Lessons From Blockbuster: Why Businesses Should Adopt Design Thinking

Design Thinking May Hold The Key To Long-Term Success

Most people that have worked in any organisation have seen new ideas and suggestions ridiculed. Even worse, it sometimes comes with a side of laughter. Other times, it is just subtly overlooked by colleagues.

Uttering words like “That’s not how we do things here” is the roadblock to exercising any kind of imagination or creativity. Doing things the same way may work… until it doesn’t. Blockbuster is an example of a strong and successful organisation that was blindsided by a competitor built on the design thinking ideology.

What is design thinking and innovation?

Put simply, design thinking is an ideology and a process which challenges assumptions and tackles undefined or unknown problems concerning customers, it is incredibly customer-centric.

Design thinking is a strategy for innovation. Innovation means to renew or change– products, processes, organisations, management, production, commercial/marketing, or services. Ambiguity is embraced and fear of failure goes out the window.

Remember Blockbuster?

Ah, the humble trip to the video store, what a throwback right? While I would love to tell you the story about how I picked the same movie every.single.time. I went there as a child; I find the story of their rise and eventual fall far more intriguing.  

The first-ever Blockbuster opened in Dallas, Texas in 1985 and rapidly expanded internationally throughout the 90s. At its peak in 2004, the organisation was raking in more than $5 billion in revenue (Business Insider, 2020) and back then it was inconceivable that there would ever not be a Blockbuster down the road.

Blindsided by Netflix

Netflix was founded way back in 1997 and their founder, Reed Hastings, created the organisation because he identified a crucial customer pain point with Blockbuster’s service – the dreaded late fees. At this point, I would like to apologise to parents everywhere that copped a late fee…my parents included…sorry Mum and Dad.

Anyway, back to Netflix.

Back in the late 90’s Netflix was delivering entertainment straight to people’s homes – DVD’s delivered for a flat rate with no late fees attached. Meanwhile, Blockbuster was fighting the rise of movie piracy and missed the opportunity that was right in front of them. In the competitor landscape, cable was introduced, and movies were offered straight to customers lounge rooms. Cable providers made their move, Netflix eventually made theirs – hello online streaming!

Netflix was and still is an agile business that can reinvent itself and adapt along with its customer's needs/desires. By adopting the design thinking approach, teams were encouraged to get creative and discover new opportunities to drive revenue and better customer engagement.

Food for Thought

While implementing the same old strategies can work for some time (in Blockbuster’s case it worked for 35 years) organisations that rely on these to deliver future success may do themselves a disservice in the long-term. Sometimes the craziest ideas end up delivering exceptional results and those crazy enough to create them, have the last laugh.

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