Start Up Blog

Kodaking

Posted in entrepreneurship by Steve Sammartino on October 1, 2013

The pace of change is overwhelming. Many established companies have finally realised that this change isn’t just a little blip in the way things are done, but an entire business eco system reorganisation. It’s fair to say that the level of  corporate anxiety is at an all time high, and with good reason. Only 57 companies still remain on the inaugural Fortune 500 list from 1955, while more than half of the Fortune 500 companies were not in it just 10 years ago.  And while the cost of not adapting to the digital era is likely to be extinction, it seems as though every day I see yet another story of a large legacy market leader who is, to put it bluntly, Kodaking.

Kodaking is the term I now use to explain a company implementing strategies which are fundamentally flawed in the new business infrastructure. But before I go through the signs of a firm who is Kodaking, I’ll recap some of the terrible decisions made by the once revered imaging company.

Kodak’s Digital Camera from 1975:

First ever digital camera - kodak 1975

- – -

Kodak had over $16B in revenue in the late 1990’s – yet is bankrupt today. In fact they recently sold 1,100 of their remaining valuable digital imagery patents to a consortium of Apple, Samsung, Google and others for the sum of $527 million in a bid to restructure and salvage something. They ironically invented the digital camera in 1975, but had little incentive to facilitate its mass marketing as it disrupted their highly profitable film sale and processing business. As late as 2004 Kodak in their wisdom stupidity attempted to sell digital cameras which plugged onto home based printers so they could continue with their old model of selling chemical film for profit. Here’s the kicker though…. What they did do, share memories, ‘Kodak moments’, has never been in stronger demand than it is today. Twice as many photos have been shared in the first half of this year as were shared in all of last year. What is facebook other than a Kodak moment 2.0? Facebook’s market capitalisation is (as of today) $122b while Kodak had a market value of only $28b at its peak. In fact there is no limit of new and large brands who took what Kodak resisted – Flickr, Instagram, Smartphones, GoPro,  parts of Google, elements of Apple…. the list is long.  Kodak could obviously see the future, because they invented most of it. But they were greedy. What they really failed to do was connect people, the way the people wanted to connect. They tried to dictate the methods of visual connection with people.  As we know technology has no respect for the past, and our strategy must always be defined by our audience’s desires. They recognised the technology, but failed to open their mind to the revenue possibilities of it, and play the long game.

So how do we avoid Kodaking? Here are some things to look out for:

  • Shelving technology which is less profitable, but highly probable to redefine a market.
  • Defining the company by product portfolio instead of human needs underneath them (see the Marketing Myopia).
  • Trying to find new ways to keep old revenue models alive.
  • Not asking these core questions often enough: What business are we in? What business do we need to be in?
  • Internal talk about the advantages of scale and infrastructure, when the opposite is true.
  • Ignoring the potential of disruptive startups in adjacent industries.
  • Trying to charge a fee for what can now be found elsewhere for free.
  • Competing for market share in an existential pie (Kodak vs Fuji vs Agfa). The future is often in baking a new market share pie.
  • Not entirely embracing technology as a mandatory company focus.

Startup blog says: Don’t be Kodaking.

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9 Responses

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  1. Jon Manning said, on October 1, 2013 at 4:31 pm

    Steve,
    Name names…who’s “Kodaking”

    • Steve Sammartino said, on October 1, 2013 at 4:39 pm

      I’m sure we can all think of many corporate examples. Most legacy industries have big players doing it….

      One thing I never understand is why newspapers believe paywalls will work when their are perfect substitutes of the same information elsewhere free on line… that’s one classic example for me. They should simply do what Business Insider and Gawker Media do – but for news.

      Steve.

  2. Susan Jones said, on October 1, 2013 at 7:26 pm

    Great post again Steve. I was just talking about Kodak’s terrible record of innovation with my entrepreneurship students this morning.

    • Steve Sammartino said, on October 1, 2013 at 9:52 pm

      Thanks Susan, Yep and their main problem wasn’t that they couldn’t conceive of great things…. but wanted their old world business model around it.
      Steve.

  3. David Brim, Tomcar Australia said, on October 2, 2013 at 9:45 am

    “Competing for market share in an existential pie (Kodak vs Fuji vs Agfa). The future is often in baking a new market share pie.” Love it.

    Also I really agree with your comment above about Newspapers and their ridiculous ideas on paying for news. Do they really believe this will stick? It’s crazy!

  4. Sam Sabey said, on October 2, 2013 at 10:54 am

    My Father worked at Kodak during it’s heyday and was an innovator in marketing there, launching many successful things, like the Kodak Shops, 2 for 1 prints, mini labs in store, Image Magic and a host of other things. Anybody remember the 15 shot Kodak Disc camera?

    The peculiar thing he told me, is when he knew he needed to do something, he couldn’t. An external consultant was required to be hired, then trained by him and his staff to report to the board why whatever it was should go ahead…

    A culture of internal stifling of the people that want to innovate, and the fear of failure and comfort of the status quo of the fat cats was a significant factor in all this.

    Sam, @samotage

    • Steve Sammartino said, on October 2, 2013 at 3:14 pm

      Must have been tough for your father to watch them blow it from the front line…

      Steve.

  5. Graham Apolony - Big Note Marketing said, on October 21, 2013 at 9:00 am

    Great article Steve. How many times have we seen icons of industry sit back in the ignorant knowledge that these little up-starts couldn’t possibly threaten their comfortable existence. After all, they are the market leaders and they set the trends, telling people what they need next.

    The old maxim, Innovate or Die, has never been more true.

    Graham Apolony
    Big Note Marketing

  6. Helen said, on November 12, 2013 at 11:49 am

    The Swatch saved the swiss watch industry in the eighties.


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