Evaluate and Control, Why Blockbuster Got It Wrong
Tristan Wright
We help B2B service based business owners that are chained to their desk learn how to grow and operate their business without requiring their daily input.
As a teenager growing up in Langwarrin I took sheer joy heading to my local Blockbuster to hire out the latest 90s action flick (wow - now I sound old!). Little did I know that the introduction of a new millennium would bring about a big change to the fortunes of my favourite video store and how I would watch movies and TV shows.
What you need to understand is that Blockbuster was a massive company. It was everywhere and had a stronghold on the entertainment industry that seemed unbreakable, it was part of life. What I now understand, through owning and running a business myself, is that there is no such thing as a safe zone in any business. You have to be willing to evolve and grow and be able to adapt no matter how big you are or how successful.
This was something the CEO of Blockbuster was unaware of. There was a critical tipping point where the Blockbuster name could evolve, or stay the same, and the choice was….stay (nothing can touch me I’m invincible!).
That decision meant that from 2004 to 2010 a $6 billion business would choke and fold, eventually filing for bankruptcy as Netflix took hold.
There are rumours that as early as 2000, Netflix CEO Reed Hastings actually approached Blockbuster to pitch his idea of a joint venture for internet-streamed movies on demand. Blockbuster was so sure of their stability that Hastings was laughed out of Blockbuster HQ.
What exactly caused the demise of Blockbuster is debatable, but overall there was an inability to adapt to the changing digital landscape (feel free to argue that point if you like).
From my point of view, Blockbuster didn’t have measurable evaluation and control mechanisms that would enable the company to transition into anything else but what it already was, mostly driven by the inflated ego of success. I know this because I was in the same boat and fortunately learned my lesson fast enough to turn things around.
Previous and even current successes mean nothing when the situation, technology, customer desires or financial configurations change. If you can’t evaluate your situation and control how you operate, you risk becoming the next Blockbuster. Or Kodak. Or Nokia...
How to Evaluate your Business Situation
In order to evaluate your business situation, you need to start with the end in mind and know what you want to achieve. This is a big part of my support for business clients because so many times goals are overlooked or too vague to be of any use. Even clients who do have goals don’t necessarily know how to structure them or use them for motivation, growth and flexibility.
Hastings had a very clear goal. He knew that he wanted a faster movie delivery service direct to people’s homes.
There was a gap in what Blockbuster offered: when a customer wanted to relax, unwind and enjoy a movie, they had to physically get themselves to the store (appropriately dressed), hope the movie they wanted to watch was still available and go through the motions of hiring it out.
Add to that long wait times between a movie being released at the cinema and released on VHS or DVD (six months to nine months was normal before it hit Blockbuster shelves). Then there were return-by times and late fines if you forget that makes the service less than friendly.
Blockbuster got around some of these issues by having the most popular blockbuster movies on a get-it-first-time-or-get-it-free promotion, meaning that if you turned up and you were disappointed that your movie was unavailable, you didn’t feel sour because the movie would be reserved in your name at you get it totally free tomorrow. It gave customers that motivation to get to the store, and in the meantime, they'd probably grab a different title to watch that night anyway. Blockbuster were not only retaining customers, they were still turning a profit because nobody else could offer anything faster, more personal or more direct.
What if a service could come along and correct every one of the video rental shortcomings? It makes sense that customers would jump ship. As impossible as that scenario seemed in that pre-digital time, reality hit hard and fast.
Figuring out the unknown and having measures put in place is essential. No matter where you are in business you need to be able to identify and track what you’re doing (or not doing) so you can stay accountable to your progress and growth.
A complete and honest evaluation of where you’re at (and where you want to go) will keep the fire burning - you’ll remain focused towards achieving your mission.
Here’s a finance example: Your target is to make $100k per month in revenue. Each customer is worth $20k = five customers per month to hit your target. On paper that sounds great but let’s say your customer conversion rate is 10%.
That means you need to be pitching to 50 people a month to achieve your goal.
How to Manage your Short-term and Long-term goals
Success in business is not down to luck, it’s your ability to evaluate your situation and respond accordingly - and this often has a long-term and short-term approach.
Long-term measures
Your long-term measures direct the future course of your business and where you ultimately want to end up. What many people don’t understand about starting out is that there are lots of long-term business goals, it’s not just a matter of making lots of money. Long-term business goals can include:
These long-term measures need to be understood and worked towards, but they are not something that takes immediate focus. Why? Because without continued short-term success, you won’t have a business strong enough to reach your bigger goal.
If you fail to break down long-term measures into easier strategies to achieve, you risk losing motivation or feeling too overwhelmed. Long-term measures are all-encompassing and require commitment and time, but also take a long time to come to fruition, meaning it’s a lot of leg work for little visible reward.
Short-term measures
Your short-term measures focus you on quarterly, weekly and daily targets needed to propel you towards your ultimate objective including creating and maintaining systems that are efficient and effective. The key here is to use your long-term goals as part of your short-term measures - they are linked in multiple ways, including personal motivation, who you hire as part of your team and what financial decisions you make for your business.
These short and instant targets give you a feeling of moving forward. You can see your progress, know what works and make minor tweaks day-to-day or week-to-week rather than having to throw out your whole system and start again blindly.
How to Control Business Outcomes
While the evaluation of your business and its objectives is vital, it means nothing without the ability to control outcomes.
Controlling how you operate is paramount to success. I get that the word ‘control’ has negative connotations in modern business settings and my clients do look a bit daunted when I use these phrases but there really is no other way to phrase it: You have to take control of your business, you can’t just let it steer itself and hope for the best. It’s on your shoulders, your business success is dependent on you.
I’m not talking about a top-down approach to running your business where every single thing goes through you in a micro-managed way. In this context, control means your ability to respond to the situation you face and be okay to make changes, adjust, adapt and assess - something Blockbuster was not able to do. Because of the way I run my Evolve To Grow programmes, it’s important to understand that controlling your emotions is the first step to controlling your results and outcomes.
If you lose a customer do you spit the dummy or evaluate why they left and put in place control measures to ensure you don’t have a repeat circumstance?
It’s how you respond to these situations that determine how long your business journey lasts.
Taking control of your outcomes has far bigger results than just good customer care, it also needs to be in place throughout your business development to enable you to effectively pivot when needed for:
Using the example above, if your target is $100k per month and you consistently miss the mark, obviously something is not working…. But what? Putting controls in place becomes your identifier for when you start going off-track and not achieving targets.
How Evaluation and Control Work in Business
Over the last six months, I’ve been speaking with a client of mine who has told me his fitness and healthy eating have taken a beating since he started his business. It makes sense (and happened to me), with the hard slog and hours that go into creating a business it’s no wonder health and fitness are not made a priority.
Yet for my client, he felt it was starting to impact his mindset and wanted to correct it. We devised a plan to get him to lose weight and recommit to his health - we called it our Charter of Commitment.
First, we evaluated his situation to determine where the issues were and also where the solutions were going to work. It’s no point putting in strategies that aren’t going to fit with his other goals and responsibilities.
Evaluation included most efficient working hours, what meals were readily available and exercise sessions were known and motiving. From there we put short-term measures in place that would abolish some of the most impacting negative health habits and put in some that he knew and trusted from his healthy days prior. For him, a weekly goal was:
To help control his situation, we conducted weekly video calls to monitor progress and address if he fell short as well as why and when it was happening as continued evaluations and control.
It worked! He lost six kilos and regained his motivation and confidence which directly led to getting out and finding new clients and moving his business forward.
The 4 Steps to Successful Business Evaluation and Control
To ensure you’re building correct evaluation and control measures, here are the three steps you need to implement:
#1. Define the parameters
Successful evaluation of any strategy begins with defining the parameters that need to be measured. Parameters that are measurable or quantifiable will help you evaluate your progress accurately.
#2. Measure your actual results
Successfully executing or implementing a strategy will produce results, but do the results you got match what was needed according to your plan? If not, you need to re-evaluate and make changes or take corrective action.
#3. Monitor internal and external issues
Monitoring internal and external issues will enable you to react to any substantial change in your business environment. Internal and external issues are constantly evolving, so you’ll need to keep on top of this continuously to help with future strategies and allow you to adjust in increments to any surrounding influences.
#4. Gauge your progress
Evaluating whether you have effectively followed the steps you outlined and whether these actions have produced the desired results helps you gauge your progress against your objectives. If it turns out that the strategy is not moving the company towards your goal take another look at your goals, evaluation and controls to see what is missing. The solution will be unique to every business, for some, it will be about taking in a larger picture to find the gaps, while others will be about drilling down into more details. Having a business coach on your side really helps to nut out the issues and get the right approach that will see rapid results.
While Blockbuster may go down in history as a way not to run a successful business the reality is, that final curtain of bankruptcy was always avoidable for them, and it is for you too. Be prepared to evaluate your situation and control your operation to handle anything that comes your way.
This will help you to re-evaluate whether the strategy you implemented and the results you obtained from their execution met your long-term and short-term goals — and if it will move your business closer to achieving your Ultimate Objective.