1: In the year 2000, Blockbuster was sitting pretty.
The company was “the undisputed leader in movie rentals,” Geoff Woods writes in The AI-Driven Leader. “Millions of customers flocked to their local stores every weekend, driving annual revenues to a staggering $8.7 billion, with $1.4 billion in profits.”
Then, a startup called Netflix pioneered a new concept: DVD rentals by mail, with no late fees.
“The idea quickly caught on,” Geoff writes, “and Netflix’s CEO, Reed Hastings, saw an opportunity.”
He flew to Dallas and met with Blockbuster CEO John Antioco. Reed offered to sell the company to Blockbuster for $50 million. The price tag was 0.6% of Blockbuster’s annual revenue.
“In one of the biggest strategic misses in business history, John Antioco declined,” Geoff notes.
Why? Because he was confident in Blockbuster’s business model: Physical stores, customer visits, and late fees.
“This model had created a multibillion-dollar company,” Geoff writes. “Why shift to DVD by mail and eliminate late fees? If it ain’t broke, don’t fix it.”
As time passed, however, John Antioco realized Blockbuster had failed to recognize two significant trends: (1) a growing desire for convenience and (2) streaming.
“If Blockbuster wanted to remain the industry leader and maintain a competitive edge, it would have to shift its business model,” Geoff observes.
So, John “proposed two strategic investments,” Geoff writes: “A $200 million investment to create Blockbuster Online, its own streaming service. Another $200 million to eliminate late fees, aligning the company’s interests with its customers.”
However, the corporate raider Carl Icahn had purchased a block of Blockbuster shares and wanted a quick return. Carl “pushed to cancel the streaming platform and reinstate late fees,” Geoff writes. “This led to a power struggle that resulted in [Carl] taking over the board, [John] leaving, and Jim Keyes assuming control.”
Carl won. “Streaming was canceled. Late fees were back. But by 2010, Blockbuster was dead,” Geoff writes.
Years later, reflecting on Blockbuster’s demise, John said, “If our online strategy had not been essentially abandoned, Blockbuster Online would have ten million subscribers today. We’d be rivaling Netflix for leadership in the internet downloading business.”
2: We may wonder: “What if Antioco had embraced change and innovation back in 2000?” Geoff asks. “What if he had bought Netflix for $50 million or questioned his biases and assumptions about the defensibility of their business model? Would Blockbuster still be the king of movie rentals?”
Who knows. But we do know that the decisions we make as leaders will determine our company’s future.
“When done well,” Geoff suggests, “they help our companies leapfrog the competition and build a sustainable competitive advantage. When done poorly, they can lead to bankruptcy.”
The bottom line? “The difference between growing our businesses or going out of business lies in our ability to think strategically,” he surmises.
The question we must ask is: As leaders, how do we make faster, better decisions so we don’t become the next Blockbuster?
3: CEOs and senior managers understand how critical strategic thinking is. “A survey of 10,000 senior leaders by the Management Research Group and published in the Harvard Business Review found that 97% believed strategic thinking was the number-one most important leadership behavior for their organization’s future success.”
What gets in the way? Time.
Do any of the following statements sound familiar? “My calendar looks like a chaotic game of Tetris,” Geoff writes, “with barely a moment to breathe.
“I’m often stuck in operational tasks, overwhelmed by never-ending to-do lists.
“Endless distractions, like phone notifications and countless emails, fragment my focus.
“At the end of the day, I know I was busy, but I question what I accomplished.
“As a result, work comes at the expense of my personal life, sacrificing the things that matter most: family, health, and well-being.”
Strategic thinking requires intentional, uninterrupted time to think through our long-term opportunities.
“Up until recently,” Geoff writes, “it required a ton of time to properly sift through all the data. In the past, we would have to get off-site to unplug for days at a time to do this thinking. It was important work, but very time-consuming and disruptive. There wasn’t really an ideal solution.”
AI is changing all that.
AI isn’t just a better Google or a tool for writing better emails. The “true game changer,” he writes, is “harnessing AI to elevate our strategic thinking.”
Step one is challenging our limiting assumptions around AI. We “need to believe that AI will enhance us, not replace us,” Geoff writes. “Rather than seeing AI as a threat (or a cheap parlor trick), recognize that it’s a powerful ally in making faster, smarter decisions. One that shifts us from operational overwhelm to strategic clarity, helping you build a better business and better lives.”
Step two is to change our behavior.
Which begins by asking a new question: Rather than say: “How do I solve this problem?” We say: “How can AI help me solve this problem?”
More tomorrow.
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Reflection: What is one decision or challenge I’m facing right now where AI could provide new insights or help me see options I might otherwise overlook?
Action: Identify a current business problem and experiment with an AI tool to generate fresh perspectives or solutions, then evaluate how it changes my approach.