Leadership lessons from Kodak’s demise

Kodak’

In the fast-paced, ever-changing world of technology and market dynamics, it is not enough for an organisation to have good products or services. Even a stellar history of success on the market is not enough.

What guarantees the success and sustainability of an organisation is leadership. And leadership is not the end, but a means to an end. Leadership works hand-in-glove with innovation.

Innovation and leadership are two intertwined forces that often determine the longevity and success of organisations.

Leadership that embraces innovation, adapts to changing circumstances and evolves with market trends is critical to long-term survival.

A case in point is Kodak, a company once synonymous with photography, which serves as a cautionary tale about the perils of failing to innovate despite having a competitive advantage.

In 1888, American entrepreneur George Eastman founded Kodak, a company that helped to bring the photographic use of roll film into the mainstream. Kodak was an iconic brand that revolutionised photography. Eastman’s innovation made photography accessible to everyone through user-friendly cameras and affordable film, which quickly became Kodak’s staple.

By the mid-20th century, Kodak had became a household name, dominating the film industry, holding a near-monopoly of the market.  In 1915, the company was the largest employer in Rochester, US, with over 8 000 employees and staggering annual earnings of US$15,7 million.

The phrase “Kodak moment” became ingrained in popular culture and street lingo, signifying memorable experiences captured on camera. This dominance was a testament to the company’s early leadership in innovation.

In the 1970s, Kodak scored another first: It invented the first digital camera. The device was an elephant step forward for the future of photography. However, Kodak’s leadership made a fateful decision — it chose to suppress the invention, fearing that digital cameras would eat into its highly profitable film business. Imagine! This decision marked the beginning of the demise of Kodak. Fast-forward in 2024, the name has been buried and forgotten.

Despite the company being the pioneer in digital photography, Kodak failed to adapt its business model to the emerging digital landscape. The leadership’s focus on protecting its core film business clouded its judgement, leaving the company vulnerable to competition.

As digital photography became more mainstream in the 1990s and early 2000s, companies such as Sony, Canon and later smartphone manufacturers, began to dominate the market. Kodak’s film sales tumbled and in 2012 (80 years after the death of its founder), the company filed for bankruptcy.

The demise of Kodak offers critical lessons about the role of leadership in fostering and embracing innovation.

While Kodak was not short on technological prowess, it lacked visionary leadership that was willing to take risks, adapt and disrupt its own business model to stay relevant.

This is a striking example of what Clayton Christensen in his theory of disruptive innovation calls “the innovator’s dilemma” — the idea that most successful organisations often fail to innovate because they are too focused on protecting traditional revenue streams.

The Kodak executive fell victim to this dilemma, clinging to the belief that its traditional film business could carry it into the future, despite clear signs that the future lay in digital photography.

Innovation is not only about coming up with new products, services, ideas, processes or technologies; it is about knowing when to embrace and implement these innovations, even at the expense of existing products or practices. This requires pragmatism — one that is forward-thinking, adaptable and willing to challenge the status quo.

Leaders play a pivotal role in creating a culture of innovation. A company’s ability to innovate is often a reflection of the values and vision espoused by its leaders.

Leaders who foster a growth mindset, encourage experimentation and reward creativity are more likely to succeed in the long term.

Crucially, leaders who are risk-averse or overly attached to traditional business models may stifle innovation and drive their organisations into irrelevance.

Kodak’s leadership failed to foster an environment where disruptive innovation could thrive. The digital camera was seen as a threat to the film business rather than an opportunity to revolutionise the future of photography. Had Kodak embraced digital photography earlier, the company might have been able to lead the digital revolution and evolve into a tech giant, much like Apple did when it transitioned from personal computers to mobile devices.

Moreover, Kodak’s leadership missed another critical opportunity: leveraging on its strong brand in the digital space. Even as digital photography took off, Kodak still had a powerful name in the industry and consumers associated the brand with high-quality imagery. Had Kodak’s leaders pivoted earlier, they could have used this brand equity to establish themselves as leaders in digital cameras, online photo storage, or even smartphone camera technology.

Instead, the company remained anchored on its past successes, unable to see that the future was passing it by.

If organisations are to survive in the global world of competition, where industry is driven by technology, leaders must take risks.

Kodak’s story underscores the danger of being too comfortable with past successes and too afraid of change.

Change is inevitable.

While Kodak saw digital photography as a risk to its existing business, its competitors saw it as an opportunity to create new markets.  Sony, for example, embraced digital cameras early on and became a market leader, while Kodak remained stuck in the past where it was paralysed by fear of disrupting its own products.

The lesson here is clear: leadership must be willing to disrupt its own business model to survive and thrive in a rapidly changing world. This requires courage, vision and an acceptance that short-term sacrifices may be necessary for long-term gain.

Adaptability is another key trait of innovative leadership. In today’s fast-moving world, companies must be agile, willing to pivot quickly when new opportunities or threats arise. This can be through partnerships. We could be talking a different story had Kodak partnered with Samsung, Nokia, Blackberry or G-Tel (our own). Now that Starlink has landed in Zimbabwe, we are likely to see several “Kodaks” falling by the wayside.

Kodak’s failure to adapt to the digital age shows how rigid thinking and an inability to pivot can doom even the most iconic of brands.

Gentle reader, the demise of Kodak is a powerful reminder of the critical role that leadership plays in driving innovation.

Organisations that wish to thrive in today’s fast-paced, technology-driven world must have leaders who are not only willing to embrace innovation, but also foster a culture that encourages risk-taking, adaptability and a constant willingness to evolve.

Kodak’s downfall is not just a story of missed opportunities; it is a lesson in the consequences of leadership that fails to innovate.

In the end, the companies that succeed are those whose leaders have the vision and courage to disrupt themselves before someone else does.

  • Cliff Chiduku is the director of marketing, information and public relations at Manicaland State University of Applied Sciences in Mutare. He writes here in his personal capacity. He can be contacted on [email protected] or call/app +263775716517.

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