There are two things that Blockbuster, Borders and Kodak have in common.
The first thing they have in common is they all went bankrupt because digital technologies made their businesses obsolete. Blockbuster fell victim to online access to movies, TV shows and other programming. Online book merchants such as Amazon and Apple's iTunes bookstores erased the need for Borders' bricks and mortar. Kodak was done in by the fact that most phones sold today have cameras, especially smartphones (worldwide smartphones activations expected to rise from 2.6 billion in 2014 to 5.6 billion by 2019).
The human cost alone of these business failures can't be understated: Blockbuster employed approximately 60,000 people in 2004; Kodak employed 17,000 in 2011, down from 64,000 in 2004; Borders had about 20,000 employees.
The second thing Blockbuster, Borders and Kodak have in common is that they all could be thriving today if they knew what businesses they were really in long before their bankruptcies. Because they defined their businesses too narrowly, they didn't see the threats from startups until it was too late. Having the correct definition of the business you are in makes you see the world differently, giving you the ability to spot opportunities that you never saw before. All of those startups that led to the demise of Blockbuster, Borders and Kodak are now big, successful businesses in their own right. If the troika of ex-companies spotted the threats early enough because of how they defined themselves, they could have purchased those startups early and successfully morphed their business into the digital era.
For instance, it appears obvious now that Netflix is the natural evolution of Blockbuster. But Blockbuster only saw itself as a bricks and mortar renter of video entertainment. If it defined its business as a programming supplier, irrespective of medium, it may have seen Netflix as its future and acquired it when it was young and cheap. Had it done so, Blockbuster would still have had to go through a long, painful, expensive process of shuttering its stores while transforming itself into an online supplier of programming but at least it would still be a viable company. It would continue to provide a living to thousands of employees, pay corporate taxes and be a material contributor to the economy.
Similarly, Kodak could have acquired Flickr and Pinterest (amongst many others in the picture space) and Borders could have evolved into Amazon. As with Blockbuster, these acquisitions would have been just the beginning of a wind down of Kodak's and Borders' traditional product lines -- closing factories and stores -- as they made the transition to their new businesses. But at least they would still be alive with a bright future for their employees, shareholders and customers.
There are many companies that have broader definitions of the business they are in and are making successful evolutions into new fields even as they are being threatened by emerging technologies. A recent article in Wired magazine highlights 10 companies that are innovating into areas that go well beyond their original mandates and, as a result, they continue to grow at a significant pace.
The article highlights how both eBay and Amazon are, in many ways, almost indistinguishable from their original businesses. For instance, Amazon has expanded into groceries, with its AmazonFresh service providing same day delivery to customers in San Francisco and Los Angeles. EBay started as an auction site but has become an online retailer for millions of resourceful entrepreneurs. Walmart has created shopping apps that make it easier for its customers to find and purchase products in its stores. App-armed customers make twice as many trips per month to Walmart stores and spend 40 per cent more than those without apps. Macy's converted 500 of its stores to serve double-duty as retail locations and online delivery fulfillment warehouses so that its customers can buy in person or digitally and get their products on the same day.
The answer to the question we posed at the beginning of this article -- is your successful company on the road to extinction? -- is "yes" because all businesses face the same threats we described above in one form or another. Somebody, somewhere is sitting in his or her basement developing an idea that will make your current business obsolete. The best way to inoculate your company from the same dire future as Blockbuster, Kodak and Borders is to have a broader, more focused definition of the business you are in and then innovate, innovate, innovate in that direction.
Two questions for you to consider:
- What other iconic companies do you think will be replaced by emerging digital businesses and how can they be saved?
- What digital businesses do you see as threats to your business and how do you need to shift in order to survive and thrive?
Please feel free to share this article with others who you think might be interested in participating in the conversation around these two questions.
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