Adapting to disruption: Kodak vs Apple

From success to failure from being the top brand in the world to bankruptcy; we continue reading about top companies around the world that we thought they were invincible but was surprised that they failed sustain. Although they were all considered disruptors when they started, they got to a stage where they forgot what it takes to innovate.

These stories include the likes of Kodak, Blockbuster, Nokia, Blackberry and RadioShack that got disrupted by the likes of Sony, Netflix, Apple, Google and Amazon but why some brands manage to adapt, while others just couldn’t catch the train? Lets take two famous examples here Kodak vs Apple

In 1976 Kodak was the market leader capturing 90% of the film market and around 85% of the camera market and in 1981 Kodak surpassed the 10 billion dollars mark[1], as was presented in the modules, with the focus on mothers or “soccer moms”, Kodak moments, and saving memories in Kodak albums. After 131 years in the in the industry, Kodak filed for bankruptcy in 2012. Yet what are the 5 main reasons that stood out in my opinion for Kodak’s failure:

1)      Adapting to digital: Although one Kodak engineer has managed to build a digital camera in the late 1970s, they were never interested in the invention and where convinced that “no one would ever want to look at their pictures on a television set”[2]. It was another way of fearing cannibalization to their existing multibillion film making industry and hence they decided to remain on “status quo”.

2)      Ignoring emerging competition: Again, due to their Anti innovative bias, Kodak’s management decided to be focused on their craft and invested more on making smaller cameras, creating CDs, batteries, one-time use cameras, better films while ignoring the likes of Sony who started engaging early in the digital camera area[3].

3)      Slowness to ride the internet trend: in the late 80s and early 90s where the internet started to grow in popularity. Customers had the autonomy in creating, deleting, sharing images easily, so they developing images was not necessary any more. Kodak instead of taking advantage of their success decided to stick to their way of working.

4)      Poor leadership: in 1881 when Kodak introduced the first film role using wax, that was considered a main disruption in the market where cameras in those days use to depend on copper/glass sheets. The leadership in the 70s, 80s and 90s forgot about the disruptive nature they once had and was convinced that they were untouchable.

5)      Banking on one market segment: All Kodak was focusing on are moments & memories through mothers. Kodak failed to appeal to the other segments in the market who quickly found a better alternative to what Kodak provided using digital cameras.

What did Apple do differently?

On the opposite side of the spectrum, Apple has completely managed to extract itself from a disaster and now is the number 1 brand in the world according to Interbrand [1] 2019 with market value worth of over 1 trillion dollars[2]. Where this wasn’t the case before Steve Jobs has taken over the CEO role in 1997. Between 1991 and 1997 Apple computers was almost going to bankruptcy due to competition where windows were at their peak in the 90s. Apple didn’t manage to appeal to the masses during the 90s similar to where windows positioned its product. Its no surprise that the first thing Jobs did after taking over was to sign an agreement with his competition Windows, so that that windows products will be supported by Apple computers. A move that wasn’t welcomed at first by many, but eventually it served very critical in the return of Apple in the market. So, what did Apple do?

1)      They adapted: With the return of Jobs as CEO in 1997, Apple computer introduced iMac in 1998 and managed to sell 1.8 million units in 1999[1].

2)      They took the risk: New product lines introduced, iMac, iPod, iPhone and iPad all running under one platform in a unified eco-system supported by Apple certified Apps that also caused disruption in the music industry with music streaming service. All of these has taken the company to huge leaps into where they are today. Also, on top of that opening a web store in the late 90s helped them gain early access to online customers.

3)      They followed the trend: Windows was leading at that moment of time and instead of competing with them, joining forces with Microsoft kept Apple alive and capable of reorganizing and reviving their product lines.

4)      They had an innovative, disruptive and risk taking leadership: Steve Jobs.

5)      And they focused on the masses: Apple was no longer a product to a certain segment, they appealed to everyone and was able to sustain their leadership through proper marketing and continuous disruption of their products and services.

From the 2 examples above we can see that any individual/company can disrupt the market and succeed but at the same time should maintain that disruptive nature and always continue disrupting their own business model and keep an eye to what is happening around to be able to maintain, sustain, grow and create new opportunities in the market. Several companies are also taking the same route as Apple, namely Netflix, Google, Huawei for example while others are more likely to take the route that Kodak has gone through if they didn’t change.

[1] The unseen patterns in Kodak’s decision https://medium.com/@sanwar/the-unseen-pattern-in-kodaks-decisions-60220212c5b8

[2] https://petapixel.com/2018/06/14/a-brief-history-of-kodak-the-camera-giants-rise-and-fall/

[3] http://www.sonyinsider.com/2009/03/11/akio-morita-and-1981s-mavica-electronic-camera/