A few weeks ago, Eastman-Kodak, once a titan of the photography industry, announced that it was filing for bankruptcy. Actually, this didn’t rock the world, as Kodak had struggled since 2008 to reorganize and gain the upper hand it once had. There are some very important lessons in this downfall, but one of the most important lessons is this – don’t ignore market changes. Allow me to explain.
Kodak sells (or once sold) film and hardware in a large mix of markets – consumers, professionals, the entertainment industry, medical x-rays. It would only make sense that as they invented the digital camera in 1975, they would evolve and embrace this digital revolution, right? Surely Kodak would realize that their customers – who once spent a considerable amount of money on film – would gravitate towards digital and its attractive ability to re-use memory without additional cost, right? And of course they could see that an open standard of photo formatting shared by millions of consumer and professional cameras was in their best interest – not a proprietary format that didn’t play well with other cameras and software?
The answer to those questions is no, Kodak did not realize – or accept – any of that. Management instead chose to dig in their heels and stick with the old way of products and services that were familiar and profitable for them, rather than adapt. They failed to see the value in the changing market and instead saw only the threats to their core business. As such, they attempted to protect their business, and that protection isolated them as time marched on and demand for their products waned.
So, what’s the takeaway? Is it to embrace technology? Didn’t that kill Kodak? A lot of people will say yes, but improper use of technology was only the vehicle that drove Kodak to the party. The road that got them there was a failure to adapt. Kodak saw the future, and even helped to create it, but they couldn’t figure out what to do with it. Senior management didn’t see any value in digital – or one that they could fit into their business model – and they failed to craft a viable long-term strategy. In the end, Kodak failed to view themselves as one of their own customers and see how their services could be better.