When the mantra “innovate or die” is invoked, two companies who are often mentioned as examples are Nokia and Kodak. But in what ways, exactly, did these two companies fail to innovate? and what lessons can we learn from their failures?
Here are 5 innovation blind spots that I identified that ultimately doomed them to failure …
1) They Defined Their Business Too Narrowly
Nokia began life in a small village in Finland, as a paper mill. It branched out into electronics in the 1960s and in 1979 created the first cellular network in the world. Soon after, Nokia launched the Mobira Senator, its first car phone.
In the late 1990s and early 2000s, Nokia was the global leader in mobile phones. Profits were sky-high. The shareholders were ecstatic. No doubt Nokia thought its name would be the Kleenex of mobile phones.
Then, companies who were focused on the internet arrived, with people who understood that data, not voice, was the future of communication.
Fast forward to 2013, when Nokia’s hardware division was acquired by Microsoft. It was the end of Nokia’s glory days.
In a TechCrunch article, Daniel Gleeson, states that Nokia just didn’t grasp the whole concept of software, or the idea of developing an ecosystem around apps. Nokia’s focus was hardware and they got stuck there.
Adam Leach worked with Nokia’s original smartphone platform, Symbian, on projects including the Nokia Communicator, one of the first smartphones ever developed. Talking about his experience in collaborating with Nokia, he said the attitude was “it’s got to be a phone first, it’s a phone, phones sell.”
Nokia’s reluctance to switch from a focus on hardware to one on software left it eating the dust of other companies.
Similarly, Kodak made the monumental blunder of clinging to analog cameras instead of moving quickly to digital — A side note: Kodak invented the first digital camera. The reason, as Forbes notes, the members of the organization were so tied to the idea that their paychecks came from the sale of consumables such as film, chemicals and paper. No consumables, no profit, was their assumption.
So what is the lesson learned? Be careful about how you define your business. Make it broad enough to encompass the possibility of change and deep enough to reach down to the core concerns of your customers.
2) They Forgot About the Customer
George Eastman, founder of Kodak, once said his goal was to “make the camera as convenient as the pencil.” With that attitude, and the development of dry-plate technology, he launched both an iconic American company and the entire practice of amateur photography. The “Kodak moment” embodies the idea of being able to capture special memories, easily and inexpensively. Later, Eastman bet his company’s future on new technology (leaving dry-plate photography behind and embracing film) because he saw how the new would serve the customer better than the old. He similarly jumped on color film early, even though it was inferior to black and white film for a long time during its development.
Somehow, Eastman’s wisdom did not survive. Later on, leadership at Kodak thought only about profit and hung on to outdated technology. They forgot the customers and the customers moved on to competitors who offered technology that made their lives easier.
Nokia, in its lack of expertise about software, didn’t pay enough attention to the compatibility of apps, even designing phones that didn’t work with games that consumers had played on their previous Nokia phones. This lack of focus on the customer’s needs is a nail in any company’s coffin.
So what is the lesson learned? Keep the customer at the center. Spend time getting to know the customer and thinking about how to solve their problems.
3) They Moved Too Slowly
Fast innovation is hard when things are going well. One of the big mistakes Nokia made was that it didn’t transfer its smartphone platform from the original Symbian OS to the next-generation one,MeeGo, soon enough. Its decision to try to compete with Android by open sourcing Symbian in 2008 came a few years too late.
Kodak, too, moved with inexcusable slowness in the face of industry changes, considering they saw it coming well in advance. The company did a study in 1981 that indicated they had about ten years to prepare for the transition to digital photography – but they completely failed to embrace this new technology. In fact, they mostly hid from it.
So what is the lesson learned? Be nimble and courageous. Make the tough calls to embrace new technology/products, even if (especially if) your organization is profitable and comfortable. Tweaking existing products can only take you so far.
4) They Didn’t Listen to Their Own People
Kodak, with all its resources, had an early start with digital cameras. It knew about the technology almost 20 years before sales of digital cameras eclipsed analog in 2002. But not only did upper management not listen to its own market research department, who sounded the alarm that the company had only a decade to transition to digital, one of its very own engineers actually developed the first digital camera – and they hushed it up.
According to Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, people within the company reacted to his new invention by saying, “That’s cute—but don’t tell anyone about it.” Sasson was unable to convince anyone in Kodak of the potential of his invention. Soon Sony and others put inexpensive digital cameras on the market, and Kodak’s moment was lost.
The warnings from inside the organization were ignored, and in 2012, Kodak filed for chapter 11 bankruptcy.
So what was the lesson learned? Make sure innovators, from every level of the organization, have a voice and then listen to them.
5) They Failed to Foster a Culture of Innovation
In other words, they got complacent.
Nokia’s early history of innovation (from paper mill to electronics to smartphones) could not survive the company’s complacency and attachment to hardware. They became overly satisfied with their success, and failed to plan effectively for future advances.
Kodak’s leaders also neglected to help employees see digital as an opportunity. They saw only that digital innovations would eradicate film and photofinishing services, and they looked no further.
In 1999, CEO George Fisher told the New York Times that Kodak had “regarded digital photography as the enemy, an evil juggernaut that would kill the chemical-based film and paper business that fueled Kodak’s sales and profits for decades.”
Innovation can be threatening. In some cases you have to let go of one product or service while you are transitioning to a new one, like Tarzan letting go of one vine with the hope that he can reach the next one – it’s scary.
So what was the lesson learned? Make innovation a tangible component in your organization’s culture. Reward accordingly. Help your employees swing from one vine to the next.
Nobody says innovation is easy and not all innovation blind spots are fatal. We are fortunate that we can learn lessons from the blunders of companies like Nokia and Kodak and look for ways to see beyond our own innovation blind spots.