Why Lego didn't make a Blockbuster mistake
Back in 2000 a meeting took place a between a fledgling tech business called Netflix and video rental giant Blockbuster.
Blockbuster were apparently given the opportunity to buy the young upstart for $50m but Netflix’s bosses were reportedly laughed out the room.
Blockbuster isn’t laughing anymore. Their failure to recognise the potential of streaming meant they’re no more and Netflix is now a multi-billion dollar business.
Blockbuster is a perfect example of what can happen to a company if you don’t future-proof your business but it’s not an isolated case.
I’m old enough to have grown up when the name Kodak was omnipresent. It was a heavyweight in the era of analog film but a lightweight in the world of digital photography.
Kodak consistently failed to see both the threat and opportunity digital photography presented and paid the price. High street camera retailer Jessops became a victim of advances in smart phone technology.
However for every casualty there’s a success story. One of my favourites is Shop Direct. It’s pivoted itself from being a catalogue business to being an internet retailer and is reaping the rewards.
Manchester-based Auto Trader is another brilliant example. I remember seeing Auto Trader magazines in newsagents as a youngster but the company binned print completely in 2013 and is now the UK’s largest digital automotive marketplace.
I interviewed Lawrence Jones this week, co-founder and CEO of UKFast, at the Resilience Direct conference, and he outlined his approach. “Resilience is about an attitude in your approach to life and business,” he said. “There can be no limit to your resilience when it comes to business technology.”
Resilient companies future-proof their business and the best example is Lego, which I used to play with as a kid.
I’m indebted to the research done by the Guardian but the turnaround in Lego’s fortunes has been remarkable.
Between its founding in 1932 and 1998 Lego had never posted a loss. But by 2003 the skids were on as sales plummeted 30 per cent. The company decided to diversify, risking its future by opening up theme parks; getting into video games; and manufacturing themed toys around tie-ins films like Star Wars and Harry Potter. It even produced a film. Today it’s the world’s most powerful brand.
Had Lego not have taken the steps they did they would be in the same boat as Blockbuster and Kodak. That’s why I’m really looking forward to hosting the future-proofing event next month. It’s an event you can’t afford to miss.