Staying Relevant in the Accelerating Future

Perhaps one of the most iconic cases of success and failure in the history of business, and one that can certainly teach us an important lesson on how to remain relevant in an accelerating future, is Kodak.

Kodak was the one the greatest photography companies in the world, until the 1990s. Kodak’s demise started in 1975 when it decided to ignore the idea presented by one of its engineers about digital cameras and digital pictures. Kodak, sure of its business assumptions and long term strategic plans, decided that the idea of digital pictures was “cute", but that it wasn’t going to last. In the mind of Kodak’s management team it was simply impossible that another technology, a disruptive technology in fact, could surpass the success of its film-based photograph. The result, from 1997 to 2012, Kodak lost 99% of its stock value and filed bankruptcy in 2012.

One of the main reasons of Kodak’s huge blunder and failure was not its lack of capacity to adapt to ever increasing and higher users’ needs. Actually, any company that is able to last for more than 100 years, like Kodak, must have the ability to survive difficulties and uncertainties, and adapt to changing times. The difference is that adapting strategies to fit market needs, versus totally renewing your corporate mindset to stay relevant in the accelerating and exponential future are two different things. Kodak’s bankruptcy wasn’t the result of lack of agility or adaptation, but its total incapacity to discard its old business assumptions, change and renew its basic premises about the industry in times of exponential innovation.  

Today, the speed of change and innovation is by all means unprecedented in human history. Most corporations, and startups, know very well that the costs of product development are exponentially decreasing, at the time that the possibility to access information and technology in order to innovate are exponentially increasing. But one of the main elements that prevent any organization from building its operational capabilities in order to remain relevant and sustainable in times of exponential change is the assumptions and the organizational mindset under which it decides to operate.

Kodak didn't fail because of its lack of talent, or its incapacity to innovate or change. Kodak was often at the vanguard of technology, and until 1997 it was profitable with almost 70% of market share. However, Kodak failed and died because its assumptions about the industry simply negated the possibility to build another set of operational capabilities in order to respond to disruptive technologies that were shaking up their basic assumptions. Kodak’s management team thought that digital technology was another fad, and that maybe its existing capacities and assumptions were going to be enough to adapt and remain relevant.

Kodak had the talent and the operational capabilities to create entire new industries. It could’ve been the trail blazer not only in digital photography, but in many other areas, and the creator of many disruptive technologies. Nevertheless, the company was so entrenched in its assumptions about how to run the business and its mindset and ideas about the future, that it became just too comfortable within that framework. By the time it realized that a disruptive technology had set a new direction in the industry, it was simply too late for them to catch up. Kodak died not because of its competitors or a disruptive technology, Kodak died because it was dogmatic about its business assumptions. And in business, especially in times of exponential and accelerated change, dogmas and orthodoxies are a corporate’s death sentence. On the contrary, open-mindedness not only to change, but about the basic truths hold by the organization is by far a greater way to remain relevant.

Kodak is not the only one example, although perhaps the most iconic one. Stories like Kodak abound in business. Many organizations are quickly becoming irrelevant, and therefore unsustainable and unprofitable. A lot of them fire people as the way to counteract their failures. But the answer is not in their human capital or their talent, but in how quickly and constantly they change and renew their basic business assumptions. Unfortunately, in times of exponential change and disruption, even incremental updates to business assumptions might not be enough.

It doesn't matter anymore how large and profitable the organization currently is, how good its talent is, or how strong their operational capacities are, all of which Kodak had before 1997. None of these greater advantages serve any purpose for an organization that is locked (and stuck) in its dogmatic assumptions and preconceptions about how its industry should be and behave. Today, every single idea is a potential disruption in itself. The engineer that presented digital photography to Kodak gave them the possibility to create an entire new industry. Kodak had the capacity to do it, because it was prevented from doing so because that idea was not aligned with its way to see the world.

Thomas Kuhn in the book The Structure of Scientific Revolutions said that a theory (which could be considered as a basic set of assumptions) works until the moment it doesn't and crisis emerge. When a crisis emerges, a revolution springs and a new theory is created that will follow the same cycle. In business, this could be translated as business assumptions changing only when things don’t go well, or in the presence of disruptive innovation.

However, in times of exponential change, when the future is accelerated at a hyperfast pace, these crises and revolutions are emerging all too fast to keep up. In 1997 it was digital technology what disrupted Kodak’s industry. For corporations in any field, instead of expectantly wait for one crisis to emerge in their industry and take them by surprise, it is just more effective and productive to constantly look at their basic business assumptions. That way they can shake up the very foundations of their beliefs and even promote a crisis that pulls them away from the comfort of existing conditions, and makes them innovate and even disrupt.

Many organizations hold their "truths" about the industry often too seriously. But in business, the only fundamental truth is that whatever a corporation believes and assumes about how the world should be and work is flawed since its very conception. Nothing ever remains static in life and business dogmas have taken hundreds of organization to the road of their demise.  Renewing basic business assumptions and letting imagination and creativity flow are part of the most fundamental calls to actions that any organization may have in order to remain relevant, profitable and sustainable in times of accelerated change.-  

Follow me on Twitter: @erubio_p
Visit my blog: www.innovationdev.org

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About the Author: Enrique Rubio is an Electronic Engineer and a Fulbright scholar with an Executive Master’s Degree in Public Administration from Syracuse University. Enrique is passionate about leadership, business and social entrepreneurship, curiosity, creativity and innovation. He is a blogger and podcaster, and also a competitive ultrarunner. Visit the blog: Innovation for Development and Podcast. Click here to follow Enrique on Twitter. 

Disclaimer: opinions are my own and not the views of my past or current employer