Sometimes, Innovation Kills.

This is the story you THINK you know…

Netflix DIDN’T Kill Blockbuster.
The WRONG Innovation Did.

You’ve heard the story before, but not like this.

A cautionary tale on innovation…

When John Antioco took over Blockbuster in ’97, he wasn’t your typical CEO.

He had a PLAN.

👉 Innovate based on real-world feedback!

So, he hit the road.

→ Store after store.
→ Employee after employee.
→ Customer after customer.

His question was simple:
“What’s your biggest pain with Blockbuster?”

The answer? Unanimous.

“REMOVE LATE FEES*!”

(*For the uninitiated: Late fees were penalties for returning a movie late.)

So, what did he do?

Exactly what they wanted.
He removed the late fees.

Seems smart, right?

Consultants call that “customer-driven innovation.”

But here’s what happened:

→ 10% of revenue VANISHED overnight (late fees were a cash cow).
→ People kept DVDs for weeks, sometimes months.
→ New releases? Always out of stock
→ Customer frustration? Through the roof.
→ Costs? Exploded as they stocked more DVDs to meet demand.

WHAT WAS HIS FATAL MISTAKE?

👉 He solved the WRONG PROBLEM.

Think about it.

❌ Customers weren’t saying “I hate penalties.”
✅ They were saying “I hate driving 20 min for a movie.”

Antonio captured the COMPLAINT, not the NEED.
The CONSEQUENCE, not the FRUSTRATION.

Meanwhile…

👉 Enter Netflix.

Before streaming, Netflix mailed DVDs to your home 📭

No store visits.
No late fees.
No hassle.

❌ Netflix didn’t just fix the “late fee problem.”
✅ They fixed the “get in your car” problem.

The rest is history.

THE LESSON?

Innovation isn’t about solving what customers SAY.
It’s about solving what they MEAN.

Netflix understood this.
Blockbuster didn’t.

So, ask yourself:

→ Are you solving the surface-level problem?
→ Or the REAL need?

Because that gap?

That’s where businesses go to die.

To your success,

Gaetan Portaels

P.S: The irony? Blockbuster actually had the chance to buy Netflix for $50 million in 2000.
Talk about missing the real problem AND the solution 😉

Original publication date — March, 2025 (HERE)