Why Kodak failed. A lesson in adapting to changing times.

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Steve Sasson, a Kodak engineer, invented the first digital camera in 1975. The initial response to his invention by the Kodak board was:

‘That’s cute, but don’t tell anyone about it.’

(The Devil’s Advocate by Vince Barabba / The New York Times).

Kodak saw itself as a film and paper company, it sold cameras, often at loss, to create a market for its more profitable products. So Sasson’s camera was seen as a crazy idea – “a camera that doesn’t use film – why would we sell that?”

Despite inventing the digital camera, Kodak failed to see the potential or how it would change the business landscape for the future.

Kodak made over 100 million Instamatics, and before that, the highly successful Brownie. Almost every house had a Kodak camera. For decades it was the number one consumer brand in photography.

Kodak was successful. Very successful, so any threat to their business was initially dismissed. Even when it did finally recognise that it was in decline it seriously misjudged how fast film would be replaced by digital.

The irony of the legacy of Kodak’s failure was that it was killed off by the very thing it invented – the digital camera.

But as we all know, times constantly change and those brands that don’t adapt, innovate and think differently – fail.

In 2001 Daniel Carp replaced George Fisher, after 5 years of decline, as CEO. Fisher had sold off most of the family silver but lacked the vision to move Kodak forward. Instead he tried to prop Kodak up by cutting costs and asset stripping it.

Carp bought vision to Kodak and they soon started to invest in new technology and finally entered the digital camera business.

They built a leading site for online photos, the Kodak EasyShare Gallery. Their EasyShare digital cameras briefly became the best sellers in the US market. Kodak also had a leadership spot in kiosks.

Kodak’s renewed success shocked many cynics in the industry, but it was unsustainable.

A key element in Kodak’s new consumer digital strategy had been misjudged: people using digital photography didn’t want to print images.

Kodak failure is a lesson in failing to understand the changing consumer.

A failure to invest in good consumer insight resulted in making serious misjudgments about consumer behaviour. The world was changing. Consumers were changing. But Kodak wasn’t changing fast enough or keeping relevant.

Behind the scenes it was collapsing internally. Politics, a board in disagreement, lack of investment, structural issues, an inability to sustain growth and a declining bottom line was forcing Kodak down.

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In January 2012, Kodak filed for bankruptcy.

Carp later said that they had based too many decisions on assumptions combined with a failure to think differently. “We tried to follow, we should have led.”

‘If you are being forced to change you are too late.’

As they say, “complacency is not a strategy”.

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THOUGHTS from FORBES and the HBR

There really is no company that can ignore change and not explore the possibilities that are ahead.

Companies need to be more agile, think differently and adapt to changing consumer needs. The challenge now is to stay relevant.

Blockbusters, HMV, MFI, and many other goliath brands, didn’t look at the future and failed to explore new possibilities.

52% of top 500 businesses have vanished in the last 15 years.

88% over the last 50 years.

In the David & Goliath economy, smart start-ups, new models and technology embraced businesses are now challenging the established big business, sometimes fatally.

The average life expectancy of a business is now just 15 years.

Big businesses are now having to look for new solutions. Ones not found in management consultants – they lack imagination. Or traditional ad agencies  too focused on ads.

The Garage is a good example of a new model of agency that is helping brands innovate in a different way. It gained a lot of publicity recently for its Steve Jobs recruitment ad with then “dyslexics only should apply”.

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So what does The Garage actually do?

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The Garage helps businesses reinvent, reframe, reimagine or just rethink where they are.

Like Steve Jobs, they believe in simplicity. Summed up in three words – we think differently. We do it fast, efficiently and without fuss.

They can show what a company would look like if it was launched tomorrow.

This highlights the gaps between where they are now and where they need to go. That can really make people internally think. A wake up call to those defending the status quo. A rallying cry for those seeking change.

They can help staff or management team see new possibilities and new opportunities.

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Look at a dice? What’s the maximum number of sides you can see at once? Three. But you know there are six. They help people see the other three. By teaching a company’s own people to think differently.

The Garage is in a disruptive innovation specialist.

 In a new space between marketing (understanding consumers and communications) and management consultancy (understanding business and economics).

The Garage was born out of Creative Orchestra, a new model creative agency founded by experienced thinkers from Saatchi & Saatchi and BBDO. It started by solving the business problems marketing couldn’t. Helping brands look at the problem in a different way.

The ad industry keeps talking about new models but no one has created any yet. Maybe The Garage is the model of the future, less about delivering ads, more about applying creative innovative thinking to business problems.

www.co-garage.com