Why didn’t Blockbuster create Netflix?
Why didn’t record companies create iTunes or Spotify, Crate and Barrel create One Kings Lane, or Sephora start Birchbox?
Huge businesses have the money, brand and power to create whatever they want, but most aren’t innovative. Scrappy, disruptive startups have to come along and steal market share before anything changes.
Last week we met with Bedrocket‘s Brian Bedol and asked him why that is.
Bedol has been a TV executive and entrepreneur for a long time. He sold his first company, Classic Sports Network to ESPN for $175 million. He sold his next company, College Sports Television, to CBS for $325 million.
“It’s so hard to disrupt yourself when you’ve done something a certain way for so long,” he replied.
“When you think about it, Blockbuster should have been Netflix. But it would have meant Blockbuster sacrificing its core business to make a big bet. It’d have had to close down stores and deliver DVDs through mail, then stream them. If you’re a big company like Blockbuster, you sit there and say, ‘We do what we do well, why would we throw out what we do in anticipation of what someone might do to us. It’s the innovator’s dilemma.'”
Bedol says the lack of innovation is really a defence mechanism to protect the thing that’s most important to big companies — revenue. It’s a damned if they do, damned if they don’t situation.
“You can’t innovate without hurting yourself,” he says. “It’s not stupid, big companies have to protect their revenue. I think they’re making the right decisions for core businesses. But it’s a classic prisoner’s dilemma. They can’t really sacrifice the current multi-million-dollar business just to accelerate their decline.”
That said, there are some extremely successful, innovative corporations like Apple. Another is Nike.
Check out how Nike is using technology to compete with hot startups like Fitbit and Fitocracy and its building a fitness social network: 48 Hours With Nike FuelBand – The Good, The Bad And The Frustrating >