Wednesday, June 15, 2011
Earlier today, I had an op-ed published in the Morning Call. For those of you who are familiar with the blog, this will be familiar - it touches on the need to make sure your business is adapting to changing times and technology. Your thoughts, comments, feedback and critisims are more than welcome!
Borders, Blockbuster lessons show businesses must evolve
As a teen in the '90s, I spent much of my youth in Borders and Blockbuster. These stores were the staple of my youth; I can think of hours that I spent, hanging out in the Borders café, or dozens of arguments that I had with friends about what movie to rent.
My son will likely never spend much time in either store; both have essentially been replaced, outsourced to the digital domain. Indeed, despite being massive chains that at one point had millions — if not billions — at their disposal, both have been forced into bankruptcy, due in no small part to their inability to adapt to changing times and technology.
The certificates of death for each of these chains would each list the same primary cause: technology.
Blockbuster failed to adequately respond to changes in distribution of content, as services like video on demand, Netflix and GameFly (essentially Netflix for video games) delivered movies, television shows or games straight to the customer's home, phone, video game system or computer. At the same time, Redbox brought movie rentals out of the video store and into just about any grocery or big-box location. The end result: Blockbuster declared bankruptcy in September, with $900 million in debt and no way to pay for it. At the time, the store had 3,300 stores; that number has since been reduced by more than 1,000, including the loss of many Lehigh Valley franchises.
For Borders, it's the same story, with just slightly different words. Borders was unable to compete in a digital world, and e-books' continued rise in popularity was one factor in Borders continuing to sink. Websites like Amazon.com now sell more e-books than traditional books, and Borders couldn't keep up, declaring bankruptcy in February. The result is the closing of 226 stores, out of more than 500, including the Borders in Whitehall Township.
There has been quite a bit of discussion about the lessons to be learned from the demise of these two stores. First, every business must constantly pay attention to the future. Sure, hindsight is 20/20. That being said, what if Blockbuster had figured out how to successfully adapt a mail-order business before Netflix? What if Borders was the first to the market when it came to digital downloads, instead of one of the last?
Second, every business must watch its competition and alter plans accordingly. Netflix actually approached Blockbuster in 2000 and offered to partner, but Blockbuster turned it down. In many cases, businesses will succeed or fail based on the actions of their competition — even if that competition has yet to clearly evolve.
Third, and maybe most importantly, any business has to keep an eye on the latest technological advances. Larger stores and chains have plenty of resources and know how to use them. With e-commerce, social media, apps, QR codes and more, a successful business knows how to leverage technology and an unsuccessful business doesn't.
But it isn't even the advanced technology that matters; sometimes it's the simplest of things. How many businesses don't take credit cards? How many don't use an electronic cash register? How many don't have a website (a 2009 national survey found that a mind-boggling 46 percent do not)? Times are hard for any business, but trying to operate a successful commercial enterprise without a website can be like trying to build a house with nothing but a pencil and a dull rock.
There is a greater conversation, however, about what the bankruptcy of Borders and Blockbuster says about the human condition. As a race, humans have evolved over time. In this sense, businesses are an extension of our humanity. We are always looking for a way to improve ourselves and the lives of others. Is your business doing the same? Is it constantly seeking new ways to make your customer happy and generate revenue for yourself and your family? If not, you may have to ask yourself: How much longer do you think your business can survive?
Mike Schlossberg is assistant vice president of technical and community management for the Greater Lehigh Valley Chamber of Commerce. He is also a member of Allentown City Council.