In my Â last post, I wrote about how good product design bends technology to it’s will to create something that is both functional and beautiful. The counter argument to that is what happens when form and function ceases to be relevant in the modern age?Â Has the Kodak Moment faded from history?
In the recent case of Kodak the answer appears to be the death of an industry giant, unable to get to grips with the digitisation of it’s business.Â However, rather than simply putting the blame at the door of digital technology, I believe that it’s malaise was symptomatic of a cultural shift in how traditional business continues to operate when compared with the modern definition of startups.
The old way of creating successful business models in the 19th-20th Centuries was to limit the means of production to the few who could afford it. This is beginning to look increasingly out of place in the digital age. There is a shift to a more open and connected philosophy of conducting business.
Writing in Gigaom, Om Malik said:
Kodak, like many other businesses that have failed before it, made one fatal mistake â€“ it forgot the true purpose of its business and instead focused on features, SKUs and products. Kodak continued to define itself by â€œfilmâ€ when all it should have done is define itself with â€œphotosâ€ or moments.
The economist, by contrast, paints a picture of Kodak being a rabbit caught in the headlights of modern progress, despite coming up with the concept of digital photography as early as 1979.
Both Kodak and it’s main rival FujiFilm recognised that digital photography was going to have an impact on their traditional business model, both firms also recognised that digital photography in itself was not going to be very profitable when compared to traditional film. But the key difference between the two photo giants was that Fuji was prepared to adapt more readily to the changing appetite for digital photography.
This got me thinking as to whether the key to Kodak’s decline was due to the fact it was a product of it’s day – a US business model of selling stuff to the rest of the world while ensuring it enjoyed the benefits of protectionism from foreign competitors? Add on top of this a corporate culture of risk avoidance and product perfectionism, it’s no wonder Kodak slid into the role of ‘complacent monopolist‘.
In the same way that General MotorsÂ epitomised US big business, Kodak found itself increasingly at odds with the liberalisation of trade and information across the world. A different business mindset was required. Kodak should have aimed to be an international business who happens to be based in the US. Instead it maintained a course of resisting change until it became too late.
Fuji’s willingness to adapt to changing conditions is rooted in Japanese management culture as a whole. There are two key planks to this perspective: 1) a proactive attitude to collaboration and information sharing (hourensou) 2) and a philosophy of (genchi genbutsu) where everyone is expected to be involved in solving the problem across all levels of the business.
Aspects of this Japanese business philosophy has undoubtedly been applied to the concept of the lean startup. With the focus on rapid iterations in response to changing requirements, agile or lean software development has formed the basis for many tech startups. But fundamentally the culture is less inward looking (a la Kodak) and more outward focused .
Instagram created a new market for digital photography whilst playing in the space that Kodak abandoned – a homage to the original Kodak Instamatic and Polaroid cameras of the past. From an initial investment of $500,000 in 2010 and a further $7,000,000 in 2011, Instagram was able to capture 5 million users and an estimated 150 million images have been uploaded to it’s service. Effectively the management team of Instagram created not just a product/service, but a scaleable platform where anyone is free to use and build upon the Instagram API.
It’s within this new operating environment, built on openness, problem solving, and frequent iterations that highlight just where Fuji Film and Instagram went right, and where Kodak went wrong.
To say that digital killed Kodak is misleading, and there are a whole range of other factors to consider that outside of this topic. Nevertheless the business culture of Kodak, was rooted in the old US centric form of thinking. In this connected world with free global trade and information, you could no longer have a situation where a product is valued simply on being from country x. Information on price, quality, design, and utility have levelled the playing field for consumers to make those purchase decisions.
Fundamentally advancement in digital technology played a contributing role but was not the main factor in Kodak’s decline. Rather Kodak became a cultural relic of big business practice in the US. It struggled to recognise that the world had moved on, and now its memory will fade.