News of the near death of the Kodak Corporation filled the news late last week and somehow slowly pushed aside competing thoughts in my brain like college football, NFL football, college basketball, the Iowa Caucus, the New Hampshire primary and a broken water pipe in my kitchen.
On Sunday as I drove the bi-ways of central Virginia and North Carolina making my way back home my mind wondered to the past when my family wouldn’t think of having a get together or make a trip without the purchase several of those bright yellow boxes of Kodak film for our cameras.
Kodak and its bright film boxes was an American icon that could be found in every drugstore and gift store in this country and in every foreign country we visited around the world. So, what went wrong with this innovative, creative and shining example of American know how?
Kodak’s situation is not the first time in my life I have witnessed a situation where a company forgets what got it to the top and stopped looking at what is important to their customers or listening to the market as it trends to new technologies. But this time, the management of Kodak is also guilty of generational management traits that sealed its doom.
In most organizations today you will find Baby Boomers in the leadership positions. In Kodak like many other companies Boomers are/were the directors, the managers, the CEOs, COOs, and CFOs.
Boomers as a group brought their competitive spirit and sense of commitment and hard work to companies, giving rise to the term, “workaholic.” Boomers are proud of what they do for a living and they define themselves by it.
One of the problems with Boomers is that they have lagged behind the Millennials and Generation X in the adoption of the most recent innovations like smartphones and social networking. On the other hand, data from the last couple of years show that the Boomers are finally rapidly beginning to accept the new technologies. All of this means that, when it comes to technology, Baby Boomers are in a period of transition.
For Boomers, their comfort zone is face-to-face, or person-to-person communication is the way things get done in the business world. Although Baby Boomers are gradually adopting smartphones and other high-tech gizmos, they do not brandish them as fashion accessories or use them to demonstrate how cool they are.
On the contrary, many Boomers are intimidated by hi-tech communication, finding it overly complicated and difficult to learn. Others see hi-tech gadgets as toys that young people use to waste huge amounts of time. Again, this is one feature of Boomers that may change over the next several years as they increasingly adopt the technologies that everyone else uses. However, it’s unlikely that they will come to see technology use as part of their identity in the way that younger generations do.
And Baby Boomers generally expect everyone they do business with to take the same approach as they do.
While phone calls and emails might be more efficient, they don’t offer the personal touch that Boomers’ crave. Boomers are much more likely to want to meet or go to lunch to discuss business than younger generations. They view face time as “real” work time and other kinds of interactions as peripheral. They are gradually adapting to new forms of communication like social networking and texting, but don’t yet feel like those kinds of exchanges are appropriate for business or sales communication.
Even though the 1950s and 60s are now more than 40 years past, Baby Boomers have never really let go of them. They remember their youth fondly on every occasion. As directors and managers, Boomers as a group are not the best listeners and are even worse mentors.
As a group, Boomers are great worker bees but may have been so focused on their own journey that perhaps they didn’t see the changes in technology that Generation X and the Millennials have embraced and led to changes in the marketplace.
So did a generation of managers and directors bcome so focused on how their generation saw the world and not look forward to how the next generation was seeing it?
Here are a couple of examples of companies that were so busy they lost sight of the destination that I remember and come to mind.
Smith Corona Typewriters – using “liquid Paper” trumped by word processors:
When I was in high school our business teacher, Ms Ringland, convinced me that I should take typing as it would be a great help to me in college and then later as I entered the business world. Well, I never won a speed contest but I did fall in love with my Smith Corona Selectric.
Smith Corona is/was a typewriter and calculator company. They were once the largest manufacturer of typewriters in our country. The company experienced rapid sales declines in typewriters during the mid-1980s due to the introduction of word processing machines and then the rapid acceptance and the resulting demand for personal home computers. When laptop computer price points became affordable, the typewriter business was over. Smith Corona missed the signals from a younger and hungry group of consumers and kept doing what they do best, build typewriters for a shrinking demand.
Sony Betamax – a better product can be beat by availability:
In May of 1975, an innovative Japanese company unveiled the world’s first home video cassette recorder. With a TV monitor at their sides, executives of Sony Corp. popped a small cassette into the new VCR and launched a revolution.
The world of personal entertainment was never the same. With that single invention, Sony changed the way we watch TV, the way we look at movies, the way we schedule our evening hours. Even the name that Sony gave to its device, “Betamax,” with its first and second syllables suggesting something both old and new – soon was the generic term for video recorder. I owned one. I used it to film my children when they were young. My Betamax is now in stored away deep back in the hall closet.
Today the Beta format has disappeared into history. Once again, management got caught up in generational management traits and didn’t keep their eye on the ball as consumers, especially younger generations, migrated to the VHS format.
It is easy to imagine a different scenario. Beta had at least four solid advantages compared with VHS: The picture is sharper, the mechanism can switch quickly from one mode to another, the cassettes are small, and the hi-fi sound tracks didn’t cause any problems for high-speed duplication.
What Sony failed to recognize that many consumers, especially younger buyers, buy such items as VCRs on impulse. They stroll through stores looking for one thing and end up buying something else. Competing VHS manufacturers knew that principle well, and made sure that VHS recorders were sold in many different types of stores, not just electronic stores.
Kodak – sharing became more important than film quality:
The Kodak Company was started by George Eastman in 1880 in Rochester, New York and was founded on incredible technical innovation that met a huge consumer need. By 1884 Kodak had become a household Eastman believed was successful because it was a user-friendly product that would be “as convenient as the pencil”.
Throughout its history Kodak thrived on innovating. They were consistent advertisers, developing memorable emotional pitches that drove their market share to near monopoly status. Kodak’s first marketing campaign used the slogan; “You press the button, and we do the rest”. Kodak became so dominate that by 1976 they sold 90% of the film and 85% of the cameras in America. They were able to leverage their expertise into new categories like videotape and memory cards.
And while they may have been a little late to the party, it wasn’t as if they ignored the digital revolution. Just six years ago, forty percent of all digital cameras sold in the U.S. were a Kodak. But what Kodak missed is that the market is being driven by younger generations that care less about the quality of their pictures (which is where Kodak placed all their emphases) and more about being able to quickly share their experience digitally with their circle of friends.
When I was growing up everyone took pictures of everything. If something was imprtant we could even get our pictures developed and returned to us in three days if we were willing to pay about twice the amount of regular development. Every family, every child, everyone had a camera. And now, Kodak stands on the brink of bankruptcy. It is hard to figure out exactly what happened but once again it seems that Kodak management got caught up in generational management traits were too busy listening to what people said and not actually understanding what they really wanted.
Remember, Kodak built their business on preserving memories. While most people have albums and keep their treasured pictures for the long term, in this millennium photography is really more about sharing moments.
What Kodak missed is while they engineered more elaborate cameras and systems designed to improve the image quality, the market was running the other way fast. Kodak’s lack of strategic creativity led it to misinterpret the type of industry that it was operating in which was later devastated with a fundamental shift towards the digital age.
But the danger signals were there much earlier. Back in 1984, when firstly the Japanese firm Fuji Photo Film Co. encroached on Kodak’s market share as customers switched to their products after launching a 400-speed color film that was 20% cheaper than Kodak’s. Kodak’s response was that “they didn’t believe the American public would buy another film”.
But this final death march started with millennials and Gen Xers and has spread to all ages of folks who are happy to take a quick shot with their camera or smart phone that is of questionable quality and then hit share button, uploading it immediately to Facebook, Photobucket or Twitter so our friends can see what we’re up to now.
The board of directors for Eastman Kodak is made up of matures and baby boomers with only a single member being a Gen X. The management team along with the board of directors are hard working (workaholic) folks but as a group their strength is not to mentor the younger generations or listen to new emerging ideas.
So now Kodak has been admitted to the hospice house for dying businesses and we are on the death watch. The company has lost money 12 of the last 15 quarters. Kodak is struggling to avoid bankruptcy protection. Its stock is worth less than a dollar and its employees are worried about jobs.
Kodak is one of those companies I pulled for. It made the memories of our country and my family. I for one am sad to see that the lessons of business have still not been learned and that the people running the companies, the baby boomers, haven’t figured out the new order of emerging technology and the younger generation’s direction that is driving purchases.
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