Kodak moment?

This week I’ve been thinking about the demise of Kodak.

Recently someone told me that their customers were “too sophisticated” to use the “frivolous” services of a competitor.

With “frivolous” in this context meaning a more engaging and simpler digital interaction.

Immediately the infamous Kodak case study came to mind.
 
Kodak had been a highly innovative market leader for many decades and had in fact INVENTED digital cameras. But they completely failed to understand and act quickly enough on a change in customer demand.
 
I’m pretty sure someone at Kodak had the opinion that photographers were never going to be tempted by the inferior quality of digital photos.
 
But what they didn’t understand was that many consumers would trade some quality to be able to see the image instantly and be able to share it online.
 
(If you really want a sense of how much Kodak missed reading that change in demand try explaining the sheer inconvenience of film photography to a Gen Z.)
 
Since the dot com era we’ve seen consumers vote with their wallets, time and time again, away from traditional companies towards new offerings that give them choice, convenience and engaging interactions. Unfortunately, time and time again, incumbents have made the mistake of relying too much on their established brand and market position, and haven’t taken new entrants seriously.
 
There is an abundance of academic work about the demise of Kodak – but the key themes seem to be an inability or unwillingness to disrupt themselves and a complacent culture within middle management that stifled innovation.
 
So, the question is, are you facing into a Kodak moment of your own? Here’s some warning signs you should pay attention to:

One: Your customer behaviour is perplexing.

There’s a classic mistake that many organisations make, which is equating tenure (in the company, industry or discipline) as a yardstick for expertise about customer wants and needs.

Clearly tenure makes you an expert about how your organisation, industry or discipline works. It does not make you an expert in what your customers need.

Sometimes your expertise actually works against you. You assume all your customers are as knowledgeable and skilled as you, and usually that’s not the case.

That’s when you get the “perplexing” customer behaviour scenarios. Sophisticated customers who do want a simpler digital experience, wealthy customers who do want value for money, new customers who will try more complex interactions online if you make it available to them.

If you have consumer behaviour that surprises or worries you then the best course of action is to look deeply at what your customers are doing and try to understand why.
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In digital transformation the most important subject matter expertise required is how to uncover the needs of your customers.  

Two: An industry new entrant is doing better than you thought they would.

Or your new product is doing worse than expected. This could be a sign that your customer expectations have changed.

Nothing ever stands still. The things that are important to your customers now are different from even a year ago.

Some of those customers have experienced major changes in the importance they place on big things like climate change, social good and public health.

Some changed expectations are a direct result of what the platform companies like Apple and Amazon now offer us. The benchmark for good digital service just keeps getting higher.

And some changes are just everyday minor irritations that your customers wish would go away, like plastic straws or the way FaceID doesn’t work when you’re wearing a mask.
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Whatever the change in your customer’s views, the companies that are listening and acting on them are more likely to be successful than those who assume everything is the same as five years ago.

Three: New ideas are stifled.

I once worked (briefly) for a very old company where someone more senior to me actually said “our organisation has been around for several hundred years; can you please stop suggesting improvements we should make”.

I left shortly thereafter.

Your junior staff are infinitely more in touch with your customers and how society is changing than you are.

And they want to work somewhere where it feels like things are moving forward and they can contribute to that.

A great way to gauge how effective your processes are at surfacing new ideas is to actually talk with junior staff who haven’t been with you for very long.

How you do this depends on you and your industry but it could be anything from requesting improvement ideas, reverse mentoring, staff focus groups, dedicated innovation time or hackathons.

It's a great way to drive new ideas but more importantly it's a yardstick for whether your company culture is blocking new suggestions from getting air. 

Best of luck!

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