We saw the downfall of Blockbuster, a movie and video game rental services giant who just could not transition toward a digital model and treaded the path to bankruptcy in 2010. Today, Blockbuster could only wish they had not turned down Netflix’s offer to sell their company because they thought it was a “very small niche business”.
We also witnessed how Compaq rose to the echelon as the first company to legally reverse engineer the IBM Personal Computer, but rambled to keep up in the price wars against Dell, HP, and other competitors.
Of course, the internet famous and inspiration for 90 percent of cellphone-related memes, Nokia and its failure to grasp the concept of software and instead focused on hardware because they “feared to alienate current users if they changed too much”. Well, the joke was on them because the Internet swiftly accelerated the world of data, information, communication, and technology.
To think that their ruination stemmed from a mere, uncorroborated hunch that their customers are not going to want to experience drastic change in their user experience system, it is insane to think about just how minuscule decisions could already be root causes to your downfall.
These and countless other companies only wish that they should have known, then, how their reluctance in innovating, and embracing change would eventually turn out to be the primary culprit in their collapse and elimination from the market.
But one particular company does not only wish for a time travel machine so they could go back to the past and make the necessary changes in their company’s mission and vision. Rather, they would die for this to happen!
Kodak’s control, dominance, and supremacy
Kodak was established by George Eastman in the 1880s, and almost a century later, Kodak would have the lion’s share of the United States Amateur film market. They controlled almost 70 percent of the US film market and took over 70 percent of the gross margins on film.
In the words of Doctor Kamal Munir from the Cambridge Judge Business School,
“Kodak was a company at the top of its game. They completely dominated its industry.”
The advertising and marketing campaigns subscribed to by Kodak made its customers realize the significance of occasions such as family events and holidays. Documenting these endeavors was not only a pastime; it was a necessity. In fact, this is why the popular phrase “Kodak moments” was given birth to.
They marketed their products to everyone and everything—from women, to travel and tourism, to sports, and to education. Kodak made it seem like photography was about preserving memories, upholding sentiment, and living in the moment.
Control, dominance, and supremacy are only three of the plethora of terms that were associated with Kodak in the 20th century. Kodak was a tech company that dominated the photographic film market, then, but blew its chance to capitalize on its control over the market because they failed to lead the digital photography revolution.
The Culprits of Kodak’s Downfall
It is even more painful to think that one of the Kodak engineers, Steve Sasson, was actually the inventor of the first digital camera in 1975. What did Sasson do to this would-have-been disruptive technology? He kept it as a secret because he thought it was filmless photography and would not have lured their customers. This diminutive notion Sasson held on to would eventually prime Kodak’s road toward defeat.
You would think Sasson is certainly the individual to point to when asked who should be blamed for Kodak’s downfall. Not wrong. But not correct either.
Former Kodak Vice President Don Strickland, who spoke on behalf of Kodak management, took full accountability of Kodak’s loss. He said that they “could not get approval to launch or sell it because of fear of the effects on the film market”.
They were so focused on the success of their film that they missed to embrace the shift and innovation toward the digital revolution, a concept well-adapted into by their competitors such as the Japanese firm Canon who would eventually outlive and overthrow Kodak, the tech giant that was.
Kodak could have pioneered what might have been a predecessor of Instagram, but they chose to get more people to print digital images anyway. In 2001, they invested in the acquisition of the photo sharing site, Ofoto, in hopes that people still loved having their images printed. This is one of the decisions they wish they had not made.
But then again, who is the one individual Kodak should pinpoint because of their reluctance in accepting and embracing change, their failure to think and act holistically, and their inability to have their business design adapted to the changing conditions.
Is it George Eastman? Dubbed the father of photography, but was severely depressed and committed suicide leaving his death note that read: “To my friends, my work is done. Why wait?” Is it Steve Sasson? The inventor of the first digital camera but threw his work to the garbage because of his belief that people would not love having their images stored digitally. Is it Don Strickland and the Kodak management? The people who took full accountability of Kodak’s demise because they feared Kodak would cannibalize the film market. The answer is, no one should be blamed.
All of them took hefty risks, and risks are prevalent, if not inevitable, in the business world. They took these risks based on beliefs they held onto and thought would be best for their company. You can never predict the future, and Kodak, most certainly, did not. For so long that their intention in making those moves was to make the best and most effective decision for Kodak, they could not be blamed.
They clung on to the belief that people still loved printing their images, and they were wrong. But we could never blame them for that. At that time, no one thought people preferred storing their pictures online rather than keeping a hard copy of it and placing them on frames or inside their wallets.
Lessons from Kodak’s Downfall
Kodak may have turned down the idea of inclining their services to the digital age, but their experience did, at least, fuel them to stand back on their feet and learn from their mistakes. Their experience offers a crash course of lessons to managers who are still not convinced of the importance of both management and innovation to a business’ success, and for the case of Kodak, continuity.
As a way of reinventing itself, Kodak hired a new generation of users and entrepreneurs to take charge of their business. They made sure this time that their workforce is brimmed with individuals who are willing to embrace uncertainty and are prepared to walk toward unforeseen directions.
The root of the many lessons companies can take away from the Kodak experience is that it is imperative that they have a corporate mindset that is open to new ideas and capable of embracing change.
As Doctor Kamal put it, “The important things are not to tie the weight of legacy assets onto new ventures; to refrain from prolonging the life of existing product lines, while trying to create false synergies between the old and the new; and, most of all, to base strategy around users, rather than the existing business model.”
Conclusion: Importance of Management Innovation
Kodak taught us just how important management innovation is. Defined by the Massachusetts Institute of Technology as the implementation of new management practices, processes, and structures that represent a significant departure from current norms, management innovation holds a huge role in the fate of any company. In Kodak’s case, the mere decision of shifting toward the modern digital way of photography could have saved them from drowning, but the beliefs they held onto just did not do them good.
The invention of digital cameras in 1975 piqued the dramatic progress of technology. This means that films and printing sheets, which were the very products Kodak trusted and banked on. As a result, they dismissed the potential of digital photography and refused to see its worth.
Kodak failed to see the potential of digital cameras because they were so focused on the profitability of films and paper at that time. When the time came when these times were no longer required for photography, it was only a matter of time before Kodak would be subjected to enormous losses. They eventually closed down the factories which used to manufacture the items which were supposedly their key to profitability.
Management innovation, therefore, is a term that should never be taken for granted in any business. Just because your business is doing great at this moment does not mean you will not be facing risks in the future. Management innovation does not only need to be recognized, it needs to be embraced.
Kodak may not have ignored motivation, but they certainly did not embrace it like they should have, and they paid the price for it.
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