I’ve been thinking about this for quite a long time in terms of the movie/video rental business, and then was spurred to actually put my thoughts into words after reading this particular Zoidland comic strip about Netflix from Jeff Burkholder (the creator of our weekly comic, The Social Life of Frank & Linh).

The recent Netflix situation has been all the buzz on the Internet, not so much that they raised their rates, but how they handled the situation. But aside from that, it just goes to prove that every business, no matter how solid or entrenched they seem, is vulnerable.

Look at MySpace. 

Then look at the television/video market. Cable was king, then satellite TV came along. For home movies, Blockbuster rose to the top of the home video rental and purchasing category. They seemed untouchable. And then came the one-two-three punch of Redbox (which Blockbuster quickly imitated, all the while closing down store after store), Hulu, and Netflix.

I think in many ways, Netflix got it right with their business model: A nice convergence of film and television, delivered to your home in a variety of ways. Now that model might be changing, but I think that Netflix will survive this, because while they didn’t handle the communications aspect of it very well, they are keeping their eye on advancements in technology, something the cable companies haven’t done. Cable companies, because they had a virtual monopoly in most regions, didn’t have to listen. For years, they were the only game in town, with no competition to worry about. That has changed.

It comes down to listening. Listening to what the customers want, and doing your best to deliver that, understanding that you can’t give people everything they want. But if you come up with the right combination of Product, Cost, Value, and Convenience (oh, I’m sure I could have made that a list of 4 C’s or 4 P’s, but I’m not in a particularly clever mood at the moment, and why bother forcing it?), people will buy.

Your business, my business, every business…we all need to keep our eyes open.

  • Keep an eye on your customers and listen to what they are saying.
  • Keep an eye on your competition, even the little guys.
  • Keep an eye on the advancements in technology. Do they make your business model obsolete, or provide you with new opportunities?

Never rest on your laurels and think that you are unbeatable. None of us is. There’s always someone looking to do what we do, but better.

And perhaps, most importantly, just because you have a business model, doesn’t mean you have to stick to it. There is something to be said for sticking to your niche, but on the other hand, if your business model is outdated and no longer relevant, you need to be adaptive. What works today most likely won’t work tomorrow.

How are you keeping your eye on your competition and the changes in your industry? Are you prepared to make the appropriate changes to your business model?