With this morning’s announcement that Kodak would seek bankruptcy protection, I reflected back on how and why it reached this point. In my opinion, Kodak fell into the same trap that most large, successful and once highly innovative companies get into – how to keep the innovation engine working over the life of the company.
So what are the 3 mistakes that Kodak made?
Weak innovation portfolio management
Like most large successful companies, once they achieve a significant market position, management retreats into a defensive mode. This includes how they make innovation investments. I’m willing to bet that if you “follow the money”, you would find Kodak’s investment model for innovation over the past 10 years would fall into the range of 95% to existing core products (e.g. film, chemicals, etc) and 5% into anything new.
When I arrived at HP, the investment model was 98% and 2%. It took +3 years to shift to a model of 70% to the core, 20% to adjacencies (new products to existing customers, existing products to new customers) and 10% to new (new products to new customers).
Believing they figured out the innovation formula
Once companies experience innovation success, they grab on to the process that got them there and believe that it contains the magic answer. In some extreme cases, companies treat their innovation process as a trade secret. Big mistake.
The one constant in business is change and the innovation process is no different. Organizations that stick with any process because “it worked in the past” puts themselves at risk of future failure. If change is inevitable, then change to the processes, policies, rules, etc need to change. Innovation is no different. Large organizations that have generational success with their innovation strategy are ones that continuously innovation the way they innovate.