Lecture 3 – Innovation and Entrepreneurship:
Organising and Managing Innovation
Real-World Reflections…
It was one of the most powerful companies in the world but today has a market
capitalization of less than one million, demise of Kodak has been studied
What went wrong?
- Kodak suffered from what is known as myopia, essentially the fact that they were so
blinded by their own success that didn’t see the onslaught of the digital technology
which was going to be the next big thing in the film industry
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,Strategic Drift…
First digital camera was invented by an employee of Kodak
Since it was made in 1975, by today’s standards, its not the most sophisticated digital
camera but was invented by Kodak
They may have invented it but they didn’t commercialise it
- Having good technology isn’t enough but you need to invest into the technology and be
able to commercialise it
The most prominent failure for Kodak was not realizing the customer and market point of
view that camera’s were actually merging with phones and the way consumers were using
photos and images and the camera itself was shifting, was happening as Kodak was needing
to do something about it but they didn’t do something about it as quickly as they should
have
People were shifting from printing pictures to posting it to social media and using mobile
phone apps
Clearly this is where Kodak failed, its not like they didn’t spot the opportunity and do
something about it, but what they didn’t keep up with is this evolution
The traditional business was about the physical film
The digital aspect became the main business
In 2001 Kodak actually bought a company called O-Photo, which was an online photo sharing
company
- In 2001, FaceBook didn’t exist, yet Kodak had the foresight to buy and invest into the
capability of an online sharing capability
- Instead of creating of O-Photo into a Kodak form of Facebook, using that as a online
social networking form of the photo, what they did is focusing on getting people to print
the photos; share it, but then eventually print the photos, but this was not what the
consumer trend was heading towards
- As part of their bankruptcy, they had to sell this O-Photo business for $24 million to
Shutterfly, this is when Face Book invested into Instagram
Kodak failed to ask, what business are they in?
They also should have moved from traditional film to online digital film
Around the same time that Kodak was number one in the industry, Fuji Film was a distant
second, however what Fuji did was they were able to obtain a joint venture with Xerox
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, where Fuji has invested into so they were able to move away from their traditional business
by introducing a new product line and shifting
That was a strategic fit that organisations try to keep up with trends
Why do we need to Organise and Manage Innovation?
Same situation as previously discussed happened to Motorola and Nokia
Linking Innovation with Strategy
Take-away from this is that organisations need a strategic approach to innovation in
a way that what they do on a day to day basis needs to link with a long term picture
of their organisational strategy
- The projects that they invest their money needs to align well with the broader
innovation as well as organisational strategy
- That will dictate what
o they want to think about when it comes to research
o do they want to think about
Page 3
Organising and Managing Innovation
Real-World Reflections…
It was one of the most powerful companies in the world but today has a market
capitalization of less than one million, demise of Kodak has been studied
What went wrong?
- Kodak suffered from what is known as myopia, essentially the fact that they were so
blinded by their own success that didn’t see the onslaught of the digital technology
which was going to be the next big thing in the film industry
Page 1
,Strategic Drift…
First digital camera was invented by an employee of Kodak
Since it was made in 1975, by today’s standards, its not the most sophisticated digital
camera but was invented by Kodak
They may have invented it but they didn’t commercialise it
- Having good technology isn’t enough but you need to invest into the technology and be
able to commercialise it
The most prominent failure for Kodak was not realizing the customer and market point of
view that camera’s were actually merging with phones and the way consumers were using
photos and images and the camera itself was shifting, was happening as Kodak was needing
to do something about it but they didn’t do something about it as quickly as they should
have
People were shifting from printing pictures to posting it to social media and using mobile
phone apps
Clearly this is where Kodak failed, its not like they didn’t spot the opportunity and do
something about it, but what they didn’t keep up with is this evolution
The traditional business was about the physical film
The digital aspect became the main business
In 2001 Kodak actually bought a company called O-Photo, which was an online photo sharing
company
- In 2001, FaceBook didn’t exist, yet Kodak had the foresight to buy and invest into the
capability of an online sharing capability
- Instead of creating of O-Photo into a Kodak form of Facebook, using that as a online
social networking form of the photo, what they did is focusing on getting people to print
the photos; share it, but then eventually print the photos, but this was not what the
consumer trend was heading towards
- As part of their bankruptcy, they had to sell this O-Photo business for $24 million to
Shutterfly, this is when Face Book invested into Instagram
Kodak failed to ask, what business are they in?
They also should have moved from traditional film to online digital film
Around the same time that Kodak was number one in the industry, Fuji Film was a distant
second, however what Fuji did was they were able to obtain a joint venture with Xerox
Page 2
, where Fuji has invested into so they were able to move away from their traditional business
by introducing a new product line and shifting
That was a strategic fit that organisations try to keep up with trends
Why do we need to Organise and Manage Innovation?
Same situation as previously discussed happened to Motorola and Nokia
Linking Innovation with Strategy
Take-away from this is that organisations need a strategic approach to innovation in
a way that what they do on a day to day basis needs to link with a long term picture
of their organisational strategy
- The projects that they invest their money needs to align well with the broader
innovation as well as organisational strategy
- That will dictate what
o they want to think about when it comes to research
o do they want to think about
Page 3
