The year is 2000, and Blockbuster CEO John Antioco just wrapped up an executive meeting with the founder of a new tech startup. During this meeting, Antioco was pitched on a potential groundbreaking partnership with an up-and-coming online fledgling company. The startup’s founder, Reed Hastings, saw an opportunity for Blockbuster to pivot away from its brick-and- mortar sales practices toward the untested, uncertain realm of e-commerce. Considering that a large portion of Blockbuster’s annual revenue came from late fees, turning to a business model that eliminated that revenue stream seemed foolish. Antioco made the call to not move forward with the startup — to not move forward with Netflix.
Antioco failed to see how the internet would change the video business. His lack of foresight cost Blockbuster dearly; they filed for bankruptcy in 2010.
It wouldn’t be the first time a large company turned down a tech newcomer. Yahoo turned down a start-up called Google. Twice. We all know how that turned out.
Disney made a similar mistake when they passed on the ideas of one of their animators who approached them about changing the way they animated movies. That animator later created Pixar and it cost Disney $7.4 billion to buy his idea.
Blockbuster or Netflix?
Over the last twenty years, the landscape of technology has changed immensely. With every change, three things occur:
- New companies emerge to make lives of consumers or other businesses easier (much like Netflix did in the ’00s and ‘10s).
- Established companies—thinking they are too big to fail—miss their window to pivot with new technology.
- The rigid companies flounder—often never to recover—and new, flexible, innovative organizations rise up to take their place.
This pattern holds true on a smaller scale as well. During my years as a business consultant and small-business owner, I have seen rigidity kill more companies that I would care to count. Oftentimes, the lack of flexibility is not in the face of an innovative, game-changing start-up, but the adapt-or-die circumstances of a crisis.
When [No] Trust Stops Your Growth
A few years ago, a business owner in Houston reached out to me for advice. A hurricane was barreling toward the Texas coast and this business owner had no idea how to adapt to this emergency. I suggested he allow his employees to work remotely and he assured me that his business “just wasn’t set up for [his] people to work from home.” But when I took a look at the entire picture, I realized that, in fact, he already had the infrastructure necessary to pivot and adapt:
- Staff worked from laptops;
- The office ran exclusively on a VoIP phone system, which meant staff could bring their desk phones home with them to plug into the back of their laptop;
- The company functioned solely on SaaS programs, accessed through a website with the proper log-in credentials;
- Every laptop had a webcam, which allowed for Zoom meetings
When I pointed this out to him, he finally admitted what the real problem was — he didn’t trust his staff to work from home.
I’ve thought about that man’s business a few times since this pandemic shut down companies around the world. Did he finally pivot to allow his business to survive, or was he stuck in his old ways because they were comfortable?
Option 2 means he would’ve had to close his office and furlough his people. Option 2 means his business stands a real chance at closing for good. We are fortunate to live in a time when technology allows us to pivot ways businesses were unable to in the past.
Technology And Your Pivot
COVID-19 has shocked the economy. It has given all of us a wake-up call. It has also forced many of us to pivot towards innovations that will carry us through this crisis and allow us to remain profitable well into the future. In short, COVID-19 has catapulted us into the future.
Aside from the hospitality industry, construction/factory work, and the medical field, there are very few industries in existence today that cannot handle 100% remote work. In the aftermath of COVID-19, the landscape of business as we all know it will be changed forever. Much like I discussed earlier, a few things will happen because of the state of the world right now:
- Organizations with a strong grasp on technology will find pivoting toward remote work easy and something they continue to do moving forward.
- Businesses with the technical ability to work remotely, but who fear change will suffer. Their decision to stay closed because they don’t trust their staff to work remotely will be the nail in their coffin.
- New companies will emerge to take the place of the businesses in Option 2, much like Netflix overtook Blockbuster in 2010.
Pivoting to an untested and new way of doing business can be intimidating. But embracing available technology will help your organization overcome nearly anything. Failing to act because of fear will greatly increase the chances that your company closes its doors, letting new companies take your place.