WHAT LED TO KODAK'S DOWNFALL?

Dr. Thomas Vande Zande
5.30.2019
8 minute read

Kodak, one of America’s most valuable brands, managed to capture the vast majority of the US film market in the 1970s. During its reign, the brand successfully launched ad campaigns that highlight classics, such as the “Kodak Moments.” Kodak was in fact the first brand to create the digital camera in 1975. Nevertheless, despite its success, Kodak ended up failing to outlast inevitable change. That didn’t have to be the case, if only it had seen the signs of the emerging changes.


Collapse Due to False Assumption?

Kodak had thought it was in the film business, when in fact, it was actually in the memories business. This false assumption blinded the brand’s culture and its leadership’s decision-making, causing the brand to miss the dramatic sweeping change to digital. The crazy part was that digital photography capabilities were already in Kodak’s hands as it was the first in the market to introduce the digital camera.

Many business experts agree that by missing out on digital, Kodak failed to innovate and keep up with the times and with what their customers truly wanted. Such blindness to change and failure to adapt are detrimental to any organization’s long-term survival. If Kodak would have taken time to better understand and challenge their current reality as well as validate their assumptions, they could have been a better fit for the impending digital future.


Understanding the Current Reality

Fortunately, organizations nowadays do not have to learn business mistakes the hard way. Businesses can now leverage perspective and the ability to see the signs early on with the right tools and process. To cultivate a forward-looking and future-thinking mindset within an organization, business leaders need to learn how to understand and challenge the current organizational reality.

By identifying and understanding its current reality, Kodak could have evaluated its value proposition and its customers in order to see that there was something out of alignment. For instance, the brand’s business leaders could have used Alexander Osterwalder’s Business Model Canvas to help outline the current model of how the organization delivers value to its customers. The said canvas gives a visual means to see what the company offers, how the company offers it, and for whom the value is created.

From here, it becomes easier to identify the underlying assumptions that underpin the business model. By asking simple questions like the ones below, an organization, like Kodak,  gets better identification of the assumptions its  business model  depends on:

1. What do our future customers want and why?

2. What change could happen to jeopardize the way we do business and why?

3. Will our value proposition remain relevant or not and why?

4. What element of our business model, that is vital to our business, have we not identified any assumption(s) for and why? Hint: This is probably where the most critical underlying assumptions exist.


Challenging Reality

With a set of underlying assumptions, the next step is to challenge them. It involves asking why something is the way it is. When business leaders find something that is “just the way they have always done it,” then they know they are on the right path.

Business leaders should get down to the core of why their organization is conducting an activity or why the customers identified are most relevant to their brand’s value proposition. The whole purpose of challenging the current reality is to reduce the number of things business leaders do not explicitly know about today, so they can think about the future and what could happen amid rapid change — helping to reduce the uncertainty to the degree that is a bit more manageable and to assist future decision-making.


Validating Assumptions

It is worth mentioning that assumptions should be validated where possible. This idea of validating is a big part of both Lean Methodology and Design Thinking. And for a good reason, it helps align actions with outcomes. The question that should be asked is: “Are we making the right thing for the right customer?”

You can prevent going down the same road as Kodak by understanding and challenging your current reality and validating your assumptions whenever possible. By making sure you know what you are doing today and thinking about how that could affect both your future and your customers’ future, you can better anticipate and adapt to the emerging changes. Having a firm grasp of current reality is only the first step to achieving your preferred future, but it is a critical step to get correct. If you are interested in a helping hand in challenging your current reality, give Flagship Futures Group a call, we are always happy to help.

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