What happens when you fail to innovate

Today, Blockbuster Incorporated, the once powerful video-rental giant, began the process of looking to sell its empire. The company, weakened by revenue losses and forced to file for Chapter 11 bankruptcy in the Fall of 2010 now believes that selling what remains of the company is the best way to maximize value for its shareholders. But what happened to Blockbuster’s once-thriving business model?

Unfortunately for Blockbuster, the company fell rapidly behind its competition in terms of innovation and use of the internet as a marketing tool. It first began to worry when Netflix started to grow by offering movies delivered to your mailbox based on a list of titles you wanted to see. But the corporation truly began to feel the pain when facing combined competition from Netflix’s new online video streaming offerings and RedBox’s ubiquitous… red boxes. Though the company attempted to catch up by offering new business models similar to Netflix, it was ultimately too little too late. Even with new programs to sell of its used DVDs at cheap prices and to “waive” late fees in order to increase demand, the company simply could not make ends meet.

Blockbuster’s demise is a powerful lesson in what happens when a corporation fails to innovate. Though their story is certainly instructive in the realm of the internet, it shows what happens anywhere when an entrepreneur fails to satisfy consumer preference. In particular, it also demonstrates the powerful transformation in business models that is created by the movement of content online. Ultimately, Blockbuster failed to understand one simple entrepreneurial concept: adapt or die.

What does that mean for you, the average reader? Well, first of all, remember to innovate while starting a company. Also, head to Blockbuster to take advantage of their 4 for $20 used DVD deals before it’s too late!