Innovation according to Rodgers (1983) is an idea, practice or object that is viewed as new by units or an individual for adoption. It is the invention of more effective or better ideas, services, processes, products or technologies which are readily accepted by the society, governments and most importantly the market. In business field, innovations are deemed catalysts to growth.
Industries must continually transform structures of an economy from within by being innovative in products and processes. Businesses must also incessantly seek for better ways and methods to gratify their customer base with improved and better quality, price, service and durability. These are the products of innovation which take place through the integration of organizational strategies and advanced technologies. Such innovations will not only add value to the customers but also make business economically viable (Tushman & Anderson, 2004, p.42).
This paper explores innovation with regard to Kodak Eastman which used innovations to become the leader in the film and photography industry, but was unable to determine what the impact of other companies’ innovation would have on Kodak Company. The innovations by other companies effectively competed with Kodak, thus rendering it unprofitable.
Kodak is an innovator in the camera, digital and film markets.
The company invented the digital camera in 1975 (Sparkes, 2012, p1). For many years, it was one of the key players in the visual and film making fields. The company had almost been kicked out of the market by the late 1990s.
In 2000, Eastman Kodak vowed to be the leader in digital cameras. According to many individuals, this was an absurd idea. By the year 2005, the company was ranked first in digital camera sales in the United States. The sales from digital cameras had surged by 40 percent to $5.7 billion (Sparkes, 2012, p.
1). However, the company’s film-based business had fallen by 18 percent (Hamm & Symonds 2006, p.27). The key to increase in profits from digital cameras was product innovation. The company was a leader in the innovation platform.
It designed various award-winning products one after another. This made digital photographing almost as simple as clicking and pointing (Hamm & Symonds 2006, p.27). In recent times, Eastman Kodak has announced that it had plans to stop the supply of pocket video cameras and digital cameras despite being innovative.
The company will focus its business on photo printing. The corporation will issue brand certificate to enterprises that create the devices after it withdraws from the camera trade. The company had disrupted the camera market by introducing the digital camera but it could not determine what to do with the new product. While other corporations absolutely centered on know-how, Kodak grieved from technological know-how. The company was caught off-guard by new and changing technology (Hermida 2012, p.1). Other corporations grasped the chance although Kodak saw the prospect but could not come with anything innovative.
Even though digital camera developed by Kodak had a significant profit success, it eventually became a crushing profit disappointment. In 2006, Antonio Perez, the Kodak Chief Executive termed digital cameras a ‘crappy business’ (Hamm & Symonds 2006, p.27). The raging progression of Kodak’s digital camera turnovers facilitated the firm’s fast-failing film proceeds but then, it had not completed a considerable replacement effect on the opulent film corporate returns.
Initially when Perez became the chief executive officer in 2005, he championed an organizational change and innovation strategy that finally proved that it could not turn around the company to the initial giant it was. In less than a decade, Perez attempted to implement yet another strategy for the company. Considering the innovation and operational mistakes the company had made in the past, he attempted to reintroduce Kodak’s core business model. The notion was to aid the corporation in photographs production and this is a similar potential strategy that other companies like FUJIFILM, Lexmark, Canon, Sony and Apple Hewlett-Packard have been effectively utilizing. For instance, unlike these companies Apple adopted it to help clients in the consolidation and management of their particular images and private libraries (Kieran, 1995). This move disrupted the digital camera industry by developing new digital photo services that were expected to bring higher returns.
This was a sudden move by the company as it included rapid-fire scanning system to online sharing. The swift-fire skimming system similarly dubbed as Scan the Sphere assembles reproduced photos and transforms them into digital pictures whereas unifying them on the basis of printing dates. This was a huge challenge for the company as it attempted to move from hard print photos to digital. Such an attempt came at a time when innovation was in top gear. Contemporary, many business leaders have discovered that innovation of new products is not the only salvation for failing companies.
It also does not turbo-charge performing companies. Most corporations’ fundamental dealings are continuously disturbed by scientific swings, new market rivals and globalization (Senior 1997, p.27). Thus, it is necessary for corporations to device trade model inventions so as to preserve their competitive edges. These innovations require managers to take time while making innovation decisions. The innovation process should not be rushed since innovation goes through a number of processes. The decision to innovate should be carefully considered since they do not always bring good results as was the case with Kodak.
The decision made by Perez was an authoritative innovation. Although it involved Kodak management team, he played a major role in influencing the decision since he had the authority. The decision that this corporation made ought to have been founded on information, influence, assessment, operation and approval. The consequences of the decision impacted the company (Kieran, 1995).
Although the innovations were supposed to have propelled the company to its full potential, the implementation followed did not reflect the initial intent. The disruption that had been initiated by Kodak in 1985 by introducing the digital camera might have been a good move if the company had considered the still image consumers. The consumers were left without a variety of option yet many could not afford the digital camera. When other companies ventured into digital cameras, Kodak’s initial loyal customers migrated (Piercy 2009, p.54). The company had generated huge profits but the impact by the entry of competitors impacted the company’s revenue. Most companies fail because of the perception that new entrants offer different products with attributes only valued in emerging markets outside the mainstream. Kodak did not perceive mobile phones and digital cameras as potential competition or competition to the company’s core business based on this premise (Hermida 2012, p.
1). The company’s core business was film cameras and film for clients who needed good quality photographs. The company failed to understand that based on technology history, the initial services or product version are mostly of low quality but shift over time to surpass established services and products. While time badges, innovation appears to be commoditized. This necessitates that corporate model innovations should be perpetually renewed.
Kodak will have to develop a product that will make it more relevant and profitable. The product will be a camera that incorporate quality, mobility and cost effective. The camera will have features that will enable the user to communicate with other people online. However, it will not be a mobile phone. The camera will have a big memory to store photos and allow quick access to the internet.
Solution to the problem
It is imperative for executives to invest significantly in technologies that disrupt the existing customers and markets. At first, these technologies primarily bring little revenue. The development of a camera that facilitates a sharing experience will be fundamental for Kodak. This approach may not develop huge profitability since there are many competitors.
Continued innovation will ensure that the camera is improved with time. The challenge between disruptive innovations, existing customers and markets and sustaining innovation is clearly demonstrated by the Kodak’s rise and fall. Disruptive innovations present a challenge for long-standing methods of doing business. These challenges require radical corporate thinking strategy. The implementation of the newly generated ideas is largely determined by the organization environment and the availability of resources (Tidd, Bessant & Pavitt 2005, p.13). For Kodak to compete effectively in the market, it must make considerable amount of investment in technology to ensure that the camera gains market share.
When resources are available, the company will be able to initiate and respond to disruptive innovation. Keeping up with disruptive innovations require companies to incur costs so that they can realize the benefits of technology. These outlays might either be economical or non-economical. Although Kodak has indicated its intention to sell its license to other companies that manufacture similar products, it is imperative for the management to realize that the company’s core business may also be eventually impacted by disruptive innovation in the market in which it operates. The company management should use previous experience to prepare and move ahead to preempt any threats that may be presented by such disruptive innovations.
The company should invest in technology and be ready for disruptive innovations considering the rate at which technology is advancing. This may require the company to invest in research and development in order to have new products ready for the market whenever a threat is detected. This will ensure that the company is at par with technology and that the company products that are dominating the market are not regarded obsolete (Agarwal, Erramilli & Dev 2003, p.72). In situation where the products are obsolete, the company will have a replacement with better customer satisfaction. Adapting to changes in technology is particularly challenging for established firms like Kodak. The challenge is often associated with the leadership.
Most corporate leaders do not easily break with previous patterns that were at one point the secret to success. For Kodak, innovations alone will not be enough to make the company success. The company must have a clear business strategy which is not pegged on individuals but on the company’s core business. The strategy should have the capacity for adapting to changing times.
When a company lacks a clear strategy, its fortunes can be sunk by disruptive innovations even if the innovations belong to the company (Fulcher 2012, p.1). The company should also strive to move far from its core business model. The move should also be fast enough to allow it to adapt to new technologies. This will require diffusion innovation. Diffusion innovation will increase competitive advantage as Kodak will adopt new innovations based on the business model that will place it on the competitive edge (Tidd, Bessant & Pavitt 2005, p.
51). It is challenging to get transformation right when an organization sticks too close to its core business. The corporation ought not to be confined to the already adopted basic corporate models. The company exclusively focuses on photography even with the entry of new advanced technologies that threatened its existence. To demonstrate this, the corporation merely reformed Ofoto from a threshold where clients could exchange snapshots to locate where appraises regarding existence and bulletin feed might be made public.
This was meant to make people print pictures instead of developing an innovative concept (Kodak, 2001, p.6). Kodak should start being innovative instead of waiting to be forced to innovate.
The innovation should be based on the development of an advanced technological camera. The hesitancy by the corporation failed to focus on the earnestness while there was still self-determination to revolutionize. In the past, the company has waited until the need to be innovative arose. The entry of mobile phones proved that the company was late to innovate (Hermida A 2012, p.1). For Kodak to succeed, it needs to drop its past success as this has been a huge impediment for the company. Even after the death of its founder, George Eastman in 1932, Kodak’s long-established ways remain difficult to change. Most of the leaders of the company still believe that his ideas were the best because he made the company successful.
His ideas might have worked then but will not work in the contemporary world if innovation is locked out. The principal challenge relates to the classified ethos proved since the unveiling of the corporation which made it inclined to the influential leadership. The culture is powerful that people do not openly disagree with the leaders (Hamm & Symonds 2006, p.29). The changes that will work to eliminate hierarchical culture should be radical as opposed to incremental. Radical change in how the employees view the leaders will help create an environment where employees will be free to express their constructive ideas and be innovative. The innovation of a new camera will enable the company to stay ahead of the competitors via novel market offerings (Agarwal, Erramilli & Dev 2003, p.71).
Silent employees with excellent innovative ideas will not benefit the company. Employees’ innovative behaviors are reinforced by the combination of personality characteristics of the employer, the employees and work environment factors. The business environment which influences the conduct of employees determines whether the business will succeed or not since employees are the most important asset to a business. Freedom to think, express ideas and the authority to act influence employee innovation. The experienced employees will be an advantage towards the development of the camera.
Evaluation of the innovation
Kodak has been in existence for decades hence most of the employees and senior managers have been with the company for long. This means that the employees have accumulated immense experience.
This an advantage for the company in putting the right people in the right positions. Changes that will be presented by the camera that will access the internet in order to have a sharing experience will be critical for the realignment of Kodak profitability. The introduction of the camera will present radical innovation and will affect the employees who may resist change (Adair 1990, p.10). Although majority of people in organizations are opposed to change, there are effective change management programs that can be initiated.
The development of the camera will be effected by the research and development team. The response of the people affected by the change can be evaluated together with the actual change that will occur. This means that the camera will create more profits for the company and the wages will be higher. The use of technology will be perceived as a threat by the employees since it will require the trimming of the workforce. These will help the HR of the company to effectively manage the workforce by reassuring them that their jobs are secure since this is one of the reasons people resist change (Stacy 2007, p.
3). For Kodak, the change is inevitable since inadequate technological advancement threaten the company’s existence. The company, having declared the sale of its digital camera license will still require being innovative. The development of the camera will determine whether the company will continue being profitable.
The impact of the innovation will be determined by the increase or reduction in profitability. In order for the company to achieve this, it will require to move from its core business and diversify into other technological fields that will enable it to meet its goals and objectives. The camera will present Kodak with the opportunity to diversify. The demise of Kodak cannot be solely blamed on the company’s failure to uphold innovation. The company became a victim of the disruptions it had initiated in the market (Hermida 2012, p.1).
The company could not handle the challenge of disruption. The mobile phone was intended to facilitate communication on the go. As technology advanced, the mobile phone took over every aspect on camera. The ‘Kodak moment’ that created a one-time and rare moment which was captured on Kodak photos started to be carried by mobile owners all the time. The technology which came with the mobile phone also allows individuals to share ‘Kodak moments’ immediately they are taken with family and friends without the inconveniences of printing. Although Kodak was innovative, it failed to identify the threats posed by mobile phones to digital imagery, the shifts in people’s behaviors and increased connectivity.
This may be associated to the fact that the initial mobile phone cameras were slow and the quality of the photos was poor. The company saw no threat posed by the mobile phones to the business it had dominated for decades (Fulcher 2012, p.1). The phones were slow, clunky and were not connected to the internet.
This can be attributed to the fact that companies ignore disruptive innovation lessons. Kodak management thought that the company was offering what its customers wanted. The management also thought that what they were offering could not be duplicated anywhere else. The perception was that the company was offering the best digital camera products and services.
Unless the company becomes innovative and move away from the core business model, its chances for survival are minimal. The development of the new camera will be critical for the success of the company. Kodak will have competitive advantage in the market since the consumers will have an alternative to the existing products in the market. Since the company has loyal customers, they will be inclined to purchase the camera. This will be a success for the company.
Innovation is a search through which economically valuable problems are solved. Companies use technology to create and develop new processes, services and products to gain competitive advantage through innovation. A combination of different types of innovation helps organizations to improve efficiency, develop new products and expand market target. It is critical for organizations to have organizational strategies that are flexible enough to adopt changes that occur in their respective markets. Kodak should first change the hierarchical culture that was established when the company was founded to create room for employees to participate in innovations. It should also initiate different innovation methods such as disruption to propel the stagnating company forward.
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