Business Eye: Learn from history’s greatest mistakes

History leaves us big clues from which to learn although we do seem to have the knack for ignoring these gifts.

Saturday, 22nd November 2014, 6:00 am
Alex Pratt

There is no richer source of accelerated wisdom than studying the failures of those too arrogant, scared or stupid to see the six foot writing on the wall for their business models.

In the early 2000’s when back in the day Blockbuster rented videos via High St stores, they failed to snap up Netflix who served videos online. Offered the entire Netflix business for just $50m they refused when they themselves were a strong $2bn plus corporation.

The rest is history.

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Blockbuster went bust in 2009, while Netflix is today worth $30 billion and spans the globe.

The phenomenon of failing to reflect the realities of a changing world fast enough is not the sole preserve of the private sector. It is a regular occurrence in the Public Sector, where the catalyst of unexpected, hungry and disruptive competition is precluded from the picture. Change is not absent from Public Service, far from it, but is politically motivated and the imperative for radical competitive remodelling is absent.

The botched Lansley reforms of the NHS are a good case in point.

Take the debate about the merits of Unitary Government in Bucks and other places. Nobody would recreate the current two-tier system in light the outlook for local government finances, and other counties moved have past us into successful unitary models. I spent last week studying a unitary council from the inside. If we were to agree to follow them, we would already be a decade behind them in making huge cost reductions allied to service improvements. Any dispassionate view would have to conclude that the current Bucks situation is unsustainable.

It is not in the interests of taxpayers to remain in denial. If Councils were private sector businesses, competitors would by now have offered us alternatives, but we have been denied change.

The heart of the problem in that those running any business model have a natural bias towards clinging to improving it and protecting their institutions, just at the very time when radical disruptive thinking is necessary. It takes bold leadership to vote for Christmas.None of this is to suggest that a single unitary authority is the only answer.

Splitting the county into two, or another arrangement may well prove the winner, which is why we need to hear the arguments for each.