This post is an extract of my forthcoming book on business model innovation. The innovation book looks at why business model innovation is needed and how it works. You can read more about it here. These posts are early drafts of planned content and I’m putting them out to get feedback. Please do comment below, or subscribe to these pages to get each new section as it is published. In today’s post, we will be looking at finding opportunities in this new world.
My grandfather came to England just before the war from New Zealand. One of his jobs was to take several hundred kilos of high explosives and fly over to German. There he would drop it on Industrial cities, or more likely the people who lived in the houses surrounding those factories. WW2 bombsights weren’t very accurate.
At the time it was called terror bombing, a deliberate policy to try and bring the enemy to their knees. Today it would be considered a war crime. Fortunately for me, Grandpa survived, and soon after the war, he headed back to New Zealand with his English Wife. Within a few years, they were back in the UK with my Dad (born on troopship somewhere tropical). Every few years, for the next 50 years or so, he and Granny would head out to New Zealand to see family, making stops at a variety of pacific islands.
When Granny and Grandpa got back to the Uk after their long trips, we’d all gather around whilst Grandpa set up the slide projector, and we see all the places they’d seen – places he’d captured on a Kodak camera, with a Kodak film and printed onto Kodak slides. It may even have been a Kodak projector.
For all those years, from the early 1950s to the early 90s (after my Gran died) when he stopped going, Grandpa captured the memories of his life on Kodak (The ones he didn’t want to keep were the ones of leaping from burning airplanes high above the French coast unfortunately those did last)
Monopoly of Kodak
Kodak was photography in many ways for several generations. Is there a consumer good now that has the same market penetration that Kodak did then? Probably not. Even when I traveled across Asia in the early 90s there were still dozens of tourist shops in every town showing the golden Kodak logo, A few Fuji greens – but not many.
Kodak looked to have it all. It owned the photography industry – apart from specialist areas – video, journalistic photography. For the masses, Kodak controlled the whole lot.
They took money from you when you bought the camera. Again, when you bought the film. Again, when you had it developed on their paper.
Why couldn’t this last forever?
In the popular imagination, Kodak is seen as a story of a business that was monopolistic and arrogant and failed through its own dumb stupidity.
Monopolistic, for sure. Arrogant, maybe. It’s hard not to be when you rule the world.
Dumb stupidity? Well, we need to take another look at that.
Kodak’s First Digital Camera
Just after I was born in 1975, Steve Sassoon, took 26 seconds to take a photo with Kodak’s first digital camera. It wasn’t a commercial model. It was important to the company as people within it could see that electronics were becoming more important, and in the years ahead digital would overtake analog.
I haven’t read through thirty years of Kodak’s board papers. What is clear from their commercial actions is that the board took digital seriously and spent time and money over a decade slowly figuring out how to miniaturize digital cameras. Steve’s first digital camera looked as it weighed almost as much as he did. Components got smaller and cheaper, and eventually, the time was reached, which made it possible to make digital cameras.
Kodak knew that they would kill much of the old film market. It would lose its old film and paper market, but it hoped to hold on to the camera market. Given what they knew, it looked like digital cameras were the future and that the film and paper market was doomed. They took the plunge.
From one aspect, it looked like a disaster. From 80% of the film camera market share, they ended up with about 40% of the digital market share. It was a large market and a rapidly growing one. Kodak seemed could compete against the best of the Japanese consumer electronic companies.
For a few years, Kodak was lauded. It had seen its old analog-based business model depreciating. It was going to collapse, and Kodak had avoided that through prescience and hard work.
How an iPhone bankrupted Kodak
Then a dude in a black polo neck stood on a stage in Cupertino, California, and showed off a phone with a camera. The phone was uber cool and had the slightly odd name of the iPhone. The camera on it wasn’t better than any of the Kodak ones. Certainly, it wasn’t nearly as good as the ones on the cameras with pop-out zoom lenses, prosthetic penises, but it was in everybody’s pocket all the time.
The business model of the digital camera lasted less than a decade. Within 5 years of the iPhone being launched, Kodak was bankrupt.
There we have seen two business models depreciate as markets and manufacturers abandoned them. The first analog film market lasted for generations – my Grandpa’s life from being a young New Zealander arriving to settle in the UK, to an elderly widower making his last trip to his homeland decades later. The second, was for me, a brief interlude between the Nikon SLR with an expensive film that I carried on a road trip across Asia in 2002 and the first iPhone I got in 2008. Barely a blip.
Kodak got so much right. It saw the future, it leaned in, and it mastered it, and then was destroyed by something that it never imagined. In that, it joined Nokia, RIM, and many others. As we dive into this book, we’ll be on a mission to understand the patterns that incorporate growth and technological development that drive why the death of business models is so certain and what we can do to give them new life.
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