How to decide if it's time to adapt your business model

In this article, you'll learn to avoid the "Blockbuster moment" by embracing changing customer needs and adapting your business model to stay relevant and competitive.

You’ll learn:

• Why staying close to customer expectations is critical for long-term success.

• How to identify outdated business practices that need to be eliminated.

• How to use the Blue Ocean Strategy’s four powerful questions to rethink your business and create a competitive advantage.

A practical way to kickstart re-invention.

Every business reaches a critical moment where it must decide: adapt to changing customer expectations, or risk becoming irrelevant. This is often referred to as the "Blockbuster moment"—a reference to the once-dominant video rental chain that failed to see the rise of streaming services like Netflix. Blockbuster’s failure to evolve in response to changing consumer behavior led to its downfall.

But there’s another path. Think of Cirque du Soleil, which faced a similar crossroads in the 1980s. Traditional circuses were losing popularity, with customers growing weary of animal shows and standard circus acts. Instead of sticking to the old formula, Cirque du Soleil reimagined the circus, creating a new kind of entertainment experience that became wildly successful and radically more profitable.

If you want your business to stay competitive, you need to constantly reassess how well you’re meeting the needs and expectations of your customers. In today’s rapidly evolving marketplace, customer-obsession and continuous innovation are key to staying relevant.

The Risk of Facing a “Blockbuster Moment”

Many companies fall into the trap of clinging to business models and practices that worked in the past, without noticing that their customers' expectations are shifting. The result is often devastating, as the company finds itself struggling to compete with more nimble competitors who have adapted to the new market reality.

Blockbuster is a classic example. At its peak, Blockbuster was the leader in video rentals, with thousands of stores worldwide. However, when customers started shifting to streaming services and on-demand video, Blockbuster stuck with its physical store model. Netflix, a small competitor at the time, embraced streaming and ultimately revolutionized the way people consumed content.

Blockbuster’s failure to adapt to customer preferences sealed its fate, while Netflix thrived by recognizing and catering to a new generation of consumers.

The key lesson here is clear: if you’re not willing to challenge your own business model and adapt to changing customer needs, you risk losing relevance in the market. This is where the concept of a Cirque du Soleil moment comes in—an opportunity to reinvent your business model and stay ahead of the curve.

Using the Blue Ocean Strategy to Reinvent Your Business

To identify your own “Cirque du Soleil” opportunity, you can apply the Blue Ocean Strategy’s four powerful questions. These questions help you rethink your business model and discover where you can create new value for your customers while eliminating outdated practices.

1. What factors can we eliminate?

The first step is to identify elements of your business model that no longer provide value to your customers. These are features or offerings that are outdated, inefficient, or irrelevant in the current marketplace. By eliminating them, you can reduce costs and refocus your resources on what matters most to your customers.

Example: Cirque du Soleil eliminated animal shows, which had become unpopular due to growing concerns about animal rights. By removing this costly and controversial element, they not only reduced their overhead but also aligned themselves with shifting consumer values.

Your Turn: Think about your business. Are there outdated services, features, or processes that no longer add value to your customers? What can you eliminate to streamline your business and better meet modern expectations?

2. What factors can we reduce?

Next, identify areas where you can reduce your focus or investment. These are factors that may still provide some value to your customers but are no longer as important as they once were. By reducing your investment in these areas, you can redirect resources to higher-value opportunities.

Example: Cirque du Soleil reduced the emphasis on humor and thrills, which were staples of traditional circuses. Instead, they focused on creating a more elegant, theatrical experience.

Your Turn: Are there parts of your business that were once important but are now less relevant? Could you scale back on these elements to focus on something more meaningful to your customers?

3. What factors can we raise?

This question asks you to identify areas where you can raise the standard and provide more value than your competitors. These are the aspects of your business that truly matter to your customers and can differentiate you in the marketplace.

Example: Cirque du Soleil raised the standard for venue design and production quality, creating an immersive experience that felt more like a high-end theater production than a traditional circus.

Your Turn: What are the key elements of your product or service that your customers care about the most? How can you improve or enhance these areas to deliver a superior experience?

4. What factors can we introduce?

Finally, think about what new factors you can introduce to your business model that will set you apart from the competition and meet the evolving needs of your customers. These are the innovative features or services that no one else in your industry is offering.

Example: Cirque du Soleil introduced elements of theater, dance, and live music, transforming the circus into a sophisticated art form that appealed to adults and families alike.

Your Turn: What new features or experiences could you introduce that would create additional value for your customers and give you a competitive edge?