The Doppler Effect
The trail of tears for companies that have fallen on the wrong side of technological disruption is extensive . Kodak , Borders , Tower Records , Blockbuster - just to name a few . While you likely know the Blockbuster story , it is worth reviewing as a stark reminder of the perils that come with complacency , with not acting in the face of new technologies and new customer demands .
In 2000 , Blockbuster was the world ’ s largest video rental company with annual revenues of over $ 5 Billion . At the time , Netflix had a few hundred thousand subscribers and was losing money . Netflix CEO , Reed Hastings , flew to Dallas to broker a deal with the Blockbuster executive team , offering them a 49 percent stake in his company . Hastings was turned down .
Blockbuster was sure it delivered everything customers wanted . It believed that the movie rental experience , complete with wandering the aisles at your local Blockbuster on a Friday night , fit the bill . Blockbuster had built a massive distribution network of 9,000 stores and 60,000 employees to deliver on this experience .
Blockbuster was committed to its vast retail network , even when that was no longer the way movie renters wanted to shop .
By 2006 , the downward spiral had begun and Blockbuster filed for bankruptcy three years later . It had clung far too long to its outdated retail strategy and failed to understand the technological and cultural changes that others so eagerly exploited .
While the Blockbuster story has been told before , the lesson for today ’ s enterprises has never been more important . Cloud computing , and the technologies built with it , are driving the largest wave of disruption we have ever seen . In “ Disrupted or Disruptor - Which one will you be ?” We highlight the impact these technologies are having on organizations across industries and we outline the strategies today ’ s businesses must adopt in order to thrive in our digital world .
A recurring theme we see from helping hundreds of enterprises innovate through cloud adoption is that investments in legacy technologies create legacy mindsets . Do not let your organization make the same mistake . It is not too late to change .
David Linthicum SVP , Cloud Technology Partners
WINTER 2017 | THE DOPPLER | 1