| Log in

Disrupt to Avoid Failure

26 March, 2010
Blockbuster Video is in big trouble.  Most analysts think the company is going to file bankruptcy – unlikely to survive – with a mere $.30 stock price today.  Most of us remember when the weekly (or more frequent) trip to Blockbuster was part of every day life.  Like too many companies, Blockbuster was in the Rapids of growth when people wanted VHS tapes, then DVDs, to rent – and CDs to purchase.  We happily paid up several dollars for rentals and purchases.  Blockbuster grew quickly, and developed a powerful Success Formula that aided its growth.
 
As it is failing, I was startled by a Forbes.com article “What Blockbuster Video Can Teach Us About Economics.” The author contends that this failure is a good thing, because it will release poorly used resources to new application.  Like most economists, his idea has good theory.  But I doubt the employees (who lose pay and benefits), shareholders, debt holders, bankers, landlords and suppliers – as well as the remaining customers, appreciate his point of view.  Theory won’t help them deal with lost cash flow and expensive transition costs.
 
As the market shifted to mail order and on-line downloads, Blockbuster could have changed its Success Formula.  But instead the company remained Locked-in to doing what it has always done.  It will fail not because some force of nature willed its demise.  Rather, management made the bad decision to try Defending & Extending an out of date business model – rather than exploring market shifts, studying the competition intensely then using Disruptions and White Space to attack both Netflix and the on-line players.  Blockbuster’s demise was not a given.  Rather, it was a result of following out of date management practices that now have serious costs to the businesses and people who are part of the Blockbuster eco-system.  I struggle to see how that is a good thing.
 
Fortunately, ManagementExcellence.com has a great article about ideas for attacking a threatened Success Formula in order to avoid becoming a Blockbuster entitled “Leadership Caffeine: 7 Odd Ideas to Help You Get Unstuck.”  The author specifically takes aim at the comfort of Lock-in, and describes how managers can start to make Disruption part of everyday life:
 
Fight the tyranny of Recurring Meetings
Rotate Leadership
Break the back of bad-habit brainstorming
Do something completely off-task with your group
Introduce your team to thought leaders and innovators
Play games
Change up your routine
 
Described in detail in the article, these are simple things anybody can do that begin to reveal how deeply we Lock-in, and expose the power of how we could behave differently.  If Blockbuster management had applied these ideas, the company would have been a lot more likely to return positively to society – rather than become another bankruptcy statistic.

 


Leave Your Comment
Dr Lal PathLabs CEO on expansion, competing with PE-backed players and more

Dr Lal PathLabs CEO on expansion, competing with PE-backed players and more

VCC Staff 1 year ago
Diagnostics chain Dr Lal PathLabs, which had a blockbuster listing last year, is...
The compressed tech life cycle: the investor challenge

The compressed tech life cycle: the investor challenge

Aswath Damodaran 2 years ago
Much of what we learn and practice as investors represent models and methods...
Opportunistic acquisitions: Blow money in Vegas instead

Opportunistic acquisitions: Blow money in Vegas instead

Martin D. Wolf 5 years ago
I meet a lot of owners of midmarket IT services companies who almost immediately...
No Comments

Disrupt to Avoid Failure

Powered by WordPress.com VIP