Editor’s note: This article was first published in April 2011, when Blockbuster was already in Chapter 11 bankruptcy and being auctioned. Its later fate is not reflected here. Larry Page’s announcement refers to his return as Google CEO that month, and the rivals and ventures named reflect that year.
I imagine you’ve all seen a Blockbuster in your city, the video rental franchise, and Google obviously needs no introduction. We’ll use Blockbuster as an example of what we should never do in business, and Google as an example of exactly the right way for a company to act and operate.
When the Blockbuster franchise chain was born, it was responsible for the closure of thousands of video stores in the United States. Then it arrived in Europe, and wherever one of its franchises opened, the old neighbourhood video shops closed down. It came in strong, with an innovative service, good prices and an incredible variety of genres. That made it the undisputed market leader, to the point of holding a dominant position in the market. Quick success lulled it to sleep.
Blockbuster is going bankrupt. The reasons are its failure to adapt to the new medium, its refusal to listen to some of the advice it received and, above all, its unwillingness to accept help and collaboration from other chains or investors who wanted to change its system to suit the new era. Add to that a small rival it didn’t take seriously, and sooner or later it will lose the business if it doesn’t act.
Reportedly, when DVDs first appeared, Blockbuster was slow to adopt them because it refused to believe VHS could be superseded. That is when Netflix began eating into its market. Netflix has never stopped growing and innovating, and today it is far more powerful than Blockbuster.
Blockbuster also failed to diversify, so it bet everything on a service, movie rental, that people use less and less as the internet takes hold. If Blockbuster falls, its partners’ capital will be lost completely. Total bankruptcy.
On the other hand we have Google, the undisputed leader with a dominant position on the internet. It is number one, but it stays awake. A few days ago Larry Page announced that the company would go back to the beginning to reinvent itself. Google’s top management will undergo changes to adapt to its new rivals, such as Facebook, Apple and Microsoft.
Google will create new departments to take on its rivals with the dreams of a beginner rather than the complacency of seasoned business people. What’s more, Google doesn’t limit its business to the internet: it is already diversifying into offline businesses such as renewable energy and smart vehicles, among others. Google uses its capital to move into new businesses, so if the internet bubble were to burst tomorrow, Google would carry on in other kinds of business without any trouble.
As we’ve said before, success isn’t hard to achieve compared with how hard it is to keep. Once it’s achieved, there are those who settle into their position and fall asleep, and those who use their position, experience and capital to keep growing.
Remember: business is like poker. The game isn’t over while there is still capital and rivals at the table.
Further reading
- 5 ways to grow your business
- The advantages of starting a business in times of crisis
- Why new businesses fail
- The main causes of failure in business and in life
Featured image: Ben Schumin from Montgomery Village, Maryland, USA, CC BY-SA 2.0, via Wikimedia Commons.
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