Kodak's masterclass in what not to do

I usually write about brands that have done exceptionally well in their respective fields.

This brand is one of the world’s most famous cases when it comes to innovation and disruption. But it also happens to be just as famous for mismanagement and complacency.

How was it that a company that dominated an industry for over a century, and was the pioneer of innovation, ended up filing for bankruptcy protection?

You're about to find out, as this is the (cautionary) tale of Kodak.

Before we had smartphones and selfies, there were only cameras.

The fact that I even need to state that is 1. Terrifying and 2. Indicative of how far (and fast) technology has moved since I was a tween.

Access to photography used to be exclusively for the elite. Only a professional could take and develop photos in a dark room. And it certainly wasn’t cheap.

That was until George Eastman, a visionary entrepreneur who believed heavily in the democratisation of photography, revolutionised the industry. How? He introduced the first commercially successful roll film camera – The Kodak Brownie. And it was this camera that propelled Kodak to the forefront of the photography industry.

The company’s success was thanks (mostly) to their ability to innovate the technology of cameras and provide photographic film for both amateur and professional photographers. Because this made cameras accessible to everyone.

Kodak's relentless pursuit of innovation kept its growth steady for years.

The brand became known for pushing the boundaries of photographic technology. It introduced the first commercially available colour film, then instant film.

Kodak consistently altered the way people captured and shared their memories. This made the brand an undeniable part of family life and special occasions during this time, captivating consumers worldwide.

And it was this notion that sparked Kodak's ingenious marketing campaigns.

The phrase that everybody knows: A Kodak Moment.

This came from a campaign that emphasised the emotional connection people have with photography. And this, of course, resonated deeply with consumers.

We all know how it feels to look at a fond photo of you and a loved one. Adding their iconic tagline to turn that feeling into a branded moment. And that's what turned Kodak into a household name, helping the brand rise to prominence.

The Digi Revolution

In the late 1990s, digital photography transformed the camera industry.

Was Kodak so blinded by its success that it refused to prioritise this new technology? Even though the first digital camera prototype was created by Steve Sasson, a Kodak engineer?

Kodak mismanaged its investment in digital in multiple ways. And this eventually led to their downfall.

However, the company’s failure is not as simple as letting digital slip through its metaphorical fingers.

In fact, Kodak did invent and invest billions in digital cameras.

It also carved out a strong market position with tech that made it easy to move pictures from cameras to computers.

When cameras merged with phones and people shifted from printing to posting, Kodak acquired a photo sharing site called Ofoto in 2001.

But unfortunately, Kodak wanted to use this site to get more people to print photos.

It sold the site to Shutterfly as part of its bankruptcy plan for less than $25 million. That same month, Facebook shelled out $1 billion to acquire Instagram; the 13-employee company Systrom had co-founded 18 months earlier.

The lessons here are subtle.

Companies like Kodak almost always see the disruptive forces affecting their industry. And they frequently divert sufficient resources to participate in emerging markets.

Their failure is usually an inability to truly embrace the new business models the disruptive change opens up.

Kodak created a digital camera. They invested in technology. They even understood that people would start sharing photos online. Where they failed was in realising that online photo sharing was the new business, not just a way to expand the printing business.

Today, we have emerging technologies coming out the wazoo.

If your company is talking about how to merge these, Harvard Business Review suggests you ask yourself 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. 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? Clark Gilbert described a great irony of disruption. Perceived as a threat, disruption is a great growth opportunity. Disruption always grows markets, but it also always transforms business models. If you perceive disruption as a threat, you'll be rigid in your response. If you see it as an opportunity, you'll thrive.

What capabilities do we need to realise 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. These include 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.

Disruptive change can make or break your company. Learn the right lessons from tales such as Kodak's, which is one of potential lost, and you can avoid the same fate.

-Sophie, Writer