Blind to disruptive changes in the marketplace
In the 20th century, Kodak was truly one of the world’s powerhouses. Its rise to prominence began when it launched its affordable Brownie camera in 1900. In the decades that followed Kodak established a dominant position in the lucrative film business, with its “you push a button, we do the rest” slogan demonstrating its commitment to making photography accessible to the masses.
By 1976 Kodak accounted for 90% of film and 85% of camera sales in America. Until the 1990s it was regularly rated one of the world’s five most valuable brands.
Then came digital photography to replace film, and smartphones to replace cameras. Today people turn to digital cameras embedded in their mobile phones, share pictures over the Internet, and eschew prints altogether.
Kodak is now looking to sell patents to shore up its shrinking cash position and stay in business after failing to turn an annual profit since 1997. They recently warned that unless it could raise $500 million in new debt or sell some patents in its portfolio, it might not survive 2012.
The easy narrative is that Kodak is a classic case of a company blind to the disruptive changes in its marketplace. Like many easy narratives, this one is not quite right.
Kodak wasn’t blind to this shift. It created a working prototype of a digital camera in 1975. The engineer behind that project, Steve Sasson, offered a memorable one-liner to the New York Times in 2008 when he said management’s reaction to his prototype was, “That’s cute – but don’t tell anyone about it.”
But Kodak did invest heavily in digital imaging and carved out a reasonable position in the digital camera space with its line of EasyShare products. As the decade wore on and its core business continued to deteriorate, Kodak brought in a new leadership team, downsized its core operations, and began placing bets on even more radical ideas, such as a line of printers with low-cost ink.
So Kodak actually saw the world pretty clearly and did what a lot of smart companies would have done in its circumstances. Yet, today it still teeters on the brink of insolvency.
Kodak’s struggles show how brutally hard it is to get transformation right. The company took aggressive action, became a viable player in the emerging disruptive space, invested in new growth businesses, but it just doesn’t seem like it was enough.
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Blind to disruptive changes in the marketplace — http://www.torbenrick.eu/t/r/ypx
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