Kodak’s long, slow demise reached its logical conclusion today. Scratch the surface and there is a critical lesson. Kodak did not end up filing for bankruptcy protection because it was not an innovator. After all, Kodak created one of the first digital cameras back in 1975. Was today’s endgame inevitable from that point on?
Not at all. As Kodak has declined, it’s traditional rival Fujifilm has thrived in the digital environment. The Economist analyzes this reversal of fortune as a result of the fact that “Kodak acted like a stereotypical change-resistant Japanese firm, while Fujifilm acted like a flexible American one”.
The article goes on to explain that the culture within Kodak did not help. “Despite its strengths—hefty investment in research, a rigorous approach to manufacturing and good relations with its local community—Kodak had become a complacent monopolist….Another reason why Kodak was slow to change was that its executives “suffered from a mentality of perfect products, rather than the high-tech mindset of make it, launch it, fix it,” says Rosabeth Moss Kanter of Harvard Business School, who has advised the firm.
The combination of a sense of complacency and resistance to change in the face of new technology and shifting consumer tastes in spite of being a leading edge innovator doomed Kodak.
This is not an isolated cautionary tale. We see this every day within the advertising industry. Traditional media publishers and agencies, built in a monopolistic environment have grown slow and resistant to change in spite of having no shortage of exceptional ideas and innovations. These ideas are either buried deep within their organizations or are brought to market too slowly to capitalize on the opportunity at hand. Fear of the shifting environment leads these entities either to try to buy in talent through acquisitions, often to the detriment of the acquired new kid (AOL, MySpace, etc..) or to raise the barricades (that SOPA thing sure worked out well, didn’t it?). These approaches do not work.
The traditional powerhouses in this industry can win in the digital environment, but this requires real change – cultural change. That means understanding that it is not business as usual, that the old rules no longer apply. We operate in an environment where the consumer is in the driving seat, not the advertiser. This is an environment where sometimes you don’t have to be the smartest, you just have to be the most willing to change. The breakneck development of technology and the fragmentation of the industry requires a flexibility and embrace of change that most traditional media companies simply aren’t equipped to deal with. Unless that changes, like Kodak, they too will be gone in a flash.
Contact us today to find out more on the importance of flexibility in the digital media industry!
Nasser Sahlool, VP Client Strategy