Last September, Blockbuster filed for Chapter 11 bankruptcy. This was somewhat of a surprise given that Blockbuster virtually invented the video content delivery industry.
In order to understand what happened to them, it’s worth re-visiting a classic Harvard Business Review article by marketing pioneer Theodore Levitt. The article, called “Marketing Myopia” pointed out that companies can succeed or fail based on how they define their product and service offerings.

How do you define the business you're in? Your answer could be the difference between success or failure.
Here’s an excerpt from Levitt’s classic article:
“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented….“
Levitt’s article highlights a classic mistake many companies make — they define their businesses based on their product/service offerings rather than on their customer needs.
I’m guessing here, but I imagine Blockbuster may have defined their company as “a chain of video store locations that rent and sell DVDs, Blu-Rays, games and other forms of video entertainment.”
But that’s a product-focused definition based on a bricks-and-mortar business model. What if they had redefined their business as “an organization that delivers content to customers using any channel available including the U.S. mail, streaming video, store kiosks, bricks-and-mortar loctions and any other as-yet-undiscovered channel.”
If Blockbuster had defined themselves based on Levitt’s customer-centric approach, do you think they would have been blindsided by Netflix, RedBox, Apple TV and others?
(Side note: Netflix just announced that consumers will soon be able to access Netflix content on their cable TV remote controls. Where was Blockbuster when that deal was being negotiated?)
Action Steps:
How do you define your company? Is it narrowly defined and focused on your product and service offerings? Or is it more broadly defined and focused on your customers’ needs?
Sit down with several members of your staff and ask them to define what it is your company does. If you’re like most businesses, you’ll get very safe, standard answers.
Once you’ve done that, broaden your scope and re-define your company with your consumers’ needs in mind. Explore new ways that you could provide helpful products or services to your company that are beyond the scope of your current business.
Then, and only then, will you be ensuring that you don’t define your way into oblivion — the way Blockbuster did.
Posted by Jamie Turner, Chief Content Officer of the 60 Second Marketer, the online magazine of BKV Digital and Direct Response. Jamie is also the co-author of How to Make Money with Social Media.