Do Not Wait to Be Disrupted—Do It Yourself
In business, nothing is harder than voluntarily walking away from a successful, profitable model. It feels irrational, counter-intuitive, and financially reckless. Yet, this willingness to aggressively invest in the future while the present is thriving is the defining characteristic of companies that achieve long-term dominance. The most dramatic example? Netflix. For years, Netflix built a highly successful logistics empire based on mailing DVDs. It was their cash cow. But the founders looked past their quarterly earnings and saw an inevitable truth: the DVD-by-mail business had an expiration date.
The Unavoidable Truth: The Physical Ceiling
In the early 2000s, Netflix faced a clear, existential challenge:
- Logistical Limit: Shipping physical media was slow, expensive to scale globally, and tied to inventory and postal systems.
- Technological Threat: Broadband internet speeds were increasing rapidly, making a direct, digital competitor an immediate and future threat.
- Zero-Sum Game: A digital competitor could instantly undermine the entire physical model with no inventory cost. The choice wasn't if they would face a digital challenge, but when. The smart move was to beat everyone else to the punch.
The Solution: Compete Against Yourself
In 2007, despite the DVD business being massively profitable and popular, Netflix made the boldest move in its history: they launched their streaming service. This was not a sideline project. It was an expensive, aggressive act of self-disruption that required: Massive Capital Investment: Pumping money into securing digital content licenses long before streaming was mainstream. Developing New Technology: Building a robust, scalable streaming infrastructure from scratch. Customer Confusion: Risking alienating loyal DVD customers by offering a new, content-limited digital product. They essentially created a competitor to their own core product before anyone else could.
The Blockbuster Lesson: The Cost of Complacency
While Netflix was bleeding cash to build its future, its primary rival, Blockbuster, dismissed the trend as a fringe activity. Blockbuster was focused on maximizing the short-term profit of its physical stores. The result is history: Netflix leveraged the early data, technology stack, and user adoption from its bold pivot to create a massive competitive moat based on scale and personalization. Blockbuster, paralyzed by the success of its current model, couldn't transition fast enough and collapsed. "Don't wait for your market to collapse to change your model. Invest aggressively in the future version of your business while the current one is still paying the bills." The only path to long-term dominance isn't optimizing your current success—it's the willingness to make hard choices today that protect you from the inevitable change of tomorrow. Self-disruption is a survival strategy.
