[Hang with us: This a long post, but it makes a critical point about how the pursuit of truth is indispensible if leaders want their organizations to thrive long-term.]

The Kodak logo today - Fairly Generic

The recent reports of Kodak taking itself into bankruptcy highlight a classic tale of a successful, profitable company overwhelmed by the need to reinvent itself, and failing to take action fast enough to maintain its market position. In keeping with our belief that the Pursuit of Truth is critical to long-term survival in business, we see Kodak as a poster child for a company that denied the truth, and paid for it. We plan on reminding our clients about this on a regular basis to keep them focused on pursing truth in all aspects of their business, whether or not it fits their current business plan.

The Great Irony: Kodak invented the technology that destroyed it.

An older logo from the 1970s - Note the shutter and flash allusion

A Kodak engineer invented digital imaging way back in 1975. Indeed, the company continued to set the pace technologically in digital imaging for decades. Yet, somehow the commercial successes accrued to the camera makers at Canon, Olympus and others, not Kodak. They failed to dominate the new digital world as they had the analogue film world for most of the 20^th Century. Why? Because they never truly changed their corporate mindset that Kodak was in the film business. What should they have done? Their best move would have been a simple shift in corporate mindset: Redefine themselves as being in the imaging business rather than the film business, and put all their marketing resources to work to make sure consumers knew it. That clear change in positioning would have allowed them to retain their film business while simultaneously leading the move into digital. Ultimately they did try to expand what Kodak meant to consumers, but dragged their feet so long that camera buyers never took them seriously as a digital imaging company.

Kodak always had the technological capability to compete. Not only did they invent digital imaging, they were the first to stuff a high-resolution chip into a handheld camera, and were the first to get the price of a digital camera under $1,000. Astrophotography camera companies like SBIG makes cameras that are considered the top-quality choice for imaging by amateur astronomers. SBIG cameras rely on a Kodak imaging chip! Somehow these accomplishments have not repositioned the brand in the marketplace. Why? Blame poor marketing driven by the erroneous belief that the Kodak brand meant more than quality photo film to consumers.

In an e-mail just this week from i4cp, we found the following passage:

“We know from experience that sustained high performance is synonymous with, among other things, being ready for change – and having a degree of insight into what’s around the corner doesn’t hurt.”

That “degree of insight” comes from having the Pursuit of Truth mindset embedded in the organization.

The Truth: Digital was a Killer App

It is incredibly hard for an organization that is highly profitable to make dramatic changes. For Kodak, entire supply chains of chemicals, plastics and paper stood at the front end, and retail distribution at the back end. Add to that after-market film developing services, and you have a huge marketplace structured around the business of selling film. Actively taking steps to threaten such a profitable venture would have taken guts that most top managers don’t have in a publically traded company. Management cannot simply say “OK, now we are a digital imaging company” unless they drag the whole company with them. Only a strong leader with a real grasp of the truth about future prospects can pull it off.

It can be done, however. IBM has done it more than once. Xerox (ironically for Kodak) made the shift from copier company to imaging company, then on from there to “managed document services.” Apple has risen from the dead twice.

Kodak could have, too. The truth was that digital was eventually going to kill the film business, and Kodak management needed to internalize that reality and reinvent the company as the leading imaging company, grabbing the technology lead from their pals in the camera business. No one trusted this hard truth as the right path forward, and this led to poor strategic decisions that led to the sinking of one of the world’s strongest international brand into bankruptcy. Had Kodak bit the bullet and made digital technology leadership a central marketing tenet, I believe they would have retained a leadership position in the “Imaging Market” even while the film business faded away.

What truths are you denying in your industry? What external threats are you discounting because they don’t fit into your definition of your marketplace, or would upset your carefully crafted business plans? What are you in denial about???

If you want to find out, give us a call. We facilitate strategic planning that embeds a mindset exposes the truth and redefines it as opportunity rather than threat, positioning your organization ahead of the curve rather than behind it. The Pursuit of Truth mindset is the best defense against becoming the next “Kodak.”