The Unravelling of Blockbuster

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:

  1. Hubris Born of Success
  2. Undisciplined Pursuit of More
  3. Denial of Risk and Peril
  4. Grasping for Salvation
  5. 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