Wednesday, April 23, 2014

A Picture of Failed Strategy: Kodak's Digital Failure

A Picture of Failed Strategy: Kodak's Digital Failure

This week I learned about key features that can cause a company’s strategy to succeed or fail. David Collis and Michael Rukstad’s 2008 article in the Harvard Business Review stressed the necessity for a simple and concise strategy statement centered on the company’s scope and competitive advantage. A Deloitte University Press publication titled Dynamic Strategy Implementation: Delivering on your Strategy Ambition, written by Dunlap, Firth, and Lurie outlined ways to avoid common mistakes in strategy implementation. This led me to do a simple online search for failed strategies. It did not take long for me to find that Kodak was the most recent offender of a strategy that failed to adapt to consumer trends and technology advancements (even though the technology was created in their labs). 
I found an article published on in January of 2012 by Chunka Mui titled, How Kodak Failed. In the article, Mui described Kodak’s “staggering corporate blunder” of failing to recognize the threat digital photography posed to the film and photo industry. According to Mui’s article, the digital camera was first developed by a Kodak engineer in 1975. For decades, Kodak failed to recognize digital photography as a disruptive technology capable of replacing their established film-based dominance.
In 1981, Kodak conducted a study to determine how digital photography would affect the Kodak’s film business. After the report, Kodak concluded that the digital technology was still about ten years away from making a significant impact to the film industry. But in the following ten years, Kodak failed to adjust their strategy for the market disruption. Over the next decade, Kodak continued to regard digital technology as the enemy, rather than an opportunity to enter an emerging market.  
Vincent Barabba, who was an executive at Kodak, recently published a book titled, The Decision Loom, where he outlines four interrelated capabilities that are necessary for effective enterprise-wide decision making.  No doubt, his experiences at Kodak help him formulate the capabilities. Barabba explained that a corporation needs to have an enterprise mindset that is open to change. Kodak failed to accept digital technology as an emerging market which left them far behind the digital curve. Furthermore, they failed to see digital technology as a film replacement.

Failure to adapt strategy to change was the second point discussed in Dunlop, Firth, and Lurie’s Deloitte article. Had Kodak used or paid attention to market research, they would have been able to set a strategy that counterbalanced the loss of market share to digital photos, or at the very least, a strategy to integrate the new technology into their current strategy. 

1 comment:

  1. John, you may find this interesting. Another film maker Fujifilm chose to apply its chemical technology to healthcare and cosmetics area. Fujifilm once entered digital camera market but it was not so successful because digital image processing is quite different from analog photo development. So instead of staying in photographic industry, Fujifilm chose to use its nanotechnology to cosmetics. Maybe they did the coherence test and figured out that Fujifilm is a nanotechnology company rather than a photographic company.


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