Blockbuster Case Study

Blockbuster was, at one time, the primary way America got its movies. When VHS tapes were first offered, studios sold them for sky-high prices – it the range of $75 apiece. So, video rental stores became popular because, for a fraction of the cost of purchasing a VHS, customers could rent tapes to catch up on movies they missed in the theaters. The company grew and began buying up independent video retailers in the 1980’s and early 1990’s.

Then, in 2013, with only 300 stores remaining, it finally went out of business completely. What happened? There were a few factors – including some less-than-ideal business deals. However, the biggest problem was that the company failed to innovate. Blockbuster failed to adapt to the age of streaming video and internet downloads. While other companies – most notably Netflix – capitalized on the new technology with innovative approaches, Blockbuster completely failed to do so. At one point, Blockbuster even had the option to buy Netflix, but they turned it down. (Netflix is now worth over $19 billion.) By the time Blockbuster finally decided to try getting into the streaming business, it was just too little, too late. The company had stayed too attached to its existing model and been unwilling to innovate in order to survive.

Read More

Innovative companies face failure

Innovative companies face failure. Innovation involves taking risks. As such, it means that innovating involves a certain amount of failure. It’s important to understand that that is just part and parcel with innovation and that you need to accept that it will happen, yet still pick up and move on. Every innovative company has faced some pretty substantial produce failures along the way.

In April 1985, Coca-Cola released New Coke. It did really well in blind taste tests but it failed spectacularly in the real world. New Coke only stayed on the market for three months. Overall, we certainly don’t think of the Coca-Cola company as a failure. Today, Coca-Cola owns Minute Maid, Powerade, Capri Sun, and around 100 other brands. Despite that highly publicized failure, the company picked itself up, moved on, and created countless other profitable and successful products.

Although Nintendo has been an extremely successful company and one that has managed to remain relevant in the highly competitive and ever-evolving world of gaming, Nintendo has drunken the bitter draft of abject failure. In 1995, the company released a product called Virtual Boy. The system attempted to make use of 3-D graphics, but they were rudimentary, the system’s headgear was bulky, and the product price was high. Virtual Boy only stayed on the market for a mere six months.

Read More

Innovative companies hire people who love what they do

Innovative companies hire people who love what they do. Steve Jobs once said, “People with passion can change the world for the better.” They also can change your company for the better. If you hire passionate people, you will have employees more willing to spend their time – and extra time – thinking about ways to improve your company. One of the keys traits of innovative people is that they are passionate about what they do – so if you want your company to be an innovative company, it needs to be comprised about people who are passionate about what they do.

Read More

Innovative companies are flexible

Innovative companies are flexible. Although innovative companies are bound to face some amount of failure simply because innovation requires taking risks, truly innovative companies understand that sometimes you can segue a failure into a success. Sometimes a product flop is just one small tweak away from a huge success.

For instance, at one point Anheuser-Busch took interest in popularizing the Asian trend of serving beer over ice. When early attempts did not produce positive results, Anheuser-Busch began looking into what other products worked well over ice. Cocktails — such as margaritas — are good over ice. Thus, Anheuser-Busch started selling premixed margaritas. The product was basically a flop. So the company tried again and this time they ended up releasing Bud Light Lime-A-Ritas, which come in beer cans and are marketed as margarita beers. That product generated over $500 million in sales in the first two years and, even better, most of those sales were in the form of category expansion. That is, Anheuser-Busch wasn’t just shifting existing customers from one product to another; it was actually adding customers in a new demographic.

Read More

Allowing physical space for innovation helps companies be innovative

Allowing physical space for innovation helps companies be innovative. Innovation occurs inside the mind, but there are certain environmental factors that can greatly help stimulate innovation. That means that there are certain ways to design an office in order to maximize innovation. For example, the Leipzig BMW factory has an open floor plan intended to maximize social interaction and thus creative stimulation. By insuring that employees come into contact with employees that they wouldn’t necessarily see in a more traditional office layout, BMW’s floor plan helps to enhance the flow of creative ideas.

Some companies have invested in more major physical redesigns to foster innovation and creativity. For instance, Grip Limited, an advertising firm in Toronto, wanted to expand the types of clients it was attracting. The company had survived primarily by doing beer marketing, but those at the top of company worried that Grip was becoming type cast as a company that only did beer commercials. Grip leaders felt that in order to successfully attract and retain a wider range of marketing clients, they needed to increase the creative output at their office. So they redesigned the office itself. Grip added in a slide, a fire pole, and a hot tub-like conversation pit. The new white walls double as projection screens and contoured window seats are scattered throughout for impromptu conversations. Although those sorts of changes seem whimsical and perhaps pointless, there is significant value to adding elements that encourage both physical activity and conversation, as both of these things are tied to creativity and innovation. In the case of Grip, the changes certainly seem to have worked. After its building redesign, Grip picked up GlaxoSmithKline, Honda, and Acura as clients.

Read More