21 May 2009 • 1:32 pm

Blockbuster vs. Netflix: A Case of Technology-Driven Strategy

For a few years now, I’ve been doing a riff on Blockbuster and Netflix in some of my speaking engagements. It’s been a useful case for sharing many of my insights about strategic management and the role of technology in strategy (disclaimer: neither of these firms has been a client of mine, and my impressions have been formed only from publicly-available information).

The essence of the riff is this: Blockbuster built a very successful business model and then had its lunch eaten by Netflix. The key lessons we can learn from this case are:

  • Don’t underestimate the power of technology to change your competitive environment.
  • Constantly be looking for ways to challenge and reinvent your value proposition, or your competitors will do it for you.
  • Recognize and overcome the forces that will resist change in your own organization.


18 May 2009 • 5:11 pm

A Brief Early History of the IT Organization

(note: This is the first in a series of posts on the topic of the Strategy-Focused IT Organization)

Many date the modern use of information technology to the introduction of the general-purpose IBM 360 computer in 1964. Organizations quickly realized that computer technology was a path to direct money savings, with the ability to quickly automate routine and time-consuming tasks such as accounting and payroll and inventory control.

As the large corporations that could afford mainframe computers began to embrace and employ the technology, a curious thing happened. The technology didn’t manage itself. Suddenly there were decisions to be made that required expertise and technology beyond simply operating the machines. A new profession, EDP (alternately, MIS, information systems, information technology, and finally, IT) arose during the 60s and 70s. When I first started working with computers in 1978, whole information technology departments with management and staff organized according to job function and technology discipline had arisen inside corporations.