?

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The biggest lesson may be the importance of continually making improvements to keep existing customers engaged and attract new ones.

 In other words, maintaining the status quo is untenable because there is too much competition waiting for a window of opportunity.

In many respects, Digg was guilty of strategic and tactical complacency.

Even though it was one of the leading news aggregators, it did two things wrong: It did not evolve as quickly as it should have, and the changes it did make missed the mark or were rejected by existing users.

This suggests Digg did not have enough insight about its own users and their needs, and the competitive landscape.

As a result, a company that was celebrated as new and leading-edge fumbled the ball when it should have been looking for the next big opportunity to make a score.

A big challenge for startups that enjoy rapid success is having the ability to recognize what went right and what has to happen to provide opportunities for future success.

Say what you will about Facebook’s constant tweaking of the dials, which many people find annoying or unnecessary, but no one can accuse the world’s largest social network of being complacent or unwilling to experiment.

Whatever Mark Zuckerberg’s shortcomings, he has built a company that isn’t afraid to try new things. For Facebook, the strategy appears to be throwing a lot of things at the wall to see what sticks.

Apple falls into the same category with how it continually iterates to create new versions of its products, even if the new products cannibalize the old ones. By pushing the ball forward, Apple not only improves its own products but prevents rivals from outflanking it.

You only have to look at how Apple’s products evolve compared with how Research in Motion does business to understand why the iPhone is a world beater while the BlackBerry is struggling to stay relevant.

For any business – big or small – the status quo is chock-a-block with dangers. Markets and consumer needs change too fast to adopt a fat and happy approach.

 It is only by embracing continual change that business can thrive and survive.

Special to The Globe and Mail

Mark Evans is the principal with ME Consulting, a communications and marketing strategic consultancy that works with startups and fast-growing companies. Mark has worked with four startups – Blanketware, b5Media, PlanetEye and Sysomos. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshmarketing and meshwest conferences.

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