A parable on the death of the retail record store caught my eye.
They started a record (CD) store in New York City in 1993. They closed in 2005.
The exact same story could have been written by owners of small book stores, travel agencies, retail stock brokers, small newspapers, and magazine publishers. They have all been dramatically changed by the Internet.
The changes were inevitable and the reactions were predictable. It is easy to blame the industry giants for stubbornly holding on to their way of doing business. But it was the small players who were hurt the most. Business, like life in the wild, is ruled by Darwin’s “Survival of the Fittest”.
The environment is constantly changing. The strongest last the longest but unless they adapt, they too will die. The The Innovator’s Dilemma tells us that very few businesses in any industry make the transition to the new way of doing things. …
The record labels continued to put out junk CDs with two good songs for $20. The labels made deals with big box stores like Wal-Mart and Best Buy that allowed them to sell for less than the small retailers cost. The Internet allowed millions of kids to download singles for free.
Amazon did the same thing to small book stores. Travelocity and Expedia put pressure on the travel agents. E*Trade and Fidelity crushed the retail stock broker. The story goes on and on.
The real story is how entrepreneurs adapt. The record store owners … are now in the online music business.
I am reminded of the cute little book “Who moved my Cheese?”. The story of a mouse who followed the same routine everyday until someone moved his cheese. Then the mouse had to figure out how to adapt to the change and create a new routine. The smart mouse figures it out. The dumb mouse keeps looking for the cheese in the same old place.
How do you like that? Business all boils down to the habits of a mouse. Take that, Harvard Business School.
Rick McCharles 