The Cost of Standing Still

Some companies manage to change with the market. Others stay successful right up until the market stops rewarding what made them successful in the first place.

Amazon and Apple are good examples of the first group. Blockbuster and Kodak are famous examples of the second.

The problem wasn't simply a failure to innovate. Kodak helped develop early digital-camera technology. Blockbuster eventually tried online rentals and streaming.

The harder challenge was turning innovation into a successful new business model that could eventually replace the old one.

Amazon: What Else Can We Build With This?

Amazon started as an online bookstore. It certainly didn't stay one.

As its retail business grew, Amazon invested heavily in technology, warehouses, logistics, and computing infrastructure. Those investments made shopping faster and more convenient, but they also created entirely new business opportunities.

The best example is AWS. Computing capabilities originally built to support Amazon eventually became cloud services that other businesses would pay to use.

Amazon also expanded beyond traditional retail margins through its third-party marketplace, Prime subscriptions, advertising, and other services.

In other words, Amazon leaders didn't just ask:

How do we sell more products?

They also asked:

What have we become really good at? What else can this business become?

Those are powerful questions for businesses of any size.

Apple: You Don't Always Have to Be the Cheapest

Apple took a different route.

The tech giant doesn't try to win by selling the cheapest phone, computer, or watch. Instead, it competes through design, ease of use, brand, and an ecosystem of products that work well together.

Buy an iPhone and suddenly the Watch, AirPods, Mac, iPad, iCloud, and other services make a little more sense.

That's not accidental.

The ecosystem makes Apple's products more convenient for existing customers while creating revenue that continues beyond the original hardware purchase. Apple reported $109.2 billion in Services revenue in fiscal 2025.

Apple is a useful reminder that competing on price isn't the only option.

Sometimes the better question is:

What can we offer that customers consider worth paying more for?

Blockbuster: When the Problem Isn't the Store

There was a time when driving to Blockbuster on a Friday night was completely normal.

Then customers discovered something even better:

not driving to Blockbuster.

Netflix offered DVDs by mail and later streaming. Redbox made physical rentals quick and inexpensive. Eventually, digital entertainment removed the trip, the return deadline, and the question of whether the movie you wanted was still sitting on the shelf.

Blockbuster did try to adapt. But it was also carrying a huge physical store network and, eventually, serious debt and liquidity problems.

That made transformation much harder.

The interesting part of Blockbuster's story isn't simply that streaming beat DVDs. Customers stopped needing the stores that ones made it successful.

Sometimes improving an existing operation isn't enough.

You have to ask the uncomfortable question:

Does the customer still need this at all?

Kodak: When Your Best Business Becomes the Problem

Kodak's story is even more interesting because Kodak wasn't oblivious to digital photography.

It had significant digital expertise and developed an early digital camera prototype.

The problem was what digital photography threatened.

Kodak made money not only from cameras, but from film, photographic paper, processing, chemicals, and printing. Digital photography gradually removed the need for much of that.

Imagine having to aggressively promote a technology that could make your most profitable products unnecessary.

That's a much harder decision than simply “embrace innovation.”

And even if Kodak went all-in on digital cameras, there was another problem: digital cameras became highly competitive electronics products, while online storage and sharing reduced photo printing.

Kodak didn't just need a new product.

It needed a new profit engine.

That's a very different challenge.

The Bigger Business Question

Amazon, Apple, Blockbuster, and Kodak aren't really stories about technology companies versus old-fashioned companies.

They're stories about business models.

Amazon found new ways to monetize capabilities it had already built. Apple created an ecosystem where products and recurring services reinforce one another.

Blockbuster and Kodak faced the opposite problem: their existing businesses were becoming less valuable while still carrying the costs, infrastructure, and financial expectations created by years of success.

And this isn't only a big-company problem.

A restaurant can keep a menu customers no longer want. A retailer can remain committed to a location that no longer matches its market. A service business can continue using a process customers now find inconvenient. A company can keep protecting a profitable product while quietly ignoring the product that may eventually replace it.

Past success tells you something important:

Your business model worked.

It doesn't tell you that it will keep working.

Perhaps one of the most useful questions a business can ask from time to time is surprisingly simple:

If we were starting this business today, knowing what we know now, would we build it the same way?

If the answer is no, that's probably worth paying attention to.