Why Your Company Needs To Forget the Past in Order to Create a Brighter Future

By Thomas Klaffke


How Kodak Failed To Navigate Digital Disruption In Spite Of Investing In It

When thinking about the challenges of disruptive innovation – one of the most commonly cited examples is Kodak’s failure to capitalize on it’s dominance during the shift from analogue to digital. However, common assessments of why Kodak failed are quite one-dimensional. They fail to touch on the real reason for Kodak’s catastrophic demise.

One common explanation is that due to strategic decisions made by Kodak’s complacent executives, the company failed to move into the digital sphere well and fast enough. What is then usually prescribed as recipe for other companies finding themselves in Kodak’s shoes is the strategy of ambidexterity: Managing and exploiting the present while, at the same time, exploring and creating the future.

Another explanation usually focuses on the nature of digital technology and how it is interpreted. Kodak invented the digital camera, but the prototype that they built in 1975 was as big as a toaster, took incredibly long to take a picture and had low quality results. But once technology enters the digital sphere, it often jumps on Moore’s law and progresses exponentially. Kodak saw the toaster but missed seeing the exponential curve digital cameras were on.

Kodak Learned A Lot, But Didn’t Unlearn

While I think that aforementioned explanations are describing relevant reasons for Kodak’s failure, they still fall short of explaining the real cause of the company’s demise. Because Kodak did not only take substantial resources to invent the digital camera, in 1996, then CEO, George Fisher, also invested heavily in it: More than $2 billion in R&D for digital imaging. Fisher and his co-executives jumped aggressively on to the digital bandwagon, committing to price points and product specifications, acknowledging the shift towards digital. Kodak even ventured out and acquired a photo-sharing website called Ofoto in 2001 – before Facebook or Instagram were founded.

So, Kodak actually foresaw the disruption and also invested substantial resources in it. The problem, however, is that Kodak saw this new digital disruption using the frame of an analogue photography company. Yes, in a fast-changing and complex world, businesses need to be ready to transform and to seek out new opportunities, but in order to do that, one key capability is needed: Letting go of the past!

Your Frame Dictates How You See the World

John Kimberly and Hamil Bouchikhi from Wharton School show that organisations develop – often unconsciously and just like individuals – a narrative of who they are, reflecting the context of their founding, the belief systems, values and identities of founders and the leadership as well as the strategic decisions made in the past. Clark Gilbert and Joseph Bower from Harvard Business School explain how this narrative can influence strategy. They emphasize that the way in which companies frame disruption or external changes, shapes the strategy they subsequently adopt.

Despite recognizing the shift to digital, Kodak still always framed digital technology as a threat. It saw it as something disrupting its Go to the full article.

Source:: Business 2 Community

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