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Managing Product and Service Innovation for Kodak Report

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Updated: Jan 27th, 2020

Introduction

Innovation is an object, idea or practice that is regarded as new by individuals or units for adoption (Rodgers, 1983). It is the invention of more effective or better ideas, services, processes, products or technologies which are readily accepted by the target market, the society and governments. In regard to innovation, the target market is the most important.

Innovations act as the catalysts for growth in the increasingly competitive business field. Irrespective of the field a company operates, firms must continually transform structures of the economy from within by being innovative in products, services and processes.

Companies must also seek for improved ways and methods to enchant their customer base with improved and better quality, price, service and durability. These are the products of innovation which might be realized through the integration of organizational strategies and advanced technologies.

Innovations will not only add value to the customers, but also make business economically feasible (Tushman & Anderson, 2004). This paper explores innovation with regard to Kodak Eastman which used innovations to become the leader in the film and photography industry.

Kodak Eastman Company Background

Kodak Eastman was founded by George Eastman. The first camera to consumers was handed to a customer in 1888 with the slogan ‘You press the button, we do the rest’. The complicated and cumbersome process of having images for reference was significantly made easy. The innovation was easily accessible to most of the consumers.

Since then, the company has always led the filming and photography market with abundant new processes and products that make photography more useful, simpler and enjoyable. Contemporary, the company is not only known for filming and photography, but also for a variety of images used in scientific, entertainment, leisure and commercial applications.

The company was designed to involve technology to combine information and images. This created and continues to create the potential to reflective change on how businesses and people communicate (Kodak, n.d.).

Having conducted intensive research into filming, Eastman and colleagues introduced the first day-light camera. The user of the camera would reload the camera without the necessity to be in a darkroom. Initially, small companies that were borrowing Kodak’s idea faced intensive competition from Kodak.

The founder invested heavily in R&D which resulted in innovation of products that had a leading edge in the market. The products disrupted the photography and filming markets as they were highly innovative. Keeping pace with the company’s innovative products was challenging for new entrants.

Maintaining leadership in innovation is challenging for most technological companies. Kodak is an innovator in the camera, digital and film markets. The company’s engineer, Steven Sasson, invented the first digital camera in 1975. For many years, it was one of the key players in the visual and filmmaking fields. The company had almost been kicked out of the market by the late 1990s. In 2000, Eastman Kodak vowed to be the leader in digital cameras.

According to many individuals, this was an absurd idea. By the year 2005, the company was ranked first in digital camera sales in the United States. The sales from digital cameras had surged by 40 percent to $5.7 billion. The key to increase in profits from digital cameras was product innovation. The company was a leader on the innovation platform. It designed various award-winning products one after another. This made digital photographing almost as simple as clicking and pointing (Hamm & Symonds, 2006).

In recent times, Eastman Kodak has announced that it had plans to stop the supply of pocket video cameras and digital cameras despite being innovative. The company will focus its business on photo printing. The company will license the brand to companies that make the devices once it exits the camera business.

The company had disrupted the camera market by introducing the digital camera. However, it could not determine what to do with the new product. While other companies almost exclusively focused on technology, Kodak suffered from technology (Rangen, 2012).

Kodak Tour Framework

The framework for assessing Kodak’s innovation will incorporate product, process, product innovation charter, product portfolio, open innovation, radical innovation and the application of disruptive innovation.

The tour framework employed by Kodak is always expensive in terms of the amount of money invested in research and development. Typically, radical innovations are more costly to pursue (Shionoya & Perlman, 1994). Sasson’s innovation of the digital camera had initially met environment resistance since the invention required significant amount of investment. The innovation was radical since it was to change the photography industry.

The company was competitive in terms of financial stability but the invention took huge amounts of money and time to develop. The challenge for the company was that the engineer was pursuing a product that could not be explained. This was an illustration of ‘subjectivity of knowledge’ as identified by Shionoya and Perlman (1994).

Even though some members of the company management agreed to Sasson’s idea, some were reluctant creating tension between the company and the research and development division. Fortunately, the innovation materialized and made huge profits for the company.

In another instance in Kodak’s tour framework, Chester Carlsson started his own company. Xerox, after Kodak turned down his idea to develop a copy machine. The management insisted that the copy machine would not earn much revenue (Shipnoya and Perlman, 1994).

This subjectivity of knowledge was weighed against deferential in expected net value of the intended innovation. Currently, Xerox is one of the leading companies in the copy machine industry. This illustrates that individuals with innovation potential are likely to start their own firms when they are faced by subjectivity of knowledge.

Product Process

The new product process has been effectively used by Kodak in the past to ensure that it accelerates the time to market new products as a strategic move. When it introduced the first digital camera, the company moved with speed to market the new product. This turned the company’s profitability that other photography companies found hard to emulate or compete with. The development process and the packaging design implemented by the company offered the company a competitive edge over the competitors.

The introduction of the digital camera was accompanied by product specifications, branding and marketing promotions. The company ensured that it maintained existing customers and marketed to prospective customers regarding the new product. This accelerated revenue realization. The cost of development of the digital was relatively low compared to other photography companies. This was facilitated by the company’s ability to reduce package development costs.

Product Innovation Charter

Kodak’s product innovation charter involves development of new products that are meant to create new markets for the company. The company initially ensured that it had products that were less than five years old. Thus, the customers had access to the most recent technology. This resulted into huge profitability for the company. The survival of the company depended on investments into innovations.

Most of products generated by this company made it successful. The invention of the digital camera was radical. Radical innovations are crucial to any organization (Huerta, 2010). One of the new products developed by Kodak in pursuing product innovation charter is the Kodak EasyShare-One Camera.

This product was an addition to the existing product lines. Sasson’s invention was not an accidental discovery as the engineer knew there was potential in the digital camera. Since the innovation of the digital camera, the company stayed committed and focused to innovation as one of the long-term strategic goals.

Product Portfolio

Kodak’s product portfolio includes a range of products that are enticing to its customers. To demonstrate its commitment to product portfolio in the photography market, the company introduced developments in its award-winning professional and consumer film product portfolio. The improvements were revealed in 2006 at the Orlando’s Photo Marketing Association Show. The company changed the traditional product consumers’ experience by improving the one-time-use camera to PORTRA 800 color-negative film (Dingus, 2006).

Open Innovation

Open innovation was a new business strategy implemented by Kodak since 2002 when film cameras were outsold by digital cameras. The product development by the company took a different approach. Due to the decline in traditional film production, Kodak adopted an open innovation approach in developing its products.

This was necessitated by Kodak’s diverse competitors. Even though the digital camera developed by Kodak had substantial turnover realization, it became crushing revenue displeasure. In 2006, Perez termed digital cameras a ‘crappy business’ (Hamm & William, 2006).

Radical Innovation

Basically, the raging progress of Kodak digital camera trades had facilitated the corporation’s fast-waning film proceeds but had not made a trivial replacement effect on the film commercial opulent returns. Initially when Perez became the chief executive officer in 2005, he championed an organizational change and innovation strategy that finally proved that it could not turn around the company to the initial giant it was.

In less than a decade, Perez attempted to implement yet another strategy for the company. Considering the innovation and operational mistakes the company had made in the past, he attempted to reintroduce Kodak’s core business model (Crawford & Benedetto, 2011).

The notion was to make this corporation do to snapshots what Apple incorporation has been exploiting in music. The Apple’s strategy helped clients in organizing and managing their images within their private libraries. This move disrupted the digital camera industry by developing new digital photo services that were expected to bring higher returns. This was a sudden move by the company as it included rapid-fire scanning system to online sharing.

The fast-moving scanning system similarly dubbed as Scan the Realm takes the reproduced snapshots and transform them into digital imageries whereas organizing them according to the printing dates. This was a huge challenge for the company as it attempted to move from hard print photos to digital. This attempt came at a time when innovation was in top gear.

Most corporations fail due to believe that new market players offer diverse products with features simply cherished in the evolving markets external to the mainstream. In fact, Kodak Corporation did not recognize handsets and digital cameras as a prospective opposition to the firm’s core trades grounded on this basis (Hermida, 2012).

Kodak’s primary commercial dealing was film cameras and this was aimed at clienteles who desired to have decent and excellent photographs. Moreover, this corporation was unsuccessful in recognizing that derived from the know-how history; the primary commodities versions are frequently of low value but modifies over a period to outshine the well-established commodities. As time pass, innovation become commoditized. It is thus imperative for commercial model inventions to be in a long-lasting pursuit for revitalization.

Application of disruptive innovation framework

The requisite change needed augment Kodak’s success should be done at management level. This means that changes will occur including the restructuring of the management, changing the business model and implementation of radical corporate thinking. This will translate to realignment of the corporate strategies. The management is best placed because it has the authority to make investments in technology.

Solutions to Weaknesses

Radical Corporate Thinking Approach

It is imperative for executives to invest significantly in technologies that disrupt the existing customers and markets. Initially, these technologies initially bring little revenue. The challenge amid disrupting innovations, present clients and marketplaces, and filling innovation is openly validated by the Kodak Corporation’s undulation.

Disruptive innovations present a challenge for long-standing methods of doing business. These challenges require radical corporate thinking strategy. The implementation of the newly generated ideas is largely determined by the organization environment and the availability of resources (Tidd et al, 2005).

Invest in Technology

To compete effectively in the market, Kodak must make considerable amount of investment in technology. When resources are available, the company will be able to initiate and respond to disruptive innovation. Keeping up with disruptive innovations require companies to incur costs so that they can realize the benefits of technology.

These costs may either be nonmonetary or economic (Fulcher, 2012). Although Kodak has indicated its intention to sell its license to other companies that manufacture similar products, it is imperative for the management to realize that the company’s core business may be finally impacted by disruptive innovation in the market in it operates.

The company management should use previous experience to prepare and move ahead to preempt any threats that may be presented by such disruptive innovations. The company should invest in technology and be ready for disruptive innovations considering the rate at which technology is advancing.

This may require the company to invest in research and development in order to have new products ready for the market whenever a threat is detected. This will ensure that the company is at par with technology and that the company products that are dominating the market are not regarded obsolete (DNN, 2009). In the situation where the products are obsolete, the company will have a replacement with better customer satisfaction.

Change Business Model

Kodak should also strive to move far from its core business model. The move should also be fast enough to allow it to adapt to new technologies. This will require diffusion innovation. Diffusion innovation will increase competitive advantage as Kodak will adopt new innovations based on the business model that will place it on the competitive edge (Tidd et al, 2005). It is challenging to get transformation right when an organization sticks too close to its core business.

The company should not get trapped in its core business model. The company exclusively focused on photography even with the entry of new advanced technologies that threatened its existence. To illustrate this, the company only changed Ofoto from a portal where customers would exchange photos to a site where updates about life and news feed would be shared. This was meant to make people print pictures instead of developing an innovative concept.

Restructuring Management

For Kodak to succeed, it needs to drop its past success as this has been a huge impediment for the company. Even after the death of its founder, George Eastman in 1932, Kodak’s long-established ways remain difficult to change. Most of the leaders of the company still believe that his ideas were the best because he made the company successful. His ideas might have worked then but will not work in the contemporary world if innovation is locked out.

The biggest challenge is hierarchical culture established since the launch of the company that is inclined towards the omnipotence of leadership. The culture is powerful that people do not openly disagree with the leaders (Hamm & Symonds, 2006). The changes that will work to eliminate hierarchical culture should be radical as opposed to incremental.

Radical change in how the employees view the leaders will help create an environment where employees will be free to express their constructive ideas and be innovative. The innovations will enable the company to stay ahead of the competitors via novel market offerings (Agarwal et al, 2003).

Silent employees with excellent innovative ideas will not benefit the company. Employees’ innovative behaviors are reinforced by the combination of personality characteristics of the employer, the employees and work environment factors. The business environment which influences the conduct of employees determines whether the business will succeed or not since employees are the most important asset to a business. Freedom to think, express ideas and the authority to act influence employee innovation (Tidd et al, 2005).

Application of the framework

Business leaders have discovered that innovation of new products is not the only salvation for failing companies. It also does not turbo-charge performing companies. Most corporations’ basic undertakings are being interrupted by scientific alterations, fresh rivals and globalization. Therefore, it is necessary for Kodak Corporation to device commercial innovations model which will assist the company to hold on its competitive positions.

These innovations require managers to take time while making innovation decisions. The innovation process should not be rushed since innovation goes through a number of processes. The decision to innovate should be carefully considered since they do not always bring good results as was the case with Kodak (Kodak, 2009).

The decision made by Antonio Perez, the Kodak Chief Executive Officer, was an authoritative innovation. Although it involved Kodak management team, he played a major role in influencing the decision since he had the authority.

The verdict that the corporation made ought to have been anchored on information, influence, decision, operation and ratification. The consequences of the decision impacted the company. Although the innovations were supposed to have propelled the company to its full potential, the implementation and followed did not reflect the initial intent.

Conclusion

Innovation is a search through which economically valuable problems are solved. Companies use technology to create and develop new processes, services and products to gain competitive advantage through innovation. The combination of different types of innovation helps organizations to improve efficiency, develop new products and expand market target. It is critical for organizations to have organizational strategies that are flexible enough to adopt changes that occur in their respective markets.

Kodak should first change the hierarchical culture that was established when the company was founded to create room for employees to participate in innovations. It should also initiate different innovation methods such as disruption to propel the stagnating company forward.

Kodak became a victim of the disruptions it had initiated in the market. As technology advanced, the mobile phone took over as the every camera. The ‘Kodak moment’ that created a one-time and rare moment which was capture on Kodak photos started to be carried by mobile owners all the time. Although Kodak was innovative, it failed to identify the threats posed by mobile phones to digital imagery, the shifts in people’s behaviors and increased connectivity.

References

Agarwal, S., Erramilli, M. & Dev, C. (2003). Market orientation and performance in service firms: Role of innovations. Journal of Service Marketing, 17 (1), 68-82.

Crawford, M. & Benedetto, A. (2011). New product management. London, UK: McGraw Hill International Edition.

Dingus, D. (2006). . Web.

DNN (2009). Design issue: Kodak zooms in on digital. Web.

Fulcher, J. (2012). Kodak innovation and the need to not adhere too closely to core business models. Web.

Hamm, S. & Symonds, W. (2006). Strategies: Mistakes made on the road to innovation. Web.

Hermida, A. (2012). What Kodak teaches us about disruptive innovation? Web.

Huerta, F. (2010). New products management part 01. Web.

Kodak (2009). Accelerating product time to market. Web.

Kodak. History of Kodak. Web.

Rangen, C. (2012). . Web.

Rodgers, E. M. (1983). Diffusion of innovations. New York, NY: Free Press.

Shionoya, Y. & Perlman, M. (1994). Innovation in technology, industries, and institutions: Studies in Schumpeterian perspectives. Michigan, MI: University of Michigan Press.

Tidd, J., Bessant, J. & Pavitt, K. (2005). Managing innovation: Integrating technological, market and organizational change. Hoboken, New Jersey: John Wiley and Sons.

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