Gustavo Ballvé on October 11th, 2010
Corporate Strategy, Food for thought, Home, Industries, Investment Themes, Media, Mental models, Portfolio Management, Retailing, Risk management

We were positively surprised by James Surowiecki in the New Yorker magazine (cover date October 18th 2010) with an article called “The Next Level”. Without giving too much away, here’s one sentence: “Blockbuster treated its thousands of stores as if they were a protective moat, when in fact they were the business equivalent of the Maginot Line. The familiar sunk-cost fallacy made things worse. Myriad studies have shown that, once decision-makers invest in a project, they’re likely to keep doing so, because of the money already at stake. Rather than dramatically shrinking both the size and the number of its stores, Blockbuster just kept throwing good money after bad.”

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