"It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change." -- Leon Megginson
One thing we can be certain about is that nothing is certain -- no matter how much we plan. While critical and necessary, no plan is a guarantee. The difference between a good manager and a great manager is their ability to adapt when their plans do not shape up as expected.
In 2008, Blockbuster's strategic plan stated, "The core values of the firm include an increased focus on retail, introducing innovative programs and expanding the in-store selection of movies and gaming equipment, including hardware, software and accessories." That same year, it also said, "Their global network of stores reaches more than 7,400 stores worldwide; the company operates about 1,600 stores through franchisees. By Blockbuster hav
ing such a large network of stores spread across the world, it really enhances their market and profit margins." Meanwhile, they were lamenting that "the video-rental market in the U.S. is currently on a downturn and the most recent shift of demand is to online and by mail."
In November 2013, Blockbuster closed all of its stores.
Blockbuster's unwillingness to adapt to a market where streaming videos and firms like Netflix were becoming more popular basically destroyed the company. What makes things worse is that Blockbuster was offered the opportunity to buy Netflix for $50 million and passed on the deal.
Another company that shared a similar fate is Circuit City. Their failure to adapt brought down a company that had been in business 60 years. By the time they came around, it was too late as Best Buy had already captured the market. They closed in 2009.
Yet another example of a company whose failure to adapt led to its own demise is Eastman Kodak. They disregarded the movement toward digital photography until it was too late for them to rally and recover.
I used to think the market rewarded firms that plan well, but after years of watching companies like Blockbuster, Circuit City and Eastman Kodak, I am now convinced that what the market really rewards is firms that adapt well. Just look at how Apple stock is starting to decline. They are not really adapting to tougher competition and rolling out very little in the way of innovation.
The market continues to make examples of companies that do not heed changing tides, so why, you might ask, are companies still going down this path? I think all these companies share a common trait: a blind allegiance to the technology or process of the day -- the way things have always been, in other words -- even in the face of obvious changes in the marketplace.
Blockbuster saw the direction of the market -- it even started an online division. Their emphasis remained, however, on the brick and mortar stores that initially allowed them to expand and dominate the market.
Eastman Kodak arrogantly assumed they were so well entrenched that no one could ever surpass them.
Circuit City was simply too little too late. They allowed Best Buy to get in and take the market.
Adaptability is critical for all businesses -- large, and especially small. Small businesses must be much more adaptable as they do not have the cash reserves their larger counterparts do. They simply can not afford even small errors in strategy.
Now go out and make sure that you make great plans but, more importantly, that you are willing to adapt to changing conditions and environments as they unfold.
Jerry Osteryoung, a consultant to businesses, is the Jim Moran professor of entrepreneurship (emeritus) and professor of finance (emeritus) at Florida State University. He can be reached by email at firstname.lastname@example.org.