The news finally came that Blockbuster is closing their remaining stores. It's sad, but is it really going to affect us? Maybe not at all.
Personally, I was a big fan of Blockbuster, but it is a classic example of how complacency, inability to adapt to technology trends, and unsustainable, “dated” business models can lead to the downfall of a business.
In the last decade, more than 40 percent of the Fortune 500 list has been replaced by new companies and startups.
As crazy as it may sound, in 2000 Blockbuster declined an offer to buy Netflix, the primary cause of its downfall, for a mere $50 million. While Netflix, which originally capitalized on simply eradicating “late fees” for customers, grew, Blockbuster took six years to start their “Blockbuster By Mail” program. But it was too little, too late... and the rest is history.
So, what can we learn from Blockbuster's mistakes?
Organizations cannot be complacent. If they do not innovate or adapt to trends like digitization and SMAC (Social, Mobile, Analytics, Cloud), they will die.
Competition can come from anywhere. Prior to the release of the iPhone in 2007, it was unimaginable that a cell phone would become a competitor to alarm clocks and eventually replace them. Executives in the airline industry had no idea that competition for their most loyal travelers would come from video conferencing. Just a decade ago, we did not imagine business models that would evolve from the web, like Google, eBay, Amazon, etc.
To better understand their customers, they need to take calculated risks in a measured approach so they can improve customer experience with innovation to stay head of the competition. Those that don’t, will follow the examples of Blockbuster, Blackberry and many others.
Businesses cannot play it safe anymore. They have to increase efforts to innovate and reduce their fear of failure. They need to focus on customer needs, or risk someone else taking care of their customers' needs.
It's their choice: be breakfast or have breakfast.
Sanjib Sahoo is an award-winning CIO/CTO, industry thought leader, contributor and speaker. Currently, he works as the Chief Technology Officer of tradeMONSTER Group and leads all aspects of IT for optionmonster.com and trademonster.com. Rated " Best for Options Traders," tradeMONSTER is setting a new standard of excellence and innovation in the online brokerage industry. Sanjib was awarded the “2013 CIO of the Year” from the Executives Club of Chicago and has contributed articles to HBR, Wired Magazine etc. and spoken at several national conferences.