Blockbuster was once one of the biggest video rental business with franchises across the world. Since their raise and subsequent fall in the early 2000s much has been written about the business strategies, and where their leadership made questionable choices. The Blockbuster story is a cautionary tale of assumption over understanding. The key to avoiding Blockbusters fate lies in design-led business lessons. Infusing lateral thinkings at all levels of your organising can help you follow these lessons.
Adapt to your reality
The first lessons Blockbuster can teach us is universal. Darwin knew it in 1859. “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change”. The reality, for Blockbuster, was technological changes were coming. There was an introduction of DVD’s and home entertainment systems to Blockbusters market segment. The landscape of customers were changing and blockbuster did not recognise, in time, that this was their new reality. They were not prepared and didn’t have a scenario plan for what this new technology could mean for them. They were not an active participant in crafting the brave new world of home entertainment. Business as usual was their failing strategy.
A strong position means its time for innovation
When you are at your strongest as a firm it’s genuinely time to worry. When your business is at its peak it is time to bring in the creatives to envision the next strategy for your business. When you are at the top of your business game, there are already start-ups and disruptors in your market. You have to answer the moving times with your own ideas of where the market is going. Use design-led business ideals to keep updating your business strategy, technology uses and customer needs. It should be a continuous process of scanning the edges of innovation and iterating on what the fit of changes mean for your current and potential customers.
Truly understand what problem you are solving
I cannot stress this enough. Blockbuster were looking at themselves through their own eyes. They thought they were in the rental VHS business. They thought they were there to rent their customers the latest and greatest movies. Blockbuster lost sight that they were in the business of providing movies people will love, the format and delivery mechanism didn’t matter to them. The shops mattered to Blockbuster, but not their customers. Don’t make something matter to you thats not core to your customers. Additionally their customers didn’t want the latest and greatest movies, they wanted to watch a movie they would enjoy at home. Customers didn’t want to visit a retail store. Second – customers didn’t always want the latest release. They wanted a good movie. They wanted to avoid watching bad movies. Blockbuster never answered that need. They truly misunderstood what they were there to provide. While other business were iterating and learning what customers really wanted blockbuster assumed they already knew. Your customer needs can change with time, make sure you truly understand what business you are in and what problem you are solving.
Resolve the frictions in your business model
Blockbuster made a significant amount of money from its customers late fees. It was their dirty secret. They exploited their customers in this way. Blockbuster would say it was an essential part of their business model to ensure customers returned the videos. However their customers resented this enforcement. This discontentment meant when another option was available blockbuster had primed their own customers to leave them.
While hindsight is 20:20, its harder to recognise these lessons while you are living your own journey with your business. By infusing design-led innovations thoughout your business you are more able to respond to changing markets. Design-led innovation is a process that shifts the role of a designer to work across an organization to radically change a company’s view of the value proposition offered to customers (Kyffin & Gardien, 2009), to co-design (Chesbrough & Schwartz, 2007), and to generate a unique and sustainable competitive advantage (Bucolo & Matthews, 2011b).
All of blockbusters lessons are design led business lessons. The ability to combine business model, technology and customer needs.
Companies engaged in a design-led program have to develop strategies for capturing the value from new knowledge generated through customer insights. Practical implications for the firm as a whole include the benefits of bringing new ways of thinking and working into technologically focused company with a tightly defined engineering culture.
Using customer insights might be any firms biggest challenge. From experience there is not a lack of information from customers but a lack of willingness to execute on the insights.