why would Bismarck think that blood and iron are the only options for making Germany successful?
Otto Von Bismarck was famous for his realpolitik approach to government. This approach to government supposed that practical concerns should supersede moral considerations. Thus Bismarck believed governments could best achieve success by "blood and iron." As he argued in a September 1862 speech:
The great questions of the day will not be decided by speeches and resolutions of majorities… but by blood and iron.
Bismarck believed 19th-century nation-states could only be successful if they demonstrated to themselves and other nations that they were willing and able to fight. They demonstrated the willingness to fight through blood--the commitment to sacrifice lives in the pursuit of a goal--and the ability to fight through iron--the commitment to devoting economic resources to the national military. Bismarck did not believe that liberalism (which placed an emphasis on moral concerns such as human rights and liberties) would bring success to a modern nation-state.
Bismarck used his "Blood and Iron" realpolitik approach to government to unify Germany. Rather than seek to find a liberal or democratic way to unify Germany, he orchestrated the Danish War, Austro-Prussian War, and Franco-Prussian War to accomplish that purpose.