Buy Disruption


A friend asked me the other day if I thought Netflix really did pitch to Blockbuster video. If so, how could the management team possibly have missed the boat so badly. Some quick Google searching suggests that it was true.

Blockbuster repeatedly declined multiple opportunities to buy Netflix for $50 million in 2000…when Blockbuster was worth $6 billion. Now, Blockbuster is bankrupt. The mystery seems to be why Blockbuster was unable to defend its market against an opponent with so much less capital. They were so busy being successful, that they forgot to succeed.

This simple situation speaks to innovation, and it’s purpose. A start-up innovates to disrupt, change and make a new world. Larger companies innovate to sustain or grow modestly, with the rare exception of Apple and a few others.

What I find interesting is watching Mobile Operators make their choices as disruption threatens voice & video revenues. Will one Mobile Operator prevail, or will they all sink or swim together? They have the money to do almost anything. Remember, Skype sold for about US $9 billion, but, a single year of global mobile operator service revenue recently topped US $1 trillion.
What would Blockbuster’s management team tell them to do, given their experience? Blockbuster-informed history teaches us that they should buy or replicate every disruptor as either an offensive or defensive tactic.Forget trying to be disruptive innovators, buy disruption.

In fact, can someone tell me why one of them didn’t buy Skype, to either exploit or just slowly bury?

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