Auto Industry Facing Its Kodak Moment

A friend of mine on the periphery of the automotive industry told me his tie up with his current company had expired and he was now in the hunt for a new position. He was especially inspired to move on because he said his current employer was facing a Kodak moment.

The expression caught my attention as the expression “Kodak moment” used to refer to a poignant or special occasion to be captured on film. Since the demise of Kodak, it has come to mean that point in time when you recognize that your organization has been outflanked and rendered obsolete.

My friend considered the emergence of app-based roadside assistance in the form of start-ups “Honk” and “Urgent.ly” to represent the death knell of traditional roadside assistance, automobile clubs and telematics service providers. Whether or not that assessment is accurate, the Kodak moment comment spurred me to investigate the history of Eastman Kodak.

To that purpose, I read “Is This Something George Eastman Would Have Done?: The Decline and Fall of Eastman Kodak Company.”

Interestingly, the last Kodak CEO to have a positive influence on the company was George Fisher. George Fisher had a PhD in applied math and served as CEO of Motorola from 1988 leading the company to an increase in profits at the dawn of the cellular telephone revolution, according to Paul Snyder's Kindle book. He joined Kodak as CEO on December 1, 1993.

The demise of Kodak is now famously attributed to the company’s own misguided belief in the longevity of the film business. Kodak executives perceived the greatest existential threat to the company to be direct film making competitors such as Fuji Film rather than the rapidly emerging category of digital cameras and inkjet printers and, more ominously, smartphone cameras.

Kodak fought hard to protect its film based products by shifting production to China and by pursuing legal and trade sanctions against Fuji. Before its demise – 2-3 CEOs after Fisher’s departure in 1999 – Kodak had morphed into a patent troll and licensing junky before filing for bankruptcy.

The amazing thing is that in 1999, Kodak was led by the very man most capable of carving a path out of the wilderness either by merging with, acquiring or being acquired by a company like Motorola from the handset business. In retrospect, it is clear that smartphone-based digital photography – and a lot of corporate myopia and misdirection - destroyed Kodak – and Polaroid as well for that matter.

Auto makers are the new deer in the headlights of the smartphone industry. Interestingly, there are dozens of executives like Motorola’s George Fisher with wireless backgrounds permeated throughout the leadership ranks of car makers. (GM was led out of bankruptcy by a wireless executive, Dan Akerson. Like Fisher, Akerson did little to alter the fundamental strategy and trajectory behind GM’s OnStar embedded connectivity offering.)

Former Motorola, Nokia, Palm and Blackberry executives are lurking behind most major connected car initiatives – including many standards-setting and mandatory programs, such as Brazil’s Contran 245. Scratch a connected car program at a major OEM and you will find a former Motorola, Nokia, Blackberry or Bellcore engineer or manager embedded deeply inside.

The question is whether, like George Fisher at Eastman Kodak, these executives will be blind to the influence of smartphones on car use, ownership and the driving experience or whether their knowledge of wireless will be properly leveraged by their employers. Like Eastman Kodak, will these executives and their employers perceive existential threats as solely derived from traditional sources – other car makers?

From vehicle security and privacy to user interfaces (touch screens!, retina scanning, voice recognition), data access, multi-core processors, GPS and accelerometers, the introduction of smartphones in to cars has enabled ad hoc vehicle ownership and ride and car sharing and a host of emerging applications such as valet parking (Zirx and Luxevalet), on-street parking (Anagog) and of course navigation, safety (iOnRoad, Carvi), usage-based insurance and, soon, mobile payments.

Car makers need to gain a better grasp of the power and intimacy inherent in connectivity. Wireless carriers and handset makers have embraced and been empowered by this new customer experience. Car makers must do likewise.

The path to success lies in proprietary platforms that enable access to apps and cloud resources safely on the go. Apple’s CarPlay and Google’s Android Auto connections are convenient customer accommodations, but proprietary connections will allow car makers to engage with their customers directly.

To fail to find ways to effectively and safely integrate smartphones in cars will set the stage for the auto industry’s Kodak moment. No one wants to be part of that close up.