I met my wife at a small record store in Lynnwood, Washington in 1979. If you ever saw John Cusack's film,
, you know what this store was like. For me, a serious record collector, it was the most fun I ever had working. I read liner notes all day, played the records I liked, and talked with customers for hours about music. What a great gig.
On a recent flight to Chicago, I watched a documentary film by Colin Hanks (Tom's son) entitled
All Things Must Pass
. It was a fascinating story of the rise and fall of Tower Records. It is, quite simply, a cautionary business tale. For baby boomers who grew up in the '60s, this story will resonate and bring back a flood of memories. The central theme of this story is, however,
change or die!
In 1999, Tower had revenues of over one billion dollars! By 2004, it filed for bankruptcy. The charismatic and charming founder, Russ Solomon, is interviewed extensively in the documentary. It is a little like attending a funeral for the living. In 1961, Tower Drugs in Sacramento, California began selling used 45s and the business took off. It was truly a case of "find a need and fill it." It quickly becomes THE place to work. There was no dress code and it had a family atmosphere. It was work hard and play hard. Tower's clerks were music snobs: they were smart, rude, and opinionated. As the company quickly expanded to San Francisco, at the corner of Columbus and Bay, and eventually to Los Angeles on Sunset Boulevard, business boomed. The Beach Boys released LPs that changed the landscape of the buying public. "Stack 'em high and sell 'em low" became Tower's motto. With huge inventories and a well-informed staff, it became a hangout for serious and successful musicians. Bruce Springsteen called it a "lost boys club." Almost every day, you could spot famous musicians in the stores buying records. Serious audiophiles and collectors could be seen listening to albums, reading liner notes, and socializing. In a very short time, the West Coast was dotted with Tower Records stores. Eventually a flagship store was opened in Tokyo, Japan!
In five short years, Tower Records died for three simple reasons:
- To continue their expansion internationally, they borrowed money from investors and accumulated massive debt.
- The marketplace changed and they did not change with it. While their customers wanted singles, they pushed LPs. What got you HERE won't take you THERE!
- There was a tectonic shift in the music industry called Napster. Virtually overnight, kids were downloading music for free. Tower did not change with the times.
Size is no guarantee of success. Natural selection has taught us only the paranoid and the adaptable survive. History is replete with similar cautionary tales: Ford vs. GM, Blackberry vs. iPhone, and Amazon vs. traditional booksellers. When there is a shift in technology, opportunity abounds. In business as in nature, the smart take from the strong. The nimble soar past the mighty.
Progress is impossible without change, and those who cannot change their minds cannot change anything.
-George Bernard Shaw
Change is the law of life. And those who look only to the past or present are certain to miss the future.
John F. Kennedy
The only way to make sense out of change is to plunge into it, move with it, and join the dance.
Because things are the way they are, things will not stay the way they are.
So, what is my point? Regardless of the size of your business, or in what industry you find yourself, there are certain questions leadership must ask. They address the basic aspects of business: sales and marketing, distribution, manufacturing, innovation, and service.
- What will our business look like in five years?
- What are our Strengths?
- What are our Weaknesses?
- What are our Opportunities? (What do our customers need now?)
- What will our customers want in five years?
- What are our Threats? (What is competition doing that we are not?)
- How is technology changing in our industry?
Microsoft was able to do that for the exact opposite reason Tower Records failed:
- They have $100 billion in cash.
- They looked at what their customers wanted and adjusted.
- They recognized they needed to change with the times.
I miss going to record stores like Tower. It was so much fun to read liner notes, talk with the snobbish, but well-informed, clerks, and leave with a smile on my face knowing I would enjoy some new tunes. Oh, well. Maybe I'll just download George Harrison's LP
All Things Must Pass
from iTunes and brag about my purchase on Facebook. Urgh! It's just not the same. When something is gained, something is lost.
I need to remember, "Change or Die!" How about you?