Why Did Kodak Fail and What Can You Learn from its Demise?

source: blogs.ubc.ca

This article presents the reasons for Kodak’s failure and what every entrepreneur can learn from it.

image source: wikipedia.com
image source: imperialleisure.com

You press the button, we do the rest.

George Eastman

The Industry’s Turning Point — Phase 1 — Photography Going Digital

When the digital came, the film sales went out the window.

It seems Kodak had developed antibodies against anything that might compete with film.

Bill Lloyd, Kodak’s CTO via nytimes.com

source: thirdway.org
image source: Jake Nielson via Twitter

The Industry’s Turning Point — Phase 2 — Photography Going from Digital to Social

image source: dpreview.com

Kodak acted like a stereotypical change-resistant Japanese firm, while Fujifilm acted like a flexible American one.

Sharifah Khairin Syed Mohd Ali, in Kodak Strategic Blunder (SlideShare)

Here are 3 Reasons for Kodak’s Demise according to Analysts:

1. Failed to reinvent itself

The right lessons from Kodak are subtle. Companies often see the disruptive forces affecting their industry. They frequently divert sufficient resources to participate in emerging markets. Their failure is usually an inability to truly embrace the new business models the disruptive change opens up. Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online. Where they failed was in realizing that online photo sharing was the new business, not just a way to expand the printing business.

2. Complacency

The organization overflowed with complacency. I saw it, maybe in the late 1980s. Kodak was failing to keep up even before the digital revolution when Fuji started doing a better job with the old technology, the roll-film business. With the complacency so rock-solid, and no one at the top even devoting their priorities toward turning that problem into a huge urgency around a huge opportunity, of course they went nowhere.

3. Lack of organisational agility

Kodak’s lack of strategic creativity led it to misinterpret the very line of work and type of industry that it was operating in which was later devastated with a fundamental shift towards the digital age. Strategic problems were tackled through rigid means, and as mistakes in the manufacturing process were costly, and profitability was high, Kodak avoided risky decisions, and instead developed procedures and policies to maintain the quo.

What you can learn from Kodak’s demise:

  1. Transform the way you view strategy, business models and innovation management;
  2. Be prepared to shift from protecting your company’s competitive advantages to making change radical and revolutionary;
  3. To avoid complacency ensure that your innovators have a voice with enough volume to be heard (and listened to) at the top;
  4. Adopt agility as an organisational strategy for development.

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