All industries faced challenges from the rapid pace of change brought about by the digital revolution, even before the current crisis.
We’re far from done. Fast-paced change is the new normal. Every day brings innovation, recent mergers, and new expectations. We also have new software solutions that help us keep up.
What Kodak Wrong
Listening to the customer and striving to exceed their expectations is critical to success in this digital age.
If you stop and think about this is the story of the digital revolution’s success.
Just ask Kodak.
Kodak is the perfect example of how to fall in the face of unstoppable, sweeping changes. I was examining company culture and its impact on decision-making at the top management level when I wrote Mean People Suck. Kodak was the most glaring example of how it is wrong.
Kodak was so famous that corporate leaders couldn’t imagine Kodak’s demise. This false sense of security led to the brand’s downfall. Kodak would have survived if it had kept its corporate culture and focused on the customer.
The global giant, which once owned 90 percent of US film sales, filed for Chapter 11 bankruptcy protection in 2012. Kodak was the most successful brand in the 20th century. It wasn’t only the dominant brand in the market. It was the first to establish the rules for the photography industry.
What went wrong? Why couldn’t Kodak take on the digital revolution despite having all the resources – top talent and a massive R&D budget?
John Naughton wrote a great piece about the story of Kodaks’s fall. It was published in The Guardian in 2012 and was titled ‘Could Kodaks’s demise be avoided?’ He points out that Kodak knew digital photography was coming. It’s a fun fact that many people don’t know: Kodak invented digital photography in 1975.
The problem was that Kodak’s corporate executives felt too attached to their brand to allow them to sacrifice what was at the time a mere potential. Digital photography would also threaten their most lucrative products, their film and film processing service. They stuck to what was working and put digital photography on hold. Why would you invest millions in a technology that could disrupt an industry Kodak was already happy to run?
Kodak’s leadership should have paid more attention to a report outlining digital photography’s future and how it would change in the next 30-40 years. It needed to align with their vision of the industry.
This was a mistake. While Kodak may not have had a vision for the future, it was clear that the consumer saw the end.
Naughton states that even great managers can make bad decisions and cause corporate disaster. Big companies can be great at encouraging “sustaining” innovation – which helps them to strengthen their position in established markets – but they are usually hopeless at handling disruptive innovations.
If They Had Only Heard Larry
Larry Matteson, a Kodak executive, published a 1979 report explaining how the digital revolution would affect the photography industry and how analog film would be obsolete. This report gave Kodak a chance to change – it was the key to Kodak’s continued dominance in the market for the next 50 years. They just needed to have the vision to see it as it was.
They didn’t.
This is an excellent lesson for all businesses. Even global giants can revolutionize their industries the same way Kodak did.
A company culture needs to listen to the opinions of its futurists and visionaries to thrive. The same old top-down organizational chart will not help a company survive.
It is important to hear other voices. To appreciate a variety of ideas and experiences. To pay attention to what consumers are expecting.
Don’t Look Sideways, Backwards, Up, Down, or Sideways – Focus on The Bull’s Eye
Mean people sucking is one of my main points. It’s all about putting customers first. It’s not about creating a culture that is inclusive and non-hierarchical, but it is essential to build a company that is empathetic, agile, and successful. This is a crucial first step. The most critical step, and the one that will make all the difference, is to be focused on the customer.
It’s all about listening to customers’ wants and making them the center of your organizational chart. You must listen to customer complaints, as I have explained in my book. It will help if you address customer concerns directly. Listen to your employees as well as your customers.
This will allow you to make changes and avoid blindsiding like Kodak. You’ll be able to adapt to cultural shifts in your industry if you tune in. If Kodak executives had listened to their customers and focused on what they wanted instead of clinging to film profits when it sank, they could have avoided their losses and moved forward.