When I was a young boy growing up in the 1960s in New York, what I really wanted was a Schwinn bicycle—first the Black Phantom, then the Sting Ray, then the Varsity. Any kid in the neighborhood was proud to have a Schwinn. No other bike manufacturer came close.
At its peak, Schwinn employed more than 2,000 people, produced hundreds of thousands of bikes a year in five factories, and owned almost 20 percent of the U.S. market. The Schwinn name stood for cutting-edge innovation and unmatched quality. Today, however, Schwinn no longer exists as an operating company. There are no Schwinn plants and no Schwinn employees in the United States. The company that was founded in 1895 declared bankruptcy in 1992 and closed its last factory in 1993. The Schwinn name is now owned by Pacific Cycle, which in turn is owned by Dorel Industries, a consumer-products company based in Canada. All of Pacific Cycle’s bikes are manufactured in Asia. And the only thing the Schwinn bicycles currently for sale at Wal-Mart have in common with Schwinns of old is the brand.
What happened? Did Schwinn’s management think that its long history of designing, building, marketing, and selling some of the world’s best bikes would keep the company on top? Did executives fail to see that the economics of the industry were changing? Did they miscalculate their response to those changes? For instance, a poorly executed attempt to source low-cost bicycles from Taiwan helped create one of Schwinn’s biggest competitors. There are different stories that might account for the company’s demise, but the facts are that Schwinn went bankrupt and its brand was sold.
And today the fact is that many well-known companies—not just in the United States but in Europe and Asia as well—are facing a situation similar to the one Schwinn confronted. Yet the course of events is not predetermined. You don’t have to lose control of your destiny. You don’t have to be a Schwinn.