Kodak was once a global leader in the camera market – everyone wanted to snap a “Kodak moment”. The company ended up losing sales and business due to the rise of digital cameras and photography simply because they failed to invest in new technology, as they were still using the film-based business model which bought in its main revenue.
The digital camera market exploded, and customers wanted newer models and chose their competition because the designs and features were better. Digital Photography was better, and Kodak had failed to innovate (very similar to Blockbuster and Netflix) but more importantly they didn’t strategically think about disruption and the future developments affecting their industry.
Kodak’s management failed to see digital photography as a disruptive technology. Kodak as a company were in denial about the future; they had researched digital photography technology and the likely adoption of those technologies and found that there was an ability of it taking over and replacing Kodak’s film-based business. The other side of that was that they thought they still had time to prepare, perhaps a decade. Even though the research was extensive, the study suggested that disruption was minimal for the time being and therefore nothing to worry about. This meant that Kodak did not prepare for the transition at all. What Kodak did instead was use digital to improve the quality of film. Kodak wanted to remain closer to its core business in film and photographic chemicals.
There were lots of CEOs who were hired and fired during this time. Unable to transition to digital photography, Kodak was on the brink of bankruptcy. A lack of strategic decision making meant that the right strategic choices were not being made. A lot of it came down to management not using market intelligence properly. Spotting something and doing something about it are also two very different things.
The decisions that were pivotal, but Kodak failed to make were:
- Not having an enterprising mindset that is open to change – Kodak’s management failed to consider digital disruption.
- Not thinking and acting holistically – Kodak’s management understood how the core business parts worked together, but they did not understand and appreciate R&D into digital technology.
- Not being able to adapt the business to external change – Kodak was not willing to change its original business model which meant that it lost its chance to adopt new technologies.
- Not being able to make decisions – Kodak failed to use data and information effectively and was SLOW to respond. The company was full of bureaucracy, had a traditional hierarchy and had a risk averse culture.
- Not being able to compete with new entrants in the photography market – Kodak was too big to keep up-to-date with market trends as it was too slow to develop new products and failed to invest in new markets.
- Too focused on protecting the existing business model (investing in traditional film) rather than change with market conditions – Kodak failed to keep up with innovation, digital technology and social media.
Kodak’s failure to innovate, not being able to make effective decision making and not having a culture of continuous learning, all contributed to its downfall and bankruptcy. Now just suppose, if Kodak had truly embraced the future, it could have rebranded to a ‘life networking’ format where people could share photos, updates and links to news and information long before Zuckerberg even launched Facebook. They even had the opportunity to merge cameras with phones. They saw it all coming; They just failed to truly embrace the NEW business model that disruptive change was opening up. They failed to realise that online photo sharing was the NEW business and instead focussed on expanding their printing business. What and how Kodak really should have thought about disruption is:
- What business are we in today? What is the problem you’re solving for customers?
- What new opportunities does disruption open up? Businesses should see these as growth opportunities instead of threats as disruption transforms business models.
- What capabilities are needed to realise these new opportunities?
This and future generations won’t remember Kodak now. They had the talent, capability and even foresight to make the transition to newer business models but instead they ended up in a tragic demise. When thinking about business, doing something and doing the right thing are different things.
