Innovate or Sink: How Blockbuster’s Titanic Mindset Led to Its Downfall

THE HORIZON MIND:

The Horizon Mind covers the 6 elements to each topic in the blogs; includes Overview, MyStory, MyAnalysis, Iconic References, Summary and What’s Next.

Horizon is defined as the line at which the earth’s surface and the sky appear to meet and it is defined as the limit of a person’s knowledge, experience, or interest.

The Horizon Mind discusses the overall topic with iconic references as resemblance of events to be remembered for the betterment of the future. Humans tend to believe things which have some kind of evidence attached to it.

1.0 OVERVIEW

Mindset is the king of everything

Founded in 1985, Blockbuster LLC, commonly known as Blockbuster Video, was once a giant in the home movie and video game rental industry. At its peak, the company boasted 9,094 stores and employed approximately 84,300 people—58,500 in the United States and 25,800 internationally. Despite its rapid expansion and various strategic shifts over the years, Blockbuster filed for bankruptcy in 2010.

In 2005, Blockbuster's late fees strategy generated an impressive revenue of USD 800 million. However, the company failed to grasp the shifting demands of its customers as they increasingly turned to alternatives like Netflix—an American subscription streaming service that posted earnings of USD 116 million in 2009 while Blockbuster suffered a staggering loss of USD 518 million. By July 1, 2010, Blockbuster was delisted from the New York Stock Exchange (NYSE). Its late entry into video-on-demand streaming proved too little, too late. Over the next three years, the once-mighty company succumbed to a slow demise as DVD-by-mail services ceased and stores worldwide fell into administration.

The success of Netflix paved the way for other streaming platforms such as Viu, Disney+ Hotstar, and Tonton. At Dyne Perspective Sdn Bhd (DYNE), we are committed to cultivating innovation for our clients because we understand that standing still is not an option in today’s fast-paced market.

Reset your mindset to make a difference. Planning is essential, but mindset reigns supreme.

At DYNE, we are passionate to cultivate innovation for our clients. We cannot win the race by standing still. Tag along with DYNE to be creative in cultivating innovations for your businesses.

So choose to be among the few today.

Reset your mindset to make the difference.

Planning is everything but the mindset is the king of everything.​

2.0. MY STORY - Why am I sharing this writing with you?

As an observer and business analyst, I have often questioned why certain companies thrive while others falter. My experiences witnessing the decline of previous employers have fueled my desire to uncover the root causes of these failures. How can a company that once flourished end up struggling for survival?

The “Iconic Reference” of The Titanic Mindsets serves as a poignant reminder of how even successful entities can sink if they fail to adapt.

In analyzing the falls of once-thriving international companies like Blockbuster, it’s crucial to empathize with the “captains of the ship”—the management teams whose decisions ultimately led to their downfall.

In this analysis of the falls and failures of the used to be successful international companies in the world, we need to have the empathy skills of experiencing the actions taken by the “captains of the ships” or the management of the companies that made the companies failed in the middle of the journeys.

“Most people don’t really want the truth.

They just want constant reassurance that what they believe is the truth.” - Anonymous

3.0 MY ANALYSIS

A. Key Factors Behind Blockbuster's Downfall

1. Missed Strategic Opportunities:

   - Blockbuster's CEO John Antioco made a critical error when he declined an opportunity to purchase Netflix for just $50 million in 2000—a decision that would haunt the company as Netflix grew to be valued at USD 235 billion in 2021.

2. Failure to Understand Customer Needs:

   - Blockbuster neglected to implement effective Know Your Customer (KYC-1) strategies —failing to grasp their customers' evolving preferences and demands.

3. Understanding Competitors:

   - The company also overlooked Know Your Competitor (KYC-2) strategies—failing to analyze competitors’ movements and innovations effectively.

B. The Importance of KYC

1. Know Your Customer (KYC-1): This involves understanding customers' interests, demands, preferences, and lifestyles. A deeper understanding allows businesses to align their offerings with customer needs.

2. Know Your Competitor (KYC-2): Understanding competitors is crucial for success in a crowded market. Competitor analysis helps businesses identify unique selling points and formulate effective strategies.

Understand your competitor’s current business strategy

“If you know thy enemy and know yourself, you need not fear the result of a hundred battles”.

Sun Tzu

Just as it is important to find your competitive advantage, if you know your competition’s movements, weak spots, strengths and marketing strategies, you can ultimately stay ahead of the game.

By neglecting both KYC aspects, Blockbuster failed to innovate or adapt its business model effectively.

C. The Role of Innovation

Innovation is the development of a certain value that meets a new need of a customer. Innovative organisations have the right to explore new ideas and commercialise these ideas quickly and effectively.

Had Blockbuster prioritized KYC efforts earlier on, it could have explored innovative solutions tailored to meet customer needs.

Design Thinking is a problem-solving methodology that emphasizes empathy for consumers’ needs above all else. It involves generating innovative solutions through experimentation and iteration—essential for any business aiming for longevity.

4.0 Iconic Reference – The RMS Titanic

The RMS Titanic serves as an iconic reference point for understanding Blockbuster's downfall. The hubris surrounding Blockbuster's extensive network of stores blinded management from recognizing critical KYC insights.

On April 14, 1912, the Titanic sank due to a series of avoidable mistakes—a tragedy that mirrors Blockbuster’s fate as thousands lost their jobs due to similar miscalculations.

Get to know into details of The Titanic Mindsets how hubris can sink your business which had caused The RMS Titanic succumbed to the seabed of The Atlantic Ocean on 14 April 1912.

From the catastrophic event of The RMS Titanic, thousands had lost their lives due to one man’s fault that could be avoided due to The Titanic Mindsets.

While thousands of Blockbusters’ employees had lost their jobs due to The Titanic Mindsets too.

5.0 Summary

Everyone has its own self-talk that contributing to the next actions to be taken. The self-talk also contributing to the mindset of the person. My series of blogs will explore and present to you for your understanding the knowledge of developing your mindsets either to the left or to the right, it will depend on your choices. My blogs will also uncover the reasons to the destructions of the successful businesses once before due to the mindsets of “too big to fail”.

6.0 What’s next?

In upcoming blogs, I will analyze successful international companies that succumbed to The Titanic Mindset and The Hare’s mindset.

For students and undergraduates, DYNE Perspective Sdn Bhd (DYNE) offers a 30-day FREE enrollment for “TheMindsetPlan” for the first 20 subscribers each month. This program provides 100% online interaction with DYNE professionals to unlock potential and cultivate innovation through design thinking approaches.

For businesses, DYNE offers a FREE Business Diagnosis Report to help evaluate organizational health within the business cycle. Understanding where your business stands is vital for achieving goals; neglecting this could jeopardize success.

The story of The Hare and The Tortoise teaches us that leveraging our strengths over weaknesses can lead to victory in unexpected ways. Explore more about our “Business Diagnosis Report” here to ensure your business thrives in a competitive landscape.

Your business is like a ship sailing in a deep sea ocean,

You maybe the captain of your ship but not the owner of the ocean.

be prepared with the relevant preparation and expect for the unexpected.

Thus, It's time to reset, rethink, reposition your current position in the map.

      Wan Azwan

Wan Azwan is the CEO and Strategy Analyst of Dyne Perspective Sdn Bhd (DYNE), a strategic management and training company. With 26 years of experience in management, consultancy, and accounting, he specializes in driving business success through innovation. He has helped startups and SMEs to achieve market success via go-to-market strategies, financial positioning, and business repositioning.  A member of the Malaysia Institute of Accountants (MIA) and a CIMA certification candidate, Wan Azwan believes everyone is capable of innovating. His explorative mindset has led to the creation of three innovative services, embodying his passion for solving challenges through creativity, innovation and fresh approaches.