Because most companies never build a capability to internally Disrupt, and they don’t regularly implement White Space, they develope a Re-Invention Gap between what they do and what the market wants. This leads businesses to milk a Success Formula too long, and not start developing a new Success Formula until too late.
Take for example Kodak. Founded in 1881, this venerable company was synonymous with photographic film. The company grew like mad as its founder made photography cheaper, better and available to everyone. But then the market "matured" (that famous euphemism for slow growth) in the 1970s. Kodak missed the digital photography wave, and in the 1990’s was kicked off the Dow Jones Industrial Average. Kodak has recently layed off nearly 30,000 employees – reaching a smallness not seen since the 1930s (see more on layoffs here.)
Like most companies, Kodak waited too late to Disrupt and implement White Space. The company was actually a pioneer in digital photography. It holds over 1,000 patents. R&D efforts in the field were strong going back nearly 30 years. But Kodak waited to Disrupt until the film market was already long-past its peak, and the digital market was well developed and full of competitors (it was 2001 when Kodak finally introduced a digital camera line). And because the Re-invention gap between their business (film) and the market direction (digital) had become huge, the company almost didn’t survive (note Palaroid, also once a leader now no longer exists). The jury is still out on Kodak’s survivability, which has had 8 consecutive quarters of losses as it has attempted to turn itself around.
The simple fact is that companies pay too little attention to the market, and too much attention to the existing Success Formula. By trying to Defend & Extend the Success Formula, they delay the necessary Disruptions and avoid White Space. Far too many companies are stuck in the Swamp, spending all their time battling aligators and swatting mosquitos while completely forgetting their main objective was to drain the darn thing. Before they know it, they are caught in the Whirlpool spinning down the drain when competitors open the plug in the swamp where they are stuck.
To avoid being too late in reacting to market Challenges, it is critical businesses implement a program of regular Disruption. You have to practice the ability to Disrupt yourself. And regular Disruptions create openings for multiple White Space projects which breed new Success Formulas. Just look at Jack Welch at GE. GE could easily have spent the 1980s and 1990s milking their businesses. But with the aid of Neutron Jack, GE constantly Disrupted itself (some might even say "unnecessarily"), and it kept putting in place White Space projects. (remember "Destroy Your Business.com" teams that every business was required to have?) That led to an incredible string of growth and above average returns that is almost unprecedented for a company of any size. Institutionalized at GE is the notion that Disruptions are good and White Space projects are normal – and that is why the company keeps itself constantly ahead of competitors and out of the Swamp.
Don’t wait. Start Disrupting your organization today. Set up some White Space. The more you practice, the better you become. And you’d sure prefer finding yourself in the position of GE than Kodak.
Wrong! There was little market for digital photography, and film was still growing throughout the 1990s. What us was a digital camera without an internet to send them through and display them on? Kodak had no SLR cameras of its own. Maybe a partnership with Leica or Panasonic to develop both a high-end line of cameras and inexpensive ones would have made sense. Kodak sells Leica the sensors they use now. Remember that Windows 95 only came out in 1995. Film was selling like gangbusters. I was there, and saw it.
Besides, customers don’t like disruption. Who wants to buy more equipment unless there is some overwhelming advantage? Until there was an installed base of individually- and family-owned computers, digital photography made little sense. You still had to go somewhere to get prints made, so what was the advantage?
Business is not a science, and cannot be! You go with your best instincts and that’s that. Sometimes you win, sometimes you lose. You cannot anticipate the future. It’s unknown. We tend to focus on the successes and ignore the failures using the benefit of hindsight. Read The Black Swan. Oil companies aren’t idiots for drilling and marketing oil products, even if other sources of energy come along, and if they do, it won’t likely be from within an oil company. same with Kodak and other film companies. You cannot be everything and you should not try to be. Focus and diversify intelligently.
Kodak made fibers at one time. Remember “Kodel” polyester? They got into fibers because they made polyester for film base. This was diversification based on material production capabilities.
How can you ever have any long-term investment or return if you keep changing things? Nobody would ever get anything done! Manufacturing anything complicated requires long-term investment, and the customers,to accept it, need some confidence that their investment won’t be worthless in six months. Why buy a fancy camera and lenses if in six months it will be made obsolete? Why build a factory to produce gasoline engines if oil becomes obsolete. We need MORE stability, not LESS.
No, Kodak was too early with digital….conventional thinking is wrong here.
Yes – Kodak had one of the first professional digital SLR cameras – I was using one in 1994 and 1995. Granted the resolution was small, and the cameras were expensive. But they did have them.
They finally came out with one of the first full-frame digital cameras (DCS-14N/C) that allowed photographers used to shooting film to make the jump over with their same lenses and other equipment. Then they got rid of it.
They also had one of the first really nice digital backs for medium-format cameras that was self-contained (battery, cards, and viewing screen), but then they stopped making that.
They could have kept making great equipment, and making improvements on that equipment and selling more of it. Sort of like Nikon and Canon are doing now – but they didn’t. Had they done that – their transition from film to digital would have been less painful and more profitable.
Perhaps there were too many MBA at Kodak who were thinking of the short-term and not the long-term?