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Tech for Tomorrow

Doug Mow

Blockbuster failure - Was it lack of BPM agility?

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With last week's news of Blockbuster declaring Chapter 11, let's take a moment to reflect on the agility of corporate dinosaurs. At one time, Blockbuster Video had it all. The company dominated the video rental market at a time when VHS rental threatened to destroy the movie business. Movie producers and premium content developers feared that the video rental business would gut their theater-based business. Imagine that, VHS was the new technology threat.

Blockbuster not only had the biggest name in the business, it had the largest footprint. More important, it helped define the release window for VHS movies and owned the "supply chain" relationships with producers and distributors of premium content, the most critical element of entertainment distribution. Movie companies, producers and actors trusted Blockbuster's ability to accurately account for rental revenues so that royalties could be paid accordingly, no easy feat.

In the late 90's Blockbuster was the darling of the industry. They were courted by high tech companies to help usher in a new era of video entertainment consumption - video on demand. On July 20, 2000 Blockbuster issued a press release (with the ill-fated Enron) heralding their video on demand partnership. That announcement sent shock waves through the industry. This was a time when cable modem and DSL were not pervasive and most households were connected via 33k modem. The "future is here" impact on the market was significant - this Forbes article was riddled with the hyperbole of the era. At the time, Reed Hastings' Netflix start up was struggling to get traction.

From annual revenues of $4.5 billion at the time, Blockbuster is now bankrupt under a mountain of debt. As I mentioned in a prior post, there are no more video rental retail stores in my town (the last one closed down this summer). Netflix is now a dominant player and a low tech operation by McDonald's (Redbox) is in most grocery stores renting DVD's for two dollars per day. In December of 2009 there were 22,000 Redboxes in operation.

So what was it, lack of operational real time BI? Did they really need a dashboard to figure out that VHS and DVD rental would decline in the face of video on demand? Would flexible BPM support help them adapt their offerings to broadband delivered entertainment? Was it a stubborn business model with executives that refused to acknowledge a trend or lack of business agility that prevented them from offering new products and services? Or maybe they should conducted market research and asked their kids if they wanted a VCR, Blu Ray player or new iPod for Christmas.

Unfortunately, this scenario is all too familiar. Companies cling to one business model 'til death do them part. Is it IT's fault that the companies cannot shift? Have you ever sat in a meeting and had to represent IT by saying "we can't offer that product/service because our systems can't support it?" I have been a business executive on the receiving end of that message.

Technology moves so rapidly that platforms and systems reach "end of life" status all too quickly. When that happens, does IT evaluate all possible alternatives to develop new, innovative and flexible systems to enable change? Today's technologies offer so much promise why not take the opportunity to take advantage of all they have to offer. Who is the Chief Innovation Officer to push for the future?

Last week I met with two very interesting, old line companies, a bank and a transportation infrastructure company. I was fascinated by the innovative applications they were developing to support their century old businesses. They didn't seem destined for extinction despite their old line industries (more on this in my next post).

So, is that the key to avoiding obsolescence? How does your company intend to avoid dinosaur like extinction?

Doug Mow blogs from a business executive's perspective about IT trends, tech news and life in the trenches of an Enterprise 2.0 transformation.

Doug Mow

#CMO of Courion Corporation responsible for all branding, communications, messaging, online and offline marketing. Courion is the leading provider of access management tools that provide maximum access to corporate IT assets with minimal risk.

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