Web-Enabling Your Business Strategy: Blockbuster & Nordstrom

I’ve been spending a lot of time this summer working with leaders to help them crystallize web and digital strategy for their business. At first, they seem to be disinterested because they think I’m asking them to determine their organization’s web design, content or technology strategy.  But I try to hold their feet to the fire and explain to them that an organization’s online strategy is about business, about profit and meeting the mission and performance indicators. I tell them if they aren’t driving the organizational digital strategy, then there is a high likelihood that the strategy is missing the mark.  I tell them that if they think they don’t have to understand the fundamental capabilities and impact of the web because they are executives, then they are missing the mark.  In the web age, digital strategy and business strategy are the same thing. People who are accountable for profitability need to engaged in setting the digital agenda. Even then, digital direction can go very right or very wrong depending on who is in charge and how in tune they are with the substantive business change that has occurred since the advent of the web.  There are two examples that have been in the news this summer that illustrate what can happen when business leaders “get” the web—and when they don’t.

Nordstrom 

There was a great article in the New York Times in August:   “Nordstrom Links Online Inventory to Real World.”  If you work with the Web in your organization and are trying to get your executives to be more engaged, this is a good article to bring to their attention. In short, Nordstrom (a US retail department store) decided to surface real-time inventory information on its web site so that (for example) a San Franciso buyer can buy that last Prada bag from the Towson, MD Nordstrom and have it sent to them. It seems very simple but, according to the article, this type of real-world/web integrated inventory management isn’t common for department stores and that in the 11 months since Nordstrom made the inventory change, its same-store sales has “out-performed it’s competitors.” That’s real dollars and web sense-- not just a feel good social media experience (although Nordstrom does a bunch oft hat as well). Nordstrom effectively merged data from an aspect of traditional supply chain management with its digital presence for a positive result. This type of change generally requires internal collaboration and sponsorship at the executive level.

Blockbuster 

On the other hand, there’s Blockbuster (video rentals)  that has been steadily going out of business over the last few years. I like this CNET report from earlier this summer at CNET "Blockbuster stock to be delisted from NYSE". And then there is the more recent news of a possible bankruptcy. For some reason, it has been particularly hard for companies that distribute and sell media and information products to figure out profit strategies in the face of the web (despite upstart competitors showing them the ropes). But, unlike newspapers and another print periodicals, the consumer market never really believed that the were going to really get movies for free. Blockbuster had the market and didn’t react fast enough to the change in distribution channel from brick and mortar stores to (of all things) snail mail, then kiosks and now streaming media. And that's not to mention the missed opportunities at building communities around folks that watch movies. That means someone in the executive suite at Blockbuster didn't get it; so, at a critical moment, the Blockbuster business strategy didn’t include a mature view of the web and its capabilities.

Only time will tell how many more market leaders will get Blockbusted by more innovative and web-saavy competitors. The web has a way of changing rules that seasoned executives think of as immutable business fundamentals. So, if you work in the web arena of your organization and see the holes in the approach to web strategy, do your best to get the attention of your leadership and help them bring you organization into the web age.