As the unquestioned champion of the rental video business, Blockbuster was once as ubiquitous a sight in American cities and suburbs as Starbucks or McDonald’s — more than 9,000 stores at its peak in 2004. The reason was simple: people like watching movies, and Blockbuster was an affordable, convenient way to pick up a few rentals for the family.
Then Netflix introduced its video streaming service in February 2007. After years of keeping up with Internet competitors, Blockbuster went out of business in 2010, just two years removed from its last profitable year. As of Jan. 2014, all but 50 stores were shut down; the name Blockbuster survives only as a streaming video service and a movie channel package for Dish Network. It vanished faster than anyone could have imagined.
"We have a strategic plan. It's called doing things."
These are the words of Herb Kelleher, Co-founder, Chairman Emeritus, and former CEO of Southwest Airlines. His approach certainly worked out well for Southwest as the company now flies more than 100 million passengers per year and enjoyed its 43rd consecutive year of profitability in 2015.
Herb understood a critical element of business that is too often forgotten: the best strategy is informed by the doing. With disruptive change being the norm these days, it's especially important to not decouple strategy from action. If you spend even just six months working on a strategic plan for your business, it's probably going to be obsolete by the time you're ready to implement it anyway.
If you want to transform your company, focus on just one thing. In 1987, Paul O'Neill became the CEO of Alcoa, the aluminum company. At his first meeting with shareholders, who were eager to hear how he planned to turn the ailing company around, O’Neill shared that he had only one objective: eliminating employee injuries. Investors thought he had lost his mind. No mention of revenues or profit? Blasphemy. A number of high-profile investors gave the order to immediately sell all stock in Alcoa.
Had O'Neill lost sight of financial goals? To the contrary. Rather than share a laundry list of changes Alcoa needed to make, such as raise operational efficiency, reduce the number of people needed for tasks, and increase the speed of machines, O’Neill understood the necessity for focus to cause organizational change. “You can’t order people to change,” O’Neill said, as described in The Power of Habit by Charles Duhigg. “That’s not how the brain works. I decided if I could start disrupting the habits around one thing, it would spread throughout the company."
One of the more dangerous myths is that innovation is all about new ideas. While they are important, ideas are often the easy part. Innovation requires implementation, the part of the equation companies struggle with the most. The truth is innovation requires change, and change comes down to culture.