06 October 2011

The difference between innovation and inaction: A Tale of Two Companies

I have always been proud of my small hometown in upstate New York. I grew up on the shores of Lake Ontario and in the shadow of a moderately-sized, but fairly important city for business, Rochester. Making their home in the Rochester area are three large corporations: Xerox, Bausch & Lomb and Kodak. For decades, these three companies have not only stimulated Western New York's economy, but have been considered pioneers in their respective fields.

Then, this week, there's rumblings that Kodak may have to declare bankruptcy.


The fact that this announcement comes the same week as Steve Jobs' death is eerily coincidental in my mind. Today, we're mourning the passing of one of America's truly great innovators, while one of America's truly great innovative companies seems on the verge of collapse.

While Jobs was able to grow and evolve his company, and in the process create markets for MP3s, smartphones and tablet technology, Kodak stagnated. Based on the news coming from downtown Rochester, a large part of their failings seem to be traced to the fact that when digital became a real game changer, Kodak didn't want to change games. It stayed at the table, playing Five Card Stud, while digital moved onto Texas Hold 'Em and then, PokerStars.net.

And maybe this is the best example of how truly difficult innovation can be. The world changes, consumers change, beliefs change, incomes change, taboos change. And these changes increase the demand for new businesses, new products, new services, while also decreasing the demand for older businesses, products and services.

Now, some organizations have managed to survive this evolution, either growing with it or providing a service that, like death and taxes, isn't going away. (Funeral homes and tax collectors have the ultimate job security.) Apple is a great example of a company that grew, changing its product mix in time with the  changes in the market. Also, Jobs diversified his business and is credited with founding Pixar. That's right, Buzz and Woody started out as apples, not mice.

Kodak didn't grow. Instead of finding a way to become the best player in the digital photography market, growing on their already highly recognizable brand name, Kodak let the digital revolution pass them by, clinging to the belief that people would always need film and they would always need someone to develop it for them. By the time Kodak did enter the digital industry, it was far too late. Their cameras weren't even considered a decently cheap alternative to their foreign competitors, and they lost the foothold they had spent 130+ years carving into America's business mountain range.

You might think the outpouring of sentiment over Jobs' passing from regular Joes and Jills as well as other technology innovators is a little much. Twitter feeds, Facebook statuses, traditional and online media have been flooded today with Steve Jobs quotes, in memoriam posts and articles. But, when you look at Apple as a business, and you compare it to other less successful organizations, such as Kodak, you have to realize that Jobs wasn't simply a really smart guy or a technological svengali--he was genuinely an innovator, creating something new, making changes to the establishment and doing it in a timely enough manner to stay relevant.

Even if you're not an Apple-ite, that accomplishment is plenty of reason to admire and emulate the man who made little 'i's as synonymous with technology as the Kodak 'K' was in the 1960s and 70s with personal photography. Kodak and Apple have many things in common: at different times they transformed our society, literally changing the way we saw the world--Kodak, through the viewfinder of a camera and Apple, through the touchscreen of an iPhone. The main difference between them seems to be that with a true innovator steering the ship, Apple has emerged from the first decade of the new millennium and one hell of a recession, with a larger share of the market than it had before while Kodak might be filing chapter 11.

It's a cautionary tale and a celebration of risk-taking all in one.

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