Blockbuster Proves: You Cannot Win A Race By Standing Still

And so Blockbuster DVD rental business has gone into the much expected Chapter 11 protection in the USA. They have about $1 billion in debt, and the outlook looks grim.


I have the following thought that it brings to mind: YOU CANNOT WIN A RACE BY STANDING STILL


It seems to me that Blockbuster did not aggressively work to change the business model as the world changed around them They focused more on their offer, trying to optimise stores, costs and the such. But the world around them was changing:

1. Technology meant that people could download movies through iTunes and other services. This was easier, more convenient and was not constrained by when stores were open, plus no need to travel to and from stores to fetch it, find it out of stock and take it back. Everything is available and not dependent on how many copies in a store and what is out.
2. Alternative methods that are more convenient for those that like having discs, which NetFlix and LoveFilm did where they post you DVDs from a list of ones you want and you keep them as long as you want and keep sending them as you send back the ones you watched. This model also meant people are signing up for a subscription and so regular revenue flows.

The key message is that you have to constantly keep moving with the race, and constantly try and be the leader of the pack. 

1. All to often, once something works, companies start to focus on optimising the model they have, reducing costs and doing that model the best. But they are so busy standing still, it is a bit like runner tidying their running kit, retying their shoes while the others run off ahead – even if they are not great runners they will beat you.
2. Interestingly, I heard an interview with the European Blockbuster Vice President who said the UK was doing well. All because the regulations meant only they could rent out blue ray DVDs, and not the subscription services. It seemed to me a bit like fiddling while Rome is burning around you. A simple change of -what seems an odd - regulation and you only point of difference crumbles?

You cannot win any race standing still. Changes in business models is happening all the time. 
In an interview with one of the founders of Google, he said he thinks the biggest risk established companies face is they keep looking back or they keep looking around them at what they do and using their context when they think about innovation. 
Innovation comes when you don’t look around but aim for the finishing line. Then a when there, a new race starts?