Avoiding those Kodak moments

Disruption was not invented in 2020. While it was a year that saw massive amounts of it, the world has faced similar periods of disruption throughout history.

Jonathan Faurie
Founder Faurie Digital Marketing

Some companies have embraced it, while others have failed to acknowledge that these disruptive forces would have an impact on their company. These companies then faced a trial by fire where they either adapted very quickly, or closed their doors fading into the sunset.

Customer Experience Transformation

I want to use the trials of Kodak and Blockbuster as an example of this later in this editorial, but for now, let us focus on a major driver of disruption.

When a business owner establishes their company, they formulate a range of products and services which they believe will address a specific demand in their client base. This is Business 101. The follow on to this is that these business owners need to do this knowing that the client dictates the evolution of the company’s products or services, not the owner.

I recently read a thought leadership article by Liliana Petrova on customerthink.com where she discusses Customer Experience Transformation Theory. It is an interesting read which will be profiled extensively at a later stage.

The article points out, that to meet the needs of the empowered 21st Century consumer, most companies, especially larger enterprises, need to embark on a customer experience transformation. Imagine a car manufacturer that does not allow any vehicle customization, or a retail bank with no app-based self-service offer. Customer experience transformation is an expensive, years-long journey. But for companies who want to serve the customers of the future, it is imperative.

The article adds that, while this sounds like a daunting task (and a risky business), business owners cannot afford to avoid it. Especially if a large organisation is involved, the time is now to figure out the how-to of customer experience transformation.

Enter the trials of Kodak and Blockbuster.

Business case #1: Kodak

In the early 1990s, and at the turn of the century, Kodak was very vocal about the fact that digital photography would be a massive game changer and would significantly disrupt the photography industry.

Yet, the company was left lagging when their own prophesy came true and other companies took advantage of the new demand in the market.

Petrova pointed out, that when a new set of customer expectations exists for a product or service you provide, but you have not designed your business to meet those expectations, it is time to transform your experience. Kodak’s business model, despite their predictions, was not agile enough to adapt. And they almost paid the ultimate price.

I recently read an article on the Mashable website from 2012 which detailed three ways in which Kodak squandered their chances to become a force in digital photography.

The article points out that miss number one came with digital cameras. In 1995 the company brought its first digital camera to market, the DC40. This was years before many others would get into the digital game, but Kodak never took advantage of its early start. Philosophically, the company was heavily invested in the film business, and embracing digital meant cannibalizing its own business model. Others quickly filled the niche, and Kodak did not fully rev up its digital business until 2001, when it launched the EasyShare line of point-and-shoot cameras.

Kodak were reluctant to move from the film business because it would mean a significant shift for the company
Photo by: Museums Victoria

The article points out that miss two came with photo sharing. Kodak had one shot at creating a truly novel and useful feature for digital cameras: The company launched the world’s first Wi-Fi enabled camera in 2005, the EasyShare-One. The camera came equipped with a special card (separate from the SD card) that, when engaged, could connect to a nearby Wi-Fi network. The user could then email photos to friends straight from the camera. Despite this innovation this small camera failed to sell well, and Kodak killed the line. However, if the company had the foresight to realize sharing was going to become the way people interacted with their photos, it might have thought twice.

The last miss discussed in the Mashable article related to photo viewing. Kodak bet big on digital photo frames and photo printers, though it did not anticipate the market forces at work in each field. When Kodak began pushing hard for frames — with differentiating features like Wi-Fi and batteries (most frames only work when plugged in) — prices were in free-fall, and digital frames were rapidly becoming a commodity market, with thin margins.

Kodak did recover and remains a major player in the photographic industry. However, one cannot look past the force that kodak may have become had they adapted at the right time.

Business case #2: Blockbuster

We all have nostalgic memories of standing in a video shop on a Friday night looking for a few movies to hire for the weekend. Blockbuster was probably the defining brand in the developed markets for exactly this kind of thing.

Blockbuster was a quintessential American brand
Photo by: Getty Images

According to an article on indy100.com, Blockbuster once had a value of  $3 billion and it earned nearly $800 million in  late fees in a single year alone.

As the world became more digitised, the alure of Blockbuster faded. The final nails in their coffin came with access to the internet and websites where the public could download movies and television series and the coup de grace was the advent of the modern streaming service. With over 70% of the world’s population having access to the internet, the demand for Blockbuster was just not there.

There is a fascinating video that was tweeted by John Elrichman that showed the rise and fall of Blockbuster.

The article adds that the number of Blockbuster stores began to decline in February 2005 due to their inability to keep up with their competitors such as Netflix who were offering a DVD-by-mail service without late fees.

Avoiding that moment

There are two more examples of companies that failed to adapt, Blackberry and Nokia, that we will discuss in the future.

The secret is to identify the drivers of disruptive forces and anticipate your next move. Business owners are often too invested in their business to undertake the necessary analysis in an objective manner; therefore, savvy business owners know that the best placed professionals to undertake this voyage of discovery are those from the business turnaround, business rescue, and corporate renewal space.

Do not let your clients experience that Kodak moment!