You, Adversity and Blockbuster Video
What would it take for your business to survive in the face of adversity? Let’s take a look at the possible bankruptcy filing by Blockbuster Video and what that has to do with you.
All over the country there are now chains of stores that have a video dispensing machine where a person can rent a DVD for $1. Then there is Netflix where you can order videos on your computer, and there is Hulu, where you can stream video to your computer.
Last week it was announced that Blockbuster might push for Chapter 11 bankruptcy protection. In a filing with US regulators, Blockbuster pointed to “significant liquidity restraints” and a steadily-mounting debt.
This is what they said, according to the Associated Press: “The increasingly competitive industry conditions under which we operate have negatively impacted our results of operations and cash flows and may continue into the future. These factors raise substantial doubt about our ability to continue as a going concern.” Blockbuster lost $569 million dollars last year and currently has more than $975 million dollars in debt.
Could the era of video stores be coming to a screeching halt?
How does this apply to you?
Here are my thoughts on what may have happened at Blockbuster headquarters…
Blockbuster saw the rising trends, but they believed they could withstand them. They added an online arm to their business to try and address the online trend, but their offline business model remained basically the same. They thought that if they marketed heavily enough they could have the best of both worlds.
Many of the upper managers were probably also trying to protect their jobs, so the solutions they were coming up with were all limited to solutions that worked along the lines of job protection. If this was the case, no one could really come up with creative solutions that matched reality…the growing trends. Their solutions could only be extensions of the old blockbuster model, which didn’t take into account the current technological trends, since those trends did not exist at the time the model was created.
Coming up with solutions to extend the old model in the face of new trends is certain to lead to demise of a company. If the company is to survive, the model has to be changed to include the new trends, not patched up or added on to. No amount of marketing will help the company survive unless its model is redone to accommodate the new trends.
How about you? Is your business model being redone to accommodate the new trends in the business world? Or are you hoping that with enough marketing, perseverance, and grit you will pull through? Are you or your employees holding on to the old model because you believe that’s the way to protect your “job”? Actually holding on to the old model is the guaranteed way to lose your “job”.
If you haven’t done so yet, start taking the trends you observe seriously, and begin to adjust your business model to incorporate those trends. Unless you do, your business may meet the fate Blockbuster is facing.
Let me know your thoughts about this article and what challenges you may be facing in adjusting your business to make sure it survives and thrives in the face of the rapid changes going on around us.