The reason behind Kodak's downfall

A Generation ago, a "Kodak moment" implied something worth saving and appreciating. Today, the term progressively fills in as a corporate bogeyman that cautions chiefs of the need to stand up and answer when problematic advancements infringe on their market. Tragically, as time walks on the nuances of what really befell Eastman Kodak is being neglected, driving chiefs to reach some unacceptable determinations from its battles.

Considering that Kodak's centre business was selling film, it isn't difficult to see the reason why the most recent couple of many years demonstrated testing. Cameras went computerized and afterwards vanished into cellphones. Individuals went from printing pictures to sharing them on the web. Indeed, individuals print nostalgic books and occasion cards, however that volume fails to measure up to Kodak's prime. The organization declared financial insolvency insurance in 2012, left inheritance organizations and auctioned off its licenses before reappearing as a forcefully more modest organization in 2013. As one of the most impressive organizations on the planet, today the organization has a market capitalization of under $1 billion.

A simple clarification is nearsightedness. Kodak was so dazed by its prosperity that it totally missed the ascent of computerized innovations. Yet, that doesn't square with the real world. All things considered, the main model of a computerized camera was made in 1975 by Steve Sasson, a designer working for Kodak. The camera was essentially as large as a toaster oven, required 20 seconds to take a picture, had inferior quality, and expected muddled associations with a TV to see, yet it plainly had monstrous disruptive potential.

Spotting something and taking care of business are totally different things. In this way, another clarification is that Kodak concocted the innovation yet didn't put resources into it. Sasson himself let The New York Times know that the administration's reaction to his computerized camera was "that’s cute – but don’t tell anyone about it." A decent line, yet all at once not totally precise. As a matter of fact, Kodak contributed billions to foster a scope of computerized cameras.

Following through with something and making the best decision are likewise various things. The following clarification is that Kodak botched its interest in advanced cameras, overshooting the market by attempting to match the exhibition of the conventional film instead of embracing the straightforwardness of computerized. That analysis may be held in early emphases of Kodak's advanced cameras (the $20,000 DCS-100, for instance), yet Kodak eventually embraced effortlessness, cutting out a solid market position with innovations that made it simple to move pictures from cameras to PCs.

All of that is debatable, the following contention goes in light of the fact that the genuine interruption happened when cameras converged with telephones, and individuals moved from printing pictures to posting them via web-based entertainment and cell phone applications. Furthermore, Kodak completely missed that.

But it didn’t, entirely.

Before Mark Zuckerberg composed a line of Facebook's code, Kodak made a perceptive buy, obtaining a photograph sharing site called Ofoto in 2001. It was so close. Envision assuming Kodak had really embraced its recorded slogan of "share memories, share life." Perhaps it could have rebranded Ofoto as Kodak Moments (rather than EasyShare Gallery), making it the trailblazer of another classification called life organizing where individuals could share pictures, individual updates, and connections to news and data. Perhaps in 2010, it would have attracted a youthful designer from Google named Kevin Systrom to make a versatile form of the site.

All things considered, tragically, Kodak utilized Ofoto to attempt to get more individuals to print computerized pictures. It?sold?the site to Shutterfly as part of its bankruptcy plan for less than $25 million in April 2012. That very month Facebook plunked down $1 billion to gain Instagram, the 13-representative organization Systrom had helped to establish a year and a half earlier.

There were alternate manners by which Kodak might have risen up out of the digital disruption of its core business. Think about Fuji Photo Film. As Rita Gunther McGrath portrays in her convincing book The End of Competitive Advantage, during the 1980s Fuji was a far off second in the film business to Kodak. While Kodak deteriorated and at last staggered, Fuji aggressively investigated new open doors, making items contiguous of its film business, like attractive tape optics and tape, and spreading into copiers and office robotization, prominently through a joint endeavour with Xerox. Today the organization has yearly incomes above $20 billion, contends in medical services and gadgets tasks and gets huge income from record arrangements.

The right illustrations from Kodak are inconspicuous. Companies often see the disruptive forces affecting their industry. They as often as possible redirect adequate assets to take part in developing business sectors. Their disappointment is typically a failure to genuinely embrace the new plans of action the troublesome change opens up. Kodak made a computerized camera, put resources into the innovation, and, surprisingly, comprehended that photographs would be shared on the web. Where they fizzled was in understanding that internet-based photograph sharing was the new business, in addition to a method for growing the printing business.

So, if your company is beginning to talk about a digital transformation, make sure you ask three questions:

• What business are we in today??Don’t answer the question with technologies, offerings, or categories. Instead, define the problem you are solving for customers, or, in our parlance “the job you are doing for them.” For Kodak, that’s the difference between framing itself as a chemical film company vs. an imaging company vs. a moment-sharing company.
• What new opportunities does the disruption open up??Our colleague Clark Gilbert?described?more than a decade ago a great irony of disruption. Perceived as a threat, disruption is actually a great growth opportunity. Disruption always grows markets, but it also always transforms business models. Gilbert’s research showed how executives who perceive threats are rigid in response; those who see opportunities are expansive.
• What capabilities do we need to realize these opportunities??Another great irony is that incumbents are best positioned to seize disruptive opportunities. After all, they have many capabilities that entrants are racing to replicate, such as access to markets, technologies, and healthy balance sheets. Of course, these capabilities impose constraints as well and are almost always insufficient to compete in new markets in new ways. Approach new growth with appropriate humility.

Kodak remains a sad story of the potential lost. The American icon had the talent, the money, and even the foresight to make the transition. Instead, it ended up the victim of the aftershocks of a disruptive change. Learn the right lessons, and you can avoid its fate.