Think about tomorrow’s business plan today

    Blockbuster, the largest retail chain for renting and buying videos, is scrambling. Watching movies at home has become as natural as watching TV shows, and internet speed is steadily increasing.

    The two forces have created new opportunities for connecting viewers with the videos they want to see. New industry entrants grabbed these opportunities as new entrants always do. After all, why go after a leader where the leader is strongest?

    Netflix provides movies on-line and by mail, with an Amazon-like artificial intelligence that helps to inform a member’s choices. Redbox offers dollar rentals in kiosks located in grocery stores, a disruptive business model innovation that captures spur of the moment purchase decisions. Both business models increase convenience. Still other kiosk competitors exist. U Flick, a start-up in Madison, Wis., for example, places kiosks on college campuses. The niche succeeds because they’ll offer films like "Rocky Picture Horror Show," a video that won’t show up in a grocery store kiosk serving the mainstream.

    Blockbuster’s in trouble as its emergence as a national chain was financed by blockbuster debt. Small local video stores may be able to handle a decline in market share, but not a national chain with high debt and demanding shareholders. So Blockbuster is trying to get creditors to give leadership time to change its business model. Blockbuster would be out of business if the studios that created the videos did not value having retail outlets for DVD sales (versus rentals).

    Watch this video to see what will happen to Blockbuster as it tries to catch up.

    Blockbuster joins the long list of companies that did not change in time to preserve a leading market position. Remember when Dell, Sears, Compaq, and U.S. Steel once held leadership positions? Jobs were lost, stockholders were disappointed, community non-profits and schools were left with less and creditors were out of a lot of money. Why? Because their leaders were so focused on running today’s business, they did not think enough about the business they should be running tomorrow and create needed changes before it was too late.

    There is no more important role for leaders than business model innovation. You must regularly challenge your current business model. One business model innovation best practice is to never take the definition of your business as a given, as Blockbuster did – video rentals and sales through retail stores. Rather, define your business broadly – connecting viewers with videos. Then identify new opportunities for fulfilling this need better than any one else can.

    It’s so simple. Why do so many leaders fail? I’d argue it’s because clearing their in-basket of today’s duties is less stressful than pursuing the ambiguous, challenging, frustrating work of defining and leading change. If you want the bigger bucks, do the harder work.

    What are your best examples of companies that stay ahead of change, steadily evolving their business model strategy?

    Kay Plantes, Ph.D., is an MIT-trained economist, business strategy consultant, columnist and author with expertise in business model innovation, strategic leadership and smart economic policies. She resides in Madison, Wis., and Oslo, Norway. For additional information, visit Plantes will be the keynote speaker at the CEO Strategies Breakfast at the BizTech Conference & Expo. To register to attend the event and receive a copy of her new book, visit

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