Cascades

by Greg Satell

  The most proximate cause was a campaign initiated by Adbusters, a pro-environment, anti-consumerist magazine based in Vancouver, Canada. Asking, “Are you ready for a Tahrir moment?”1 and distributing posters with a ballerina perched atop Wall Street’s famous bull statue,2 those seemingly small sparks quickly grew to bonfire-sized proportions. “We basically floated the idea in mid-July into our [email list] and it was spontaneously taken up by all the people of the world,” remembered Adbusters senior editor Micah White. “It just kind of snowballed from there.”3

  Others point to earlier precursors, such as a meeting held at 16 Beaver Street, an artists’ collective in lower Manhattan, which had been discussing occupations for some time. Or the “New York General Assembly,” which helped organize the “Bloombergville” protests that took place earlier that summer to decry budget cuts that would result in mass layoffs of teachers and firefighters.4 Clearly, those earlier actions laid important groundwork.

  Most likely, the embers had been stoking for some time and the call from Adbusters merely helped channel the anger that had been brewing since the financial crisis and had been slowly growing through the work of various activist groups. What is clear, though, is that nobody was quite ready for what followed. Thousands of protestors descended on Zuccotti Park, bringing tents, sleeping bags, and provisions. They were prepared to stay as long as it took to achieve their vision. “We are the 99%,” they declared, and as far as they were concerned, it was time for the reign of the “1%” to end.

  The movement spread like wildfire, and before you knew it, similar protests were popping up everywhere. In nearly 1,000 cities across more than 80 countries,5 ordinary citizens took to the streets to rise up against those who wielded power. It was time for their voice to be heard, and they were determined to make sure it was.

  Yet within a few months, the streets and parks were cleared. The protestors went home, and nothing much changed. Occupy was, to paraphrase Shakespeare, full of sound and fury, signifying nothing. It may have attracted attention and brought certain issues to the fore, but little more than that. Certainly, nothing tangible was accomplished, as Micah White himself admitted in a 2017 column in the newspaper The Guardian.6

  Now consider the Serbian resistance movement called Otpor that succeeded brilliantly where Occupy failed so completely. Unlike Adbusters and the other groups that spawned Occupy, the founders of Otpor weren’t very ideologically driven. They were, for the most part, just students who’d grown fed up with the incompetence and corruption of the Milošević regime that ruled their country with an iron hand. They also had very different ideas about how to move forward than the Occupy protestors. Otpor had no desire to sleep on the streets or ask anyone else to do so, but were, at heart, a fun-loving bunch. “Our product is a lifestyle,” Ivan Marović, a cofounder of Otpor, would explain. “The movement isn’t about the issues. It’s about identity. We’re trying to make politics sexy.”7

  The contrasts don’t end there, either. While the Occupy protestors were adamantly anti-corporate and anti-consumerist, the founders of Otpor considered the branding strategies of corporate giants like Coca-Cola to be a model to emulate. One of their first acts was to create a logo—a clenched fist with the text “Otpor!” (“Resist!” in Serbian)—and spray-paint it throughout Belgrade. Compared to the dedicated activists of Occupy, it seems like a childish and futile act.

  But the founders of Otpor were different from most activists. Growing up, they had been far less interested in politics than they were in going to rock concerts and having fun. Their heroes weren’t civil rights leaders or revolutionaries, but the British comedy group Monty Python. Srdja Popović, a bass guitarist and a founding member of Otpor, would later write in his memoir, Blueprint for Revolution, “It’s common for people launching nonviolent movements to cite Gandhi, say, or Martin Luther King, Jr., as their inspiration, but those guys, for all their many, many virtues, simply weren’t that hilarious.”8

  In my own conversations with Srdja, he exudes the same easygoing spirit. At 46 years old, he still looks the part of a bass guitarist in a rock band. His easygoing smile hardly ever leaves his face, even when the subject of discussion is him getting brutally beaten in a police station and having a gun stuck in his mouth. When our conversation turns to current movements that seem unable to get results, he often points to their lack of a sense of humor as a key weakness.

  So perhaps not surprisingly, Otpor’s weapon of choice was street pranks. One of the earliest and best known involved a barrel with a picture of Slobodan Milošević’s face drawn on it. They painted a big sign that read, “smash his face for just a dinar” (worth about two cents at the time) and placed it, the barrel, and a long wooden stick on a street called Knez Mihailova, which was famous for its fashionable boutiques and cafes. At first passersby were reticent, but eventually one dropped a coin in the barrel and took a swing. Soon there was a long line of patrons waiting for their turn to beat the brutal dictator’s face with a bat.9

  Soon the police showed up and were at a loss for what to do. There was no law against hitting a barrel with a wooden stick, and arresting pedestrians on the street would have caused an outrage. They couldn’t arrest the members of Otpor either, who were sitting out of sight at a nearby café drinking coffee and smoking cigarettes, watching the scene with the utmost amusement. Out of options, the officers decided to arrest the filthy, rusted-out barrel. The next day a photograph of the burly men in uniform struggling to fit the thing in the back of their squad car made the papers. They looked ridiculous. A dictator can afford many things, but looking ridiculous in front of his people isn’t one of them.

  In another exploit, Otpor activists in the city of Kragujevac took white flowers, much like the ones Milošević’s wife wore, and stuck them onto the heads of turkeys, which they then let loose in the streets. Now, a turkey is just about the worst thing you can call a woman in Serbia, so this was an outrageous insult to the first lady of the country. But what could the police do except to arrest the turkeys? The citizens of the city were then treated to the farce of out-of-shape police officers chasing turkeys all over town. Once again, journalists were there to take photos and published them in the next day’s papers, another embarrassment for the seemingly all-powerful regime.10

  Although these pranks earned Otpor admirers, its membership grew slowly at first. By March of 1999, a year after its founding, it had maybe 300 members,11 nothing compared to the massive numbers that attended Occupy’s protests. But eventually the movement hit a tipping point and its membership swelled to over 70,000 activists. By October 2000, things came to a head and Slobodan Milošević was voted out of power. He tried to annul the election’s result, but by this time, even the police and the army would no longer obey his orders. The dictator died in his prison cell at The Hague six years later.

  After their victory in their home country, some key members of Otpor would later form the Centre for Applied Nonviolent Action and Strategies (CANVAS) and train activists in other countries. One by one, regimes began to fall. In Georgia, Ukraine, Lebanon, Maldives, Egypt, Burma, and other countries, activists using Otpor’s methods overcame seemingly insurmountable odds to create transformational change in their societies. To date, CANVAS has been active in almost 50 countries. Somehow, the party-loving pranksters developed a repeatable model that worked.

  So we are left with a puzzle. How could a fun-loving band of students succeed so completely, while the hardened professional activists behind Occupy fail so miserably?

  John Antioco’s rise to the highest echelons of corporate America began in the humblest of fashions. The son of a milkman from a working-class neighborhood in Brooklyn, he started out as a management trainee at 7-Eleven. Smart and ambitious, he worked his way up quickly, becoming a district manager responsible for 35 stores by the age of 25. Antioco made the most of the opportunity, turning his region into one of the most profitable in the country. He then went on to become northeast division manager, then natio
nal marketing manager, and finally a senior vice president of the company.

  As a fast-rising executive, Antioco got noticed and was recruited to turn around the struggling Circle K convenience store chain. He took the company private in a $400 million leveraged buyout, improved its operations, and three years later it was worth $1 billion. His next assignment was PepsiCo’s Taco Bell chain, known unaffectionately to many as “Taco Hell.” There, he introduced a new menu and a new ad campaign, and revamped the franchising strategy. Once again, it only took Antioco three years to work wonders. Years of declining sales were magically transformed into steady growth, and soon Taco Bell was humming again.12

  When Antioco was named CEO of Blockbuster Video in 1997, he was, by all accounts, ideally suited to lead the 800-pound gorilla of the video rental industry. For his part, he saw a great opportunity to transform the business. At the time, video rental operations had to pay movie studios up front for the latest hits and needed to rent each one 30 times before they could make a profit. The model not only involved the rental chain taking all the risk, it tied up a lot of cash that could be more productively deployed elsewhere, such as for marketing new releases.

  “It seemed crazy to me,” Antioco would later remember. “I myself had stopped going to Blockbuster on Friday and Saturday nights because they never had the movies I wanted. So I went to the studios to ask them to enter into a revenue-sharing agreement. They would sell us each video for as little as a dollar, but then we would share 40 percent of the rental revenues with them.”13 He expected them to agree to a six-month pilot program, so he was surprised when the studios were so enthusiastic about the plan that they agreed to multiyear contracts. It turned out to be a win-win arrangement. Blockbuster reduced its risk and improved its capital position, while the studios got a recurring revenue stream.

  It also allowed Blockbuster to guarantee availability of hot new titles. After all, the videocassettes themselves were cheap; it was the intellectual property that was valuable. As long as the studios were getting a 40 percent cut of the rental proceeds, they were more than happy to send Antioco and Blockbuster as many copies as he wanted. Also, with more cash on hand, Antioco was able to boost his advertising budget by 30 percent, increasing profits for both his company and the studios. The strategy was nothing less than a stroke of genius.14

  Yet in putting the plan into place, he encountered stiff resistance. “The experienced video executives were skeptical,” Antioco told me. “In fact, they thought that the revenue-sharing agreement would kill the company. But throughout my career, I had learned that whenever you set out to do anything big, some people aren’t going to like it. I’d been successful by defying the status quo at important junctures, and that’s what I thought had to be done in this case.”15

  This time, it took only two years for Antioco to work his magic. In 1999, Blockbuster’s parent company, Viacom, raised funds in an initial public offering that valued the company at $2.6 billion (it would spin off Blockbuster entirely in 2004). Once again, Antioco had transformed a struggling business into a well-oiled machine. Yet he would soon find that all of the acumen he acquired throughout his storied career had not equipped him for the challenges to come.

  It started with a simple meeting with a fairly insignificant startup called Netflix.16 Antioco’s schedule was probably hectic that day and he wasn’t able to attend, but if he had, it’s likely he wouldn’t have taken much notice. Netflix was still in its embryonic stage. The start-up proposed to run Blockbuster’s brand online much like the deal Toys “R” Us signed with Amazon. That arrangement turned out to be a disaster for the toy retailer, and Antioco didn’t see how it would benefit his company.17

  Netflix would eventually develop an innovative subscription model for renting videos online. Rather than charging for each title, the company let customers pay a low monthly subscription fee for access to all the movies they wanted by mail. The fledgling company would grow quickly to rival Blockbuster. That, however, was years in the future. In 2000, when the meeting took place, the young start-up was much like the “Bloombergville” protests that preceded Occupy, fairly insignificant and easy to miss.

  Yet Blockbuster’s model had a weakness that wasn’t clear at the time. It earned an enormous amount of money by charging its customers late fees, which had become an important part of the video rental giant’s revenue model. Blockbuster was, in fact, a business largely dependent on penalizing its patrons. That’s never a good sign.

  And while Netflix was still just a small start-up that had yet to turn a profit (in fact, it was hemorrhaging money at the time), it had certain advantages that also weren’t immediately obvious. By eschewing retail locations, it lowered costs and could afford to offer its customers far greater variety. Also, the monthly subscription model it would develop made the annoying late fees unnecessary. Customers could keep a video for as long as they wanted or return it and get a new one. In effect, Netflix was what Harvard’s Clayton Christensen calls a disruptive innovation. Blockbuster would have to alter its business model—and diminish its profitability—in order to compete with it effectively.

  Customers loved the subscription service, and the idea began to spread. People raved about Netflix and encouraged their friends to give it a try. Some were reluctant at first—they actually liked being able to browse movies at the store and pick one up at a moment’s notice—but others jumped right in. As the holdouts heard more and more of their friends heap praise on Netflix, they tried it too, loved it, and convinced others to give it a go. Much like a social movement, there seemed to be a powerful force drawing people in.

  While the story of Blockbuster and Netflix is often portrayed as a clever, nimble start-up running circles around dull corporate executives who were blind to the changes swirling around them, nothing could be further from the truth. In 2004, after Blockbuster’s spinoff from Viacom was complete, Antioco felt he had much more freedom to address the Netflix threat head-on and formulated a plan to meet the challenge. He dropped the late fees that turned off customers18 and invested in an online platform, which surprised industry observers with its user-friendly design. Before long, it began to gain traction.

  In 2006, he instituted a hybrid plan, called “Total Access,” which allowed customers to rent from either a physical store or online for one low subscription price. Customers were also saved the trouble of mailing movies back because they could return them to a local retail location. It proved to be an enormous success, and soon Blockbuster was adding online customers even faster than Netflix was.19 The company’s COO, Nick Shepherd, had also begun taking serious steps toward launching a streaming service, although that was still in the future.20 Once again, it seemed that Antioco had come up with a brilliant plan to meet a thorny challenge.

  Alas, it was not to be. While Antioco’s handling of the Netflix threat was a textbook case of good strategic management in which he identified clear objectives, formulated a plan to address them, and deployed resources intelligently, there were other forces brewing that would undermine his cleverly crafted strategy.

  First, there were the franchisees who had invested in Blockbuster retail outlets. For them, the new plan meant the demise of the businesses they had worked hard to build and, although they only accounted for 20 percent of stores, they could make their displeasure felt. The company’s shareholders didn’t measure success in terms of online subscribers but profits, and they didn’t like the costs associated with the shift—about $200 million to abandon late fees and another $200 million to launch Blockbuster Online.21 Much as in the case of the revenue-sharing agreement with the studios, Antioco understood their concerns but felt it was necessary to push forward.

  Things came to a head when the Blockbuster CEO found himself in a compensation dispute with the company’s largest shareholder, Carl Icahn. “I was at a point, both personally and financially, that I had little desire to fight it out anymore,” Antioco told me. He left the company, and his successor, Jim Keyes, reduced inv
estment in the digital platform, reinstated late fees, and refocused the company on the retail stores.

  Where Occupy let its networks spin out of control and undermined its ability to effect change, Antioco was unable to align his network of stakeholders around the change needed to secure Blockbuster’s future. In both cases, the result was the same—failure. Blockbuster went bankrupt in 2010.

  Like John Antioco, Stanley McChrystal showed early promise and enjoyed a stellar career. The fourth child of an Army general, he enrolled at West Point in 1972. When he entered service as a young lieutenant in 1976, he gained a reputation for extraordinary discipline and quickly moved up through the ranks. McChrystal completed his Special Forces training in 1979, becoming an elite Ranger instructor and then a Fellow at Harvard’s John F. Kennedy School of Government. He was, by all accounts, a model officer with an impeccable record both in and out of combat.22 But like Antioco, nothing in his experience would prepare him for the challenge he faced leading US Special Forces in Iraq.

  As a commander McChrystal led what was perhaps the greatest military machine ever built. Not only were his Special Forces operators among the world’s most elite and highly trained soldiers, they had cutting-edge technology that could link up to an extensive network of satellites, manned aircraft, and unmanned drones. In an instant, they could access live video to surveil the battlefield, locate a target, and launch an attack. They also “owned the night,” having the ability to move swiftly and silently under the cover of darkness, achieve an objective, and return to base before anyone knew they were there. Their outstanding fighting skills made them almost unbeatable in battle.

  Yet still, they were somehow losing the war. As McChrystal would later write, “The world had outpaced us. In the time it took us to move a plan from creation to approval, the battlefield for which the plan had been devised would have changed. By the time it had been implemented, the plan—however ingenious in its initial design—was often irrelevant.”23