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Destructive Innovation: Kodak Company

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Question:

Discuss about the Destructive Innovation for Kodak Company.

 

Answer:

Business practices are faced by great competitions each day. The big firms try so hard to maintain their positions while the lower performing or the emerging companies tries to rise up and beat the already existing ones. However, this comes after considering some factors and keeping all things to place for the company to run as expected. Innovation is one of the greatest factor that makes big firms to be overtaken in the market by small firms. When these technologies cause the big firms to fail, or maybe, overtaken by the others, they result to what is referred to as the innovators dilemma. The inventor in the falling company is placed in a situation of dilemma.  The innovator must choose between improving from the current situation both in technology and in product services or else, the company or the firm gets to the risk of going extinct (Christensen, Raynor and McDonald, 2015, p.44).

The Kodak company can be a very good example to illustrate Innovators Dilemma. It had for many years been on the top in photography. It had approximately 90% share in photography industry the tragedy that was as a result of technology shift. When photography shifted from being based on Chemistry to being based on bits, the company collapsed until now where it has become bankrupt. The company failure to advance and research on how it would satisfy its customers through gradual technological innovation brought about innovator’s dilemma to Kodak companies. The small firms overtook Kodak until it had to start disposing its assets for upkeep.

Big companies fail, in fact, they have failed. Kodak company is a good example. According to Christensen, successful companies which have been standing for many years may be doing its things so perfectly, in fact, he says “right,” but at the long run, the company ends up losing to upcoming competitors. Innovators dilemma can efficiently explain these phenomena.

One point to consider is that, big firms and companies would not innovate easier with the disruptive technologies than small and upcoming organizations for the reason that the small firms and organizations are not dependent on their old fashioned organizational norms and values. There is a notion that big companies are fond to maintaining their customers and always struggle to make them happy. Disruptive technology always needs a new market. New markets which are better in adjustments to this innovation have a principle derived from this theory that Old customers are less relevant than the new customers in the new market.  The reason behind this is that, the preservative customers will always demand the product that was in the market since they knew it. They will hardly go for a new one.

According to Christensen, the progress in the market is very separate from the progress in technology. The customers of many products in the market are not aware of what exactly they need. In contrast, they take what others praise and what they had in the past. The big firms are mostly keen on such customers and therefore, they end up losing the tact from the market competition. The situation created in this sense is the innovation dilemma. The big companies, organizations and firms are in most cases unable to cope with this situation as in small firms.

On the above innovator’s dilemma base, the big firms can be concluded to stumble for ignoring the trends of the time, making wrong decisions, for instance in innovations and technology and finally poor planning and bureaucracy in the management. Slow picking poor technologies are ignored by the top management and ends up losing everything when the market changes.

The managers of Kodak firm failed to see and evaluate the disruptive innovation. They did not see it as a threat, after all, they were the best, manning about 90% in their product market. During this time, Kodak experienced an abrupt fail from the best of its time to a state to auctioning its products. It has been noticed that when its profits margins were seemed to be on top, an executive was bragging over the achievement. However, it was not a bad thing, but, there is an element of satisfaction and a sense of security over maintaining the same business margin and the trade name. This is one of the reason as to why the Kodak Company crushed. It means that, because of only relying on the innovation technology they had at first, the change shook all their firms.  When a big company has achieved this much, there is little for the top management to work on. They relax on their previous achievement and forget to follow the very small firms behind them. This is what Kodak management did. Being dump to these innovations failed the Kodak company.

 

Another thing is that, disruptive innovation needs patience and investments. Incorporating a new technology in a big firm seems to sterilize development as a new technology would always be poor in performance where there is none else for comparison. However, this do not help the company to adjust to the risks and uncertainties that may come as a result of disruptive innovation. This is where the Kodak company failed.

Negligence to chance was also a factor that contributed to the failure of Kodak. In the year 1995, Kodak engineer had developed a digital camera but the management paused the idea of implementing its services in digital film making. The company came to regret up to the year 21st century where digital photography had subdued the whole population. Other companies like the apple company which had brought about phones which had digital cameras had become the prestige for many people in America and outside continents. This can be attributed to the ignorance or negligence of the management to appreciate digital technology when it was very important. According to the principles of Innovators Dilemma, the technology can change because new innovations are made each day, but, to avoid the innovation dilemma, the value of the company’s offers and product should not change. For Kodak, they changed (King and Baatartogtokh, 2015, p.77). The results were worse and embarrassing.

Nokia company is one of the companies that are likely to fall in the next ten years if it doesn’t change its way of doing things. Nokia company had been doing good in mobile phones manufacturing and sales. People in many countries liked the phones for their performance and durability. Very good and hard cover that protected the phone from damage. However, the company has started performing poorly for the last five years. It has faced a lot of competition from companies like Samsung which is the top most company in electronic mobile phones and Apple company.

The problem rose from the company management whereby it experienced innovator’s dilemma in its products and services. The transition of technology, where companies introduced smart touch screen on phones in place of hardware keyboard left the Nokia phones backward in innovation. The company management seems to be reluctant on this aspect. It has settled for less and then endangering the lives

The company is seen to lose its market power every time. The company has done another mistake that consumers criticize each day. Nokia smart phones are not like the other smart phones. They do not share some applications with other phones as it is in the case of other phones like Samsung, HTC and also RIM. Therefore, customers whose friends have different phones from Nokia cannot share applications. Another thing is that, Nokia phones use windows while many other smart phones use android. The company has been left too independent and unique, though not bad, the features in window Nokia phones are not in accordance to the price. An android Samsung phone will always be slightly lower in price than a Nokia phone with the same features but with a higher price. According to the theory of disruptive technology, the customers do not know exactly what they require but they are moved by the product they meet in the market (Gray and Vander Wal, 2014, p.104).

Therefore, Nokia Corporation company should act towards this problem and have it glory back. The compatibility of its products, especially smart phones, the price and marketing policies of its smart phones should be revised and amended by the involved department for its future. For now, its graph is going down at a very sharp rate, of which it is very dangerous.

 

References

Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. Disruptive innovation. Harvard Business Review, 93(12), pp.44-53.

Gray, D. and Vander Wal, T., 2014. The connected company. " O'Reilly Media, Inc.".

King, A.A. and Baatartogtokh, B., 2015. How useful is the theory of disruptive innovation?. MIT Sloan Management Review, 57(1), p.77.

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