“The way is shut. It was made by those who are Dead, and the Dead keep it, until the time comes. The Way is Shut.”
“The Return of the King,” J.R.R. Tolkein, Author
The United States’ economic history is replete with examples of businesses whose collapse and failure caught the world by surprise. And yet, many of the more notable collapses have some common elements. These same elements are prevalent in many of the eating disorder organizations today. And with the changing economic and cultural world which will arise after the Covid-19 Apocalypse passes, these elements may doom some of those organizations to failure … unless they learn to adapt, innovate and reinvent now.
Blockbuster became not just a video industry giant but its stores became social centers in small towns throughout the United States and abroad. Its empire was vast. It had a virtual monopoly over the video industry. Production of VHS tape recorders and then DVD players exploded as a result of Blockbuster stores. Blockbuster went public and its empire of stores exploded in growth. By 2004, Blockbuster had over 9,000 stores globally, counted 60,000 employees and had an annual revenue of $5.9 billion. But, Blockbuster’s fate had already been sealed 4 years before, in 2000.
In 2000, struggling fledgling company Netflix approached Blockbuster about being acquired. Netflix envisioned a future in which streaming videos on the internet was the wave of the future. Unfortunately, Netflix at the time did not have the financial means to fully develop this software and technology. So, they offered themselves up to Blockbuster for the relatively bargain price of $50 million. Blockbuster declined. Speculation exists to this day that Blockbuster declined in part because late fees were a substantial part of its revenue stream and the Netflix model of operation did not include these fees. In fact, at its height, Blockbuster collected annual late fees in the amount of $800 million! This was 16 times the amount for which Netflix could have been acquired.
We know that streaming video today is the goliath, as is Netflix, and Blockbuster ended up insolvent and in bankruptcy. Certainly in part it was Blockbuster’s short sightedness in not acquiring Netflix. But it was also a failure of leadership in not embracing creative innovation. Blockbuster was more interested in protecting its own business model instead of looking to the future.
In 1978, Sony invented the “Walkman.” In an industry with many competitors, for at least ten years, Sony maintained a 50% market share in the United States even though its Walkman was routinely more expensive than its competitors. This success allowed Sony to purchase CBS Records in 1987. Two years later, it purchased Columbia Records. Therefore, Sony now had the most popular portable music device and the ability to control its product distribution through the acquisition of the record label brands and their retail outlets.
Sony was in the ideal position to expand its market control through inventing the “iPod.” Instead, Sony languished allowing a computer company with no experience in the music business to brazenly jump into the market and then, to dominate the music industry. That computer company? Apple. And the invention of the iPod, followed quickly by the development of the iTunes store established Apple as an industry giant. Apple’s vision and power of innovation allowed it to evolve from a computer company into a consumer electronics company and major retailer behemoth.
So, why did Sony not make this jump? Some experts attribute Sony’s failure to “innovation dilemma.”
Innovation dilemma occurs when established companies in an industry become resistant to perceived disruptive innovation, which threatens their existing capabilities and cannibalizes their existing products. In theory, an assemblage of businesses which could be positively impacted by disruptive innovation might appear to be the best means of assembling the capabilities needed to manage proactive change. In practice, it is more often than not a means of gathering together everyone who has an incentive to resist change.
The executives of music companies, film studios and book publishers did not embrace the opportunities offered by new channels of distribution. They saw these technological developments as a threat to well established business models in which they had large personal and corporate investments. And their lack of vision was a financial and cultural time bomb waiting to explode.
This allowed Apple, with its creative innovation to introduce its vision into a completely new industry and to dominate the competition. The old ideas from old companies mired in protectionist thinking could not possibly compete.
Thirty years ago, when an employee needed a copy of a document, more often than not, they were asked to “get a Xerox of that please.” Xerox’s control of the business copier market was so entrenched that its corporate name became synonymous with photocopies.
To sustain this monopoly, in 1970 Xerox started its research department, the Xerox Palo Alto Research Center (“Parc”). Parc was supposed to allow Xerox to look ahead and invent the technologies of the future. And at first, Parc was successful in developing inventions. The Ethernet, the graphical user interface, a commercial version of the mouse and laser printers were the work of Parc. And yet, Xerox was not able to capitalize on the market potential of its own research and development.
Then, in 1984, despite not having invented the graphical user interface or the mouse, both of these technologies were incorporated in Apple’s Macintosh. The Macbook evolved and became a dominant force in personal computing machines while Xerox market share is non-existent.
The lesson learned is that research, development and invention are not enough. In order to creatively and successfully innovate, a company must take its framework and inventions and adopt them to have commercial success. Xerox failed in part because its leaders could not connect those innovations with its core business. Innovation without sustainably profitable business models is only half the battle.
The lessons learned from these, and many other examples are many but all have similar foundational elements. Those companies which rely too heavily on protecting their own business interests and ideas (“that is the way we have always done it”) do not attract creative innovative thinkers. Better mousetraps are always being built. Those failed companies generally lack the vision to take their own product or services, incorporate developing technologies and market them successfully. In general, those failed companies cannot envision new financial or cultural possibilities. Ego and hubris dominate. Their own image is more important than the power of the message they are trying to send. And they are passed. And left in the past.
They do not understand that sometimes, that light at the end of the tunnel is an oncoming freight train.
The Eating Disorder Industry and Covid-19
On a national scale, the eating disorder industry is relatively new, is very small and has no particular significance in terms of power and prestige in our Nation’s Capital. Public funding from state and federal entities is a pittance. There is no advertising or marketing of clinical treatment centers or research breakthroughs which capture the imagination of mainstream society. Infighting in the eating disorder community is rampant. Protecting the small pieces of their pie predominate many organization’s mindsets to the exclusion of all else. And now, Covid-19 could be the death knell.
As we struggle to survive the Covid-19 Apocalypse, individuals, non-profits, organizations and corporations must come to grips with harsh new realities. The world is forever changed. Covid-19 has brought the world’s economy to the brink of disaster. Employee lay-offs are massive. Unemployment claims continue to spike to record levels. Budgets have been cut. The Federal Deficit has risen to unprecedented levels.
Those are the facts. That is the reality.
Each eating disorder organization must conduct a thorough self-evaluation and determine if they are a Netflix or a Blockbuster. Do they have the bold, creative innovative thinking and action of Apple? Or are they looking to hold on to their past like Xerox? Are they zealously holding on to their own version of the “Walkman” instead of exploring brave new avenues of funding, of messaging, of collaboration? Do they possess the skills, experience, intellect and courage to discover the necessary new paths which lay in the future and guide the organization on this path and to a place of success? Or are they doomed to languish in anonymity and failed dreams?
The way is shut. And Covid-19 and its long term economic and cultural ramifications could be the “culling of the herd” in the eating disorder industry and community.
The way is shut.