I recently read “Built to Fail: The Inside Story of Blockbuster’s Inevitable Bust” by Alan Payne and it brought up some great reminders for me. I worked at a Blockbuster store in Tulsa, OK when I was in college, and I loved the video store environment. It was the ideal position for me as I was a movie buff and was paid to talk about movies. What’s not to like? And with 2 free rentals a day as an employee, I couldn’t be happier.
It is amazing to me that a company like Blockbuster (9,000 stores globally and $6B in revenue at its peak) could dominate the entertainment industry in the 1980s and 1990s and be bankrupt and non-existent by 2010. It was more than just pivoting to digital and passing on buying Netflix for $50M in 2000 (Netflix is worth $20B and trading at $430+ per share today).
Blockbuster’s demise came down to a 5-stage decline and this deterioration is explained in even more detail in another excellent book, “How the Mighty Fall” by Jim Collins. The 5 stages include:
- Hubris Born of Success
- Undisciplined Pursuit of More
- Denial of Risk and Peril
- Grasping for Salvation
- Capitulation to Irrelevance or Death
Do any of these stages sound familiar to your current company or your leadership team? Look for the warning signs in this 5-stage decline and make sure that you are not working for a company that is experiencing this type of decline and not doing anything about it.
By Kent Wilson