The bankruptcy of former photo giant Kodak is loaded with lessons that business owners can learn. The fact that Kodak invented the digital camera over 35 years ago, a decade or more before its competition, makes the story even more tragic. The lessons business owners and management can learn from the fall of Kodak are compelling and relevant.
Besides never capitalizing on the digital-camera technology it helped create, Kodak ignored the marketplace. That’s what happens when management thinks it knows what’s best for its customers and stops listening and adapting. It ignored technology even though its world-class laboratories were introducing new products years ahead of the competition. Kodak management continued to believe it could introduce new products when it was ready, not the consumer.
Social media didn’t exist when Kodak decided that paternalism was in its best interest. Today, turning a deaf ear to your customer could be a near-fatal strategy. Just look at the response to the Netflix subscription brouhaha following by the Verizon fee fiasco. Had social media been a primary mode of communication in the 80s and 90s, Kodak’s fall would have been much faster and deeper.
The truth is that by the time Kodak go into the game, it was too late. Kodak was outclassed by more nimble competitors with better products that didn’t even exist just a few years earlier. For nearly 30 years, it was classic David and Goliath and David slayed Goliath over and over again.
Whenever Kodak took a shot at getting into the digital game, it tried to knock one out of the park. Unfortunately they were playing in the ballpark. They viewed Fuji and the like as its primary competition. It completely ignored companies like Apple, Intel, Nokia, and Motorola whose technology made film photography obsolete.
In 1975 Kodak invented what was then referred to as a “film-less” camera. Management killed it because if introduced, it believed film-less photography would cannibalize its existing business. How many businesses today are fighting to keep fading products and services alive to preserve its own existence, ignoring revolutionary changes in the marketplace and radically different consumer wants.
Fortunate for Kodak, it got a 2nd chance to revolutionize how consumers took photos. In 1995 Kodak brought its first digital camera to market, the DC40. This was years before many others would get into the digital game. Kodak never took advantage of its early start. Embracing digital photography meant cannibalizing its own business.
Few people could envision the world today where 2.5 billion photos are uploaded to Facebook daily and shared with family, friends, and even complete strangers. Sharing via the Web is by far the biggest way people use their photos today and again Kodak had a chance to be the leader in this business. It purchased the Ofoto service in 2001 but took four years to relaunch the service as Kodak EasyShare Gallery. As anyone knows, technology doesn’t wait for you to catch up. Thinking its history and one time world dominance could stall change, it dragged its feet. By the time EasyShare Gallery launched, Facebook, Flickr, Picasa, Photobucket and others were becoming household names. Kodak went from industry leader to also-ran.
It also ignored what has become a critical blindspot in the vision of many business leaders. It’s not always your competitor who is the biggest threat to sustainability and growing marketshare. Sometimes it’s a new technology that makes your product obsolete.
While worried about Fuji, Kodak ignored cellphones and how digital sharing would change the way consumers interacted with their photos. Still thinking that like a print company, Kodak launched a line of digital frames and photo printers. If it couldn’t make photo paper, it could at least help consumers print photos at home and then frame them, right? Wrong again. Its frames didn’t include wifi and only worked when they were plugged in. And most recently, it completely ignored the mobile revolution and was a very late entry into the app marketplace.
it was a virtual non-presence in mobile apps (no, SmileMaker doesn’t count), which cemented the company’s irrelevance in the way people experience photos today. There are no Kodak moments in mobile.
There are three critical lessons here for all business owners and management.
- Be nimble. Be quick. Change is inevitable and it is happening faster than ever before. You can’t be afraid to cannibalize your own business in the name of progress. Learn from RIM, the owners of the once-dominant Blackberry, who allowed the iPhone and Android phone to erode their marketshare. Learn from Sony whose hesitance to develop a digital Walkman allowed the iPod to replace it. Learn from Blockbuster which ignored Netflix.
- Your competition may not be who you think it is. Learn from Sears and K-Mart which felt that two failing former giants was better than one. Sears had one of the world’s best known brand names – Kenmore. Instead of leveraging this asset, it squandered it. It focused on Walmart and Target as its biggest threat, despite neither of those retailers selling large appliances. Sears ignored how Amazon was changing the way consumers buy everything, including large home appliances not just books and music.
- Listen, listen, listen. Companies may own their brand and they may manage it. But social media changed ownership. You don’t own your brand anymore – your consumers do. Silence is no longer golden. If you are not listening, you are not playing on the same field as your competition.
Kodak’s misguided attempts to slow changing consumer buying habits and a malignant reluctance to innovate killed an industry and American manufacturing icon. After over a century of inovative leadership, another corporate giant has fallen. What can you learn from Kodak so that history does not repeat itself?