In case you’ve missed the headlines, Blockbuster (which is, to my surprise, still in business) is officially closing down their last 300 stores, and shutting down their rent by mail service. Their stock is worth $0.01 on the NYSE the last time I checked (which is up from $0.00!), and the company itself has little chance of ever recovering.
They are simply a shell of a brand, offering some online streaming services that hardly anyone uses.
In addition to the Twitterverse buzzing with comments such as “They still had 300 stores?” and “I’m kind of sad, I have good memories from when they were… You know, relevant.”, everyone and their dog is currently trying to analyze just what went wrong. How could a company almost 30 years old with billions in revenue just fade into obscurity? How could a company that practically invented its own industry just slowly dissolve?
Being the ever-optimistic strategist I am, I wanted to offer a different perspective: 7 things we can learn from the failure of Blockbuster.
1. Don’t get complacent.
Industries change. Customers change. Economies change. You could be a small player today and a giant tomorrow, or your enormous multi-national corporation could come crashing down in a matter of months. The more complacent you are, the less you’re striving to grow. The less you strive to grow, the slower you adapt to market changes, and the faster you die.
2. Know what you’re actually selling. Err, renting.
A crucial mistake that Blockbuster made was assuming they were in the video rental business to begin with. They weren’t. They were in the entertainment business. You didn’t go to Blockbuster to rent a DVD (or a VHS tape if we go *way* back…) You went to bring home some entertainment. To bond with your family or friends over a great new flick, or sit alone in a darkened room and lose yourself in a romantic comedy (large vat of ice cream optional.)
They were the highlight of slumber party planning, the delivery mechanism for something that would make you laugh, cry, smile, or jump in your seat. And, quite simply, they forgot that – if they ever even knew. So when other options existed to get the same kind of entertainment from people who understood what they were selling, consumers jumped ship faster than an Italian cruise ship captain. Remember what you’re actually selling, and always strive to improve the way it is delivered.
3. Technology is your friend.
The 21st century has been market by amazing technological advances. Things like “personalized recommendations”, live chat helpdesks and related content are commonplace. If you own a bookstore and try to fight Amazon by opening more bookstores and lowering your prices, you’re going to LOSE. Technology allows them to win. Never be afraid to bring new technology into your business if it can help create the experience your customers crave.
4. Know thy customer.
Did you know that my tiny little podunk town actually still has a couple of video stores? And they’re not going under, either. They’re flourishing because the big-box, corporate giants have moved out and left customers behind. Who are they? True movie buffs! The people who want indie films from Paris, or the latest Bollywood hit.
They don’t care what Michael Bay just directed, they want to know what the film festival crowd is buzzing about. Bonus points to the video store downtown who, knowing that most of their clients have always been hipster-types, added in a cafe about 10 years ago. Now their bearded iCustomers can park their hybrids out front and sip a latte while deciding whether or not to rent “Dancing in Jaffa”, because you just can’t pirate or stream a movie nobody knows about.
5. Know when to cut your losses and get *out*.
Blockbuster was not the first company in this space to get out of renting physical DVD’s. In fact, they were close to the last. They were also one of the last to get into online streaming, renting DVD’s by mail, and pretty much every other innovation ever to hit the industry. If they had closed all of their stores when, say, Rogers Video (big Canadian chain) did, and moved exclusively to streaming, they may have had a chance at succeeding.
At the very least, they would be cutting out an entire unprofitable arm of their business. But they stuck with what *had* worked. They didn’t know when to say enough was enough. It resulted in the Chapter 11 and subsequent multiple sales of the company.
6. Look to the past to anticipate the future.
If Blockbuster had taken a look back to record stores when cassettes, then CDs, then MP3s came out, they would have been able to anticipate the next steps for their industry as well. Digital media would reign supreme for the mass market, and physical media like DVD, VHS and Blu-Ray would own market share in a small, obscure corner of the world.
Purists would claim that DVD is the only true medium, others would miss the warmth in sound of a VHS tape, and their stores would operate like a museum – with the exhibits for sale. The lesson is clear. Nothing is new – not market trends, not industries, not ideas. The past can be used to anticipate the future, so make sure it is always in your view.
7. You’re never too big to fail.
Billions of dollars. An industry cornered with fast-food-style service. Get a mediocre movie for a mediocre price, and get back to your happy suburban life. It seemed like Blockbuster was so big, so powerful, that no matter what happened they would have to stay on top. Kind of like Enron, Kodak, Polaroid, Pan Am, Blackberry, Washington Mutual… You know where I’m going with this.You are never, ever too big to fail. Even GM, famously bailed out by the government, was one misstep away from complete destruction.
Even if your company is just you today, you’re not too big to fail. If you’re 300,000 employees worldwide and $100 quadrillion dollars in valuation tomorrow, you’re not too big to fail. Always be reaching for bigger, better, higher, and keep an exit strategy in your back pocket. You’ll never know when you need it.
What else have you learned from Blockbuster’s failure? Share in the comments! And if you haven’t grabbed your free copy of Start Something, your guide to starting a successful, scalable business (and avoiding these very pitfalls, I might add), just click here my awesome friend and access will be yours!