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Episode 4  |  15:40 min

Jean Claude Van Damme & Sour Jacks: Adapting to Change

Episode 4  |  15:40 min  |  11.24.2020

Jean Claude Van Damme & Sour Jacks: Adapting to Change

This is a podcast episode titled, Jean Claude Van Damme & Sour Jacks: Adapting to Change. The summary for this episode is: We've heard it all before: "The only constant is change." But seriously, how do you adjust? How do you adapt?

The ability to adapt to change is a foundational prerequisite for entrepreneurship. But this ability is contrary to our human instincts—we like to be comfortable! And change? That’s not comfortable at all.

Case in point: Blockbuster stores. The video rental store dominated the market, until a little company called Netflix began to try something new: video rentals by mail. Unwilling to pivot, Blockbuster faced several rounds of bankruptcies before its ultimate demise.

Netflix, on the other hand, continued to pivot from video rental company to the media goliath we know today. What went wrong for Blockbuster? And what went right for Netflix?

Short answer: Blockbuster resisted change, and Netflix was structurally built to adapt to new ideas.

This same principal applies on a smaller scale to you as an entrepreneur. They say the only constant in entrepreneurship is change. Do you suck at adapting to change?

In Ray Dalio’s book Principles, he says that his approach is to have “strong beliefs, but loosely held.” If you have a rigid mindset contingent on a linear plan, it’s likely that you’ll fail. Because things are going to change.

One element of adapting to change is the willingness to experiment. With a mindset that’s pliable and adaptable, you’ll be able to iterate your ideas and find ways to maximize successful outcomes.

Try this: next time information is brought to you that makes you uncomfortable, use that moment as a chance to work on your innate adaptability. Will you pivot? Or will you stay stuck? The mindset is a choice, and the choice is yours.

Do you have tips or tricks you use to stay adaptable? We’ve love to hear them. Find Andrew Hong on Twitter or LinkedIn.

Andrew Hong: Welcome to Entrepreneurship Sucks, the podcast where we talk about the mindset, tactics and skills that entrepreneurs need to succeed, but most suck at. In today's episode, we're going to talk about the concept of adapting to change. So here's the thing, most people suck at adapting to change. It's kind of a human trait that we like to get stuck in a specific position, and whenever we try to change what we're comfortable with, well, it becomes uncomfortable. Unfortunately, needing to adapt to change is a prerequisite for being a successful entrepreneur. And what I wanted to talk to you a little bit today is a case study about a company that was resistant to adapting to change. We all know the company, Blockbuster. Right? They were the movie, DVD rental service that had a huge retail presence in... Was it the'80s, '90s, and 2000s? And they're a really good example, and I'm sure an example that many of you have heard of, of a company that's been resistant to change. So I want to start by talking about, back in 2004, Blockbuster was doing about$ 6 billion of revenue. And Netflix at the time was trailing behind as sort of a scrappy internet startup from Silicon Valley. Don't forget that back then, Netflix didn't have any streaming. So for any of you who are listening today that think Netflix has always been streaming, it actually started out in mail in DVD services, so they were a direct competitor to Blockbuster's business model, but they had completely different distribution channels. Right? And just think about today where you've got Postmates, and you've got all these sort of on demand delivery services, we take a lot of those things for granted. But before, if you wanted to go see a movie, you had to get in your car on a Friday night. I remember this distinctly, going with my parents to the local Blockbuster, renting Air Force One, or all these'90s Harrison Ford movies. My dad was a huge Jean- Claude Van Damme fan, so we watched a ton of terrible martial arts movies. But that was a family experience to rent a movie from Blockbuster, get to the front. We'll buy all... I remember I always wanted to buy those watermelon Sour Jacks that they sold up there. Parents always told me no. That was a very distinct memory kind of growing up. So Blockbuster for sure was a cultural phenomenon. Right? And similarly to how Netflix is today. But six years later from 2004, Netflix was then doing$2. 2 billion in revenue. And Blockbuster had I think gone through their very first bankruptcy. I think they went through multiple rounds of bankruptcy as they tried to revive the company. Today, Netflix's market cap is$ 230 billion, 100 times more than it was before. And Blockbuster is ancient history. In fact, there's actually one Blockbuster somewhere in Oregon where they recently had this, I guess they did a sleepover at Blockbuster. And it was kind of a novel thing. But Blockbuster is kind of to me, like the lava lamp of the retail industry right now. So the reality of it is: What went wrong? Right? Blockbuster had this huge competitive advantage over Netflix. They had acquired tons of users. Right? What actually went wrong? And looking back at what happens, Blockbuster really failed to realize that the video rental market was being disrupted. It was in the middle of change. Right? And the reality of it was that Netflix started as a competitor to Blockbuster by not trying to compete on the same terms as Blockbuster, but trying to change the paradigm under which the end product or service is sold. And Blockbuster's paradigm is, let's invest in retail heavy, capital intensive retail stores, and a lot of them were franchises. Right? And let's not also forget that they've got to carry inventory as well. Right? Netflix decided to take an opposite approach. I call it the Silicon Valley approach. How do I build this leaner and meaner, and deliver a better customer experience to my end customer? So Netflix's premise was, people don't want to go to Blockbuster. What if they could just go online? And the internet was still in its infancy back then, but you could still go online. You could pick your DVDs, and you could have them mailed to you. Right? And then you put your DVDs back in the mail, mailed them back, and they figured that all out. That was Netflix's first approach to user acquisition. Right? And they essentially started competing with Blockbuster to acquire users for the ultimate endgame of saying, " We don't need physical media anymore. We see where the internet is going. We see that broadband is going to be a very important component to American society moving forward." And let's not forget that in Asia and Europe and other places back in 2004, they were way ahead of us in terms of broadband connection and telecommunications and things like that, so they knew that the future had something in store that would allow people to stream on the internet. Right? So they were building towards this. So their entire business model was actually built for change. Right? The DVD thing was just the customer acquisition piece of it. Right? And they had a vision that streaming would be the future from their very first day. Right? This is a classic sort of business case study for leadership truly failing to adapt to change. Right? Blockbuster kind of got caught up in their own hubris and kind of said, " Hey, look. We're the 800 pound gorilla. Our business model's not going to be disrupted. Let's keep doubling down on our overall strategy." Right? So looking at this as a big company approach and taking it back to experience as an entrepreneur, it's got to beg the question. Right? Are you as an entrepreneur someone that easily adapts to change? Right? And what does that mean for you as an entrepreneur? And what's that challenge? Right? Because the reality of it, and this is where I sit, and I certainly deal with this myself, is that it's human nature to be resistant to change. But most entrepreneurs need to be ready for constant change. Right? And there's a saying that the only constant in entrepreneurship is change. Right? And especially when you're early on in the first couple, few years of your business. So I want to just pause here really quick and ask you the question for you to ask yourself. Do you suck at adapting to change?

Andrew Hong: Think about that very clearly, and think about that. Try to be unbiased about it. And what that actually means for you as an entrepreneur if you suck at adapting to change is that you cannot suck at adapting to change because your success as an entrepreneur depends on it. In today's day and age, you've got to expect that the status quo isn't going to hold, and that you don't ever want to be too attached to one specific idea. I like the saying, I got this from Ray Dalio in a book called Principles, which is a great book. We'll link it in the show notes. But he has this saying in there, it's a philosophy that he lives by, and he's a hedge fund manager, manages, I think he manages the largest hedge fund in the world. And he basically says that his approach to investing is taking this idea of strong beliefs, but loosely held strong beliefs. And I think that's a really big takeaway for anyone out there who's thinking about entrepreneurship and struggling with the idea of adapting to change because we know that your business is going to go through multiple iterations of people, of your product or service, of the way you price it. You might even change the way you brand your company. Right? And the reality of it is, is that these are all very normal parts of growing and scaling a business. Right? There's never a linear path to growing and scaling a business. So if you have this mindset that, oh, yeah, I've got this plan, I've laid it out, we're going to execute on it, and everything's going to be great, well, you're probably wrong because your plan is going to be broken. It's going to be taken for a number of different changes that maybe you can control, or maybe you can't control. And the reality of it is if you're not good at adapting to that change, you're just going to go and execute the strategy that you had originally set out to execute. Right? And that's usually where people fail because they get to tied to one thing, they didn't pivot. And there's a reason why this word pivot is such a popular Silicon Valley BS buzzword, because it's true, because every fucking company has to pivot. Right? Because we never get it right on the first try. We probably don't get it right on the second try. And so this constant iteration around change is just something that has to be a part of your DNA. So I'm someone who, as more of a personal example, I'm someone who really forms an idea and just goes for it. Right? I don't think much about it. I don't overanalyze it. And if I have a good feeling about it and a good gut instinct about it, I just go for it. I pick up a lot of information along the way, and I use that information to kind of adjust what I decided to go for in the beginning, now that I have more information. Right? And what this has allowed me to do as an entrepreneur is that this whole idea of kind of adapting, changing constantly, it's actually forced me into a mindset of experimenting more. And when you start using experiments, and you kind of apply the scientific method, you have a hypothesis, you come up with a process or an approach to test that hypothesis. You look at the results and see if your hypothesis was true or false. And then you iterate and kind of go onto the next thing from there. You cannot undergo that process until you have a mindset that is ready and adjustable for change. Right? So you need to be willing to take in new information and constantly adjust your viewpoints, your hypothesis on the world, and do that accordingly. Right? Another interesting quote, and I hope my dad never hears this because I don't want him telling me that I told you so, but he has this saying that change is inevitable and growth is optional. Right? Again, it goes back to that same idea that the only constant out there is change. So again, by kind of pulling things back and asking you as the listener, as an entrepreneur, you might be someone who just started a company, you might be someone who's a more mature entrepreneur, who's found some growth and has some stability. Or you might be someone who's working in a regular job right now, thinking about starting your own company for the very first time. My advice to you is to ask yourself. How do you deal with change? And how do you interpret change? Are you a person who's resistant to it? Right? And if you are a person who's resistant to this idea of change, you should really question whether or not that attitude towards this concept of change is going to affect the decisions that you make or don't make, for that matter, in running and growing your business. Right? After working with so many companies, and I was a management consultant, working with large government organizations, fortune 50, fortune 100 companies, fortune 500 companies. As an agency owner now, I work with a lot of companies. And my entire focus on those companies is: How do you grow? And inevitably, we always talk about marketing and sales and content and all these other things. But a lot of times, the discussions actually go back to me working with the general manager or the owner of that business. And it becomes a mindset thing for them. And what I'm talking about today is a true mindset thing. Right? This is not something that you go to learn about through some certification course or something like that. Right? This is a true change your view, change the way you look at the world, sort of thing. And the reality of it is I think that the business owners that I've seen that have been the most successful are the ones that actually realize, holy cow, I'm actually pretty resistant to change. Every time my agency brings an idea to me, I'm like, " Oh, that's great. But we're need to do my thing." Or my employees, a junior level employee might bring an idea to me, and I might say, " Oh, well, they don't have the full view of everything that's going on, so their advice probably isn't the best advice." Well, you might want to rethink how you handle some of this situation. Maybe you should be more open minded to them. Maybe you, I think, and we'll talk about this, I think in probably future podcast episodes, but I think the second that someone brings something uncomfortable to you that makes your skin kind of crawl is the first second that you're like, " Hey, maybe I should evaluate this just a little bit further." Right? So again, this concept of change is I think a very hard thing to adjust to. Not everyone is a natural at it. Right? And again, that's the whole premise behind this podcast is that a lot of the things that you need to be good at as an entrepreneur are not things that come naturally to us. Right? And obviously, as I've just kind of ranted on for a little bit, change is definitely one of those things that I've seen, not only in myself, but all the business owners and business leaders that I have consulted with. Thanks for joining me on this episode of Entrepreneurship Sucks. Entrepreneurship Sucks is brought to you by the Tobe Agency Podcast Network. Did you like what you heard? Please subscribe, rate, review and share this podcast. And if you ever want to talk to me about the crazy journey of entrepreneurship, reach out to me on LinkedIn or @andrewnhong on Twitter. Thanks, and we'll see you on the next one.

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