Blockbuster and Strategic Drift

There are lots of excellent examples to use when teaching strategic drift but one of my favourites is Blockbuster.

At the peak of its powers, Blockbuster had 60,000 employees across 9,000 stores and was worth around $8 billion. In 2000 Blockbuster took a staggering $800 million in late fees alone, which accounted for around 16% of its revenue.

Its easy to think that the growth of the internet and Netflix destroyed this colossal business but dig a little deeper and we discover that Blockbuster decided against investing some of its huge financial resources to go online as well as declining several offers to buy Netflix (for a mere $50 million) believing that they had a fantastic business model which they didn't want to disrupt for a 'maybe business' in the online world.

Below is a fantastic video which looks at how Blockbusters failure to change resulted in their demise.