People never seem to notice, but strategies have fashions. Just as cars had fins for a while, or business folks try to dress like they just stepped off the set of Mad Men, or phones get big touch screens and icons to chase after Jony Ive's iPhone design choices, there are also conventions in how we think about what firms should do to create value. These ways of thinking even have names so we can refer to them in shorthand: focus, cost leadership, differentiation, core competence leverage, supply chain integration, and the like.
This came to mind over the last few days in the midst of the Kodak (EK) death vigil. Most of the Kodak conversation has been standard issue Chicken Little: the sky is falling; the American dream is dead; another classic company has bitten the dust. We're all off to hell in a handcart and there's not a thing we can do about it. After all, Kodak was a symbol of better times, an era when American innovation and invention was seemingly ubiquitous. But while George Eastman's goal -- to make photography "as convenient as the pencil" has been realized and even exceeded -- Kodak was not the company that capitalized on this new ubiquity.
And so, with a mixture of schadenfreude and fear, we hear the Monday morning quarterbacks explain what went wrong and explain how a company with so much promise managed to snatch defeat out of the jaws of victory. The basic buzz is that Kodak missed the moment. Addicted to film photography, they never really could (to borrow a phrase from another brief strategic fashion) "cross the chasm" and drive the growing new digital photography field.
What if this convenient analysis is just too superficial? The demise of Kodak isn't merely the classic disruption story that everyone loves to tut tut over. Nor is the company's downfall merely a result of recent bad decisions or the mismanagement of senior executives. It is the more nuanced story of how easy it can be to get things wrong, even when trying with the best of intentions to do everything right. It's a cautionary tale of the need for deeper understanding of what innovation really means, and how it is infinitely more vital than most people think it is, even as it isn't about any single product or widget or technology.
Kodak knew all about the impending disruption of digital technology. As many have noted, they own the primary patents on digital photography and built one of the world's first digital cameras in 1975. As The Economist reported recently, a report circulated among senior executives in 1979 detailed how the market would shift permanently from film to digital by 2010. This disruption was no surprise. But following the fashions of the moment back then, Kodak's leaders looked at the whole shift through the lens of their signature strengths in chemistry, optics, and films. They tried to do new things with familiar capabilities at the exact moment they needed to be hungrier to do truly new, unfamiliar things.
One of Kodak's significant attempts to diversify away from the world of film came at the end of the 1970s. They targeted xerography, specifically aiming at the other hometown hero in Rochester, New York. I was consulting with Xerox (XRX) at the time, and we took Kodak's threat to enter the world of copying very seriously. We were right to; Kodak's strengths in organic chemistry and optics helped them to create some excellent, high-end products.