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14Nov

Kodak: Lessons From Their Loss of Focus

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Even after 7 years since their bankruptcy in 2012, Kodak remains as a prime example for businesses to learn from their past failures. The film-based company was first established in the late 1880s, thrived in the photography industry in the 1970s, and ultimately filed for bankruptcy in 2012.

The company was at the forefront of innovation, but fell from deity to disgrace throughout the 2000s. More importantly, what lessons can we learn from Kodak and how can they translate to successes in the logistics industry?

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Embrace disruptions

Kodak was a mummified company in the analog era with the fear that technology would mark its demise in the film industry. The company actually invented the first digital camera in 1975, but held back instead of marketing the new technology in fear of undermining its lucrative film processing business.

Although significant capital and Research and Development (R&D) were devoted to invest in digital photographs, Kodak was crippled by their inability to accept unprecedented demands resulting from the disruptive forces. The company’s hesitance to market the digital technology, resulted in their stagnation and Kodak eventually plummeted from its top spot in the industry.

This illustrates that companies should perceive the disruptive forces as opportunities for new ventures as opposed to threats to their industry.

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Nostalgia

Kodak understood the stake of digitalisation, invested in the technology and foresaw that pictures would be shared online. The company thus acquired Ofoto, a photograph sharing website, in 2001. Unfortunately, Ofoto was used in a bid to make people print digital pictures. Kodak failed to realize that the sharing of pictures online was the new business, not just a way to expand their printing sales.

Eventually, smartphones with built in cameras decimated the digital printing industry. Once again, instead of venturing into the novel market, Kodak adamantly persisted in their failing digital printing business. Concurrently, Fujifilm - a distant second in the film business to Kodak- invested heavily in digital photography and even diversified by entering the pharmaceutical sector in response to the uncertain film-based industry. Kodak however, sold its highly profitable Healthcare Imaging branch in 2007 to put more resources into its losing consumer camera division.

Kodak failed as it was more comfortable looking at its past successes of its profitable film business as opposed to diversifying its offerings. The company clung onto the outdated printing services and was unable to move along with the times.

img_03An enclosed ecosystem

Kodak’s entire ecosystem was one that revolved around, and supported film-based photography. This stemmed from the fact that film-based photography was the company’s cash cow and its retail partners benefited from substantial profits generated from finishing photographs.

The lucrative photo-finishing business served as an impetus for Kodak to withdraw from the development and manufacturing of its own digital cameras in order to focus on its photo-printing department. The company thus had to rely on Original Equipment Manufacturing (OEM) manufacturers instead for components of the cameras. This resulted in their failure to own technology imperative to survive in the digital race.

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Lessons to be learnt

With constant advancements in technology and its element of disruption, survival should not be the main focus of a company. This is especially imperative for logistics companies in the face of volatility caused by economic uncertainties and the continuous evolution of technology. Logistics companies should thus possess the drive for innovation and entrepreneurial greatness to flourish in their field.

 

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