In 2006, Blockbuster Video launched Total Access, a service that allowed its customers to rent videos online and return them to stores. The strategy was an immediate hit with customers and before long its online unit was making big gains against Netflix. It seemed that the video giant had finally cracked to code to renting videos on the Internet.
Alas, it was not to be. Investors balked at the cost of the new plan, while franchisees feared that online rentals would make them obsolete. In 2007, the company's CEO, John Antioco, was fired and the online strategy was scrapped. Just three years later, in 2010, Blockbuster filed for bankruptcy.
Traditionally, we have looked at strategy solely as a set of plans designed to achieve specific objectives. However, as we increasingly operate in a world of networks rather than hierarchies, leaders need to learn the lessons of social movements and focus on shared values. As the story of Blockbuster shows, you can't change behaviors without first changing core beliefs.
Values Before Strategy
The link between strategy and values is seldom obvious. When Mahatma Gandhi returned to India, he began to implement a strategy of civil disobedience similar to what succeeded in South Africa. He would later call this his Himalayan miscalculation. "Before a people could be fit for offering civil disobedience," he later wrote, "they should thoroughly understand its deeper implications."
Clearly, he learned his lesson and spent a decade indoctrinating the Indian independence movement in his philosophy of Satyagraha. These values not only helped Gandhi achieve his goals, but also inspired later movements for change such as the civil rights movement led by Martin Luther King and the anti-Apartheid efforts of Nelson Mandela.
Successful corporate revolutionaries follow a similar path. When Lou Gerstner set out to transform IBM, he said "last thing IBM needs right now is a vision," but then sought to shift the company's values from an emphasis on its "stack" of proprietary products to the "stack of its customer's business processes." In a similar way, when Paul O'Neil set out to transform Alcoa, he started by valuing safety above all else.
Compare that to Antioco's "Total Access" plan. Strategically, it was sound, but it sought to forge a fundamental change in behavior without first creating a change in mindset. Not surprisingly, key components of Blockbuster's stakeholder network rebelled. That's why it failed.
Building Allies and Pulling In Pillars
Every movement for change, whether it is in a social or a corporate setting, begins with shared values because values are what drive action. Still, simply stating values is not enough. To drive transformation, values must be indoctrinated across a diverse set of stakeholders.
In Blockbuster's case, the company set up a separate online organization to implement the Internet strategy and, as noted above, the plan was a hit with customers. However, investors and franchisees felt blindsided and, to some extent, betrayed. Essentially, they were being forced to join a movement they hadn't signed up for.
Two concepts from social movements can be helpful here. The first is the Spectrum of Allies, which identifies constituencies according to how strongly they support or oppose the outcomes the movement seeks. The second, called the Pillars of Support, identifies the institutions which need to be leveraged in order to make change happen.
A successful transformation strategy targets specific constituencies in the Spectrum of Allies in order to influence key pillars of support. For example, O'Neil's safety efforts at Alcoa effectively mobilized employees, which then helped to pull in the key pillar of unions. This support was essential to his transformation efforts.
Weaving A Network
One thing that many change efforts overlook is that allies and pillars are not islands unto themselves, but inextricably linked and require a networked approach. In effect, early supporters must be mobilized to break through the higher resistance thresholds of other groups.
At Blockbuster, change efforts were focused on the new online division which was separated from other stakeholders. Not surprisingly, the "Total Access" plan was seen by many as an assault by a foreign entity rather than a shared effort. Little was done to indoctrinate those stakeholders before the plan was imposed as a fait accompli.
In General Stanley McChrystal's efforts to transform the Special Forces in Iraq, he ran into similar challenges trying to get diverse teams to work together. Yet he saw that by building connections between units he could build a "team of teams" that was able to effectively coordinate action. In One Mission, his aide-de-camp, Chris Fussell, describes two strategies used to achieve this effect.
The first was to leverage high-performing liaison officers to build personal connections among disparate units. The second, called the "O&I" forum, was a daily video conference that was designed to create informal connections between officers at an "operational cadence." Since leaving the military, McChrystal and Fussell have had similar success implementing these strategies in civilian organizations at their consulting group.
Perhaps most importantly, every transformational effort must define success in terms of values rather than specific objectives. By conventional measures, Blockbuster's "Total Access" strategy was successful in that it achieved its objective of winning market share from Netflix. However, that was at best a pyrrhic victory.
This is, in fact, all too common in efforts to achieve transformational change. Political revolutions in places like Ukraine in 2004 and Egypt in 2011 succeeded in their immediate goals to bring down a corrupt regime, but soon found another had taken its place. In the long struggle for LGBT rights many victories were won along the way, but these always ended in backlash.
Yet these failures can often be reversed when common values are asserted over specific objectives. After decades of fighting against discrimination with little to show for it, the LGBT movement changed the political calculus at record speed when framed its struggle as "a recognition of basic American principles." In a similar way, Ukraine's more recent revolution was not in support of a specific political agenda, but of "dignity" and European values.
The truth is that change that is imposed never sticks, because it asks those who must affect change to betray themselves. You must first change minds before you can change actions.