The demise of Eastman Kodak is a story of a company which did not take on the challenges of disruptive innovation.
After 133 years, the company has filed for bankruptcy. Essentially, Kodak was caught out by a combination of factors.
The technologies that enable us to represent with world in still images changed radically with the development of digital cameras. The rise of digital was bad news for a company that made so much of its money from selling film.
But technology alone doesn’t explain Kodak’s demise. Along with digital technologies came changing patterns of behaviour. A device intended to help us communicate while on the go, the mobile phone, took over as our everyday camera.
There is a sense of irony at play. Here is a brand that became synonymous with the Kodak moment – “a rare, one-time moment captured with a photo, or should have been captured by a photo,” as the company defines it.
Now, those moments are captured by a device that most people carry with them all the time, the mobile phone. These connected devices also make it easy for us to immediately share those “Kodak moments” with friends and family,
Kodak failed to see the danger from digital imagery, the mobile phone, increased connectivity and the shifts in people’s habits.
But it is easy to see why the company didn’t act. The first cameras on mobile phones were of such poor quality that there seems little reason for Kodak to see them as much of a threat. The phones were clunky, slow and not hooked up the net.
They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.
Based on this premise, Kodak would not have seen digital cameras and mobile phones as competition or potential threat to its core business. Its core market was film and film cameras for customers who wanted good quality photos.
However, the history of technology shows how often the initial versions of a product or service are often of low quality but over time shift from being low-end and overtake established products and services.
Executives are reluctant to invest in technologies which disrupt their existing markets and customers, and usually bring in much less revenue, at least initially.
The rise and fall of Kodak is an example of how companies struggle between sustaining innovations that prop up existing markets and customers and disruptive innovations which challenge long-standing ways of doing business and require a radical rethink in corporate strategy.