The Role of Innovation in Kodak's Downfall - Research Paper Example

The Role of Innovation In Kodak’s Downfall All businesses , whether local or not, must face the challenges of Globalization. The location of a business nor its product does not matter much anymore as the boundaries of doing business has crossed international territories . The world out there with its billions of people is a vast market for any type or service. Yet, the catch is that businesses must know how to compete globally to survive. In an article about Globalization by Rosmanitz (2012), he emphasized the crucial role that globalization has played in promoting the exchange of products or services among countries. From digital consumer electronics to household trinkets, everything can be sourced out from one part of the globe no matter how remote it may be. He also emphasized that introduction of different communication devices and platform that has increased the rate of information transfer. However, his comments about sustainability of a business in a globally competitive world is true. While consumers enjoy the benefits such as low prices and more options, local markets can also lose their business. Unemployment rises as downsizing occurs since global companies prefer outsourcing services due to a lower rate. Moreover, workers are not the only affected but big companies as well. Even big name companies like Eastman KODAK was not spared from the ugly head of globalization. Only this year, the Wall Street Journal announced the company’s filing or bankruptcy. It was a shock to the public considering that it has existed for 133 years. Yet, this is a glaring example that competitiveness is the key to survival in a globalized economy. Hence, this paper will cite the main reasons behind the downfall of KODAK. Innovation is the main element for modern businesses to survive the rigors of globalization. The areas mainly responsible in an organization’s drive towards globalization would be marketing and management. Businesslink has stated in an article the necessity of innovation after creating a product or service. More so, when innovation is applied, it can help increase profitability because the value of products or services have increased. Consumers are always on the lookout for better products that go beyond their expectations. Apple is a market leader due to the ingenuity and creativity of its beloved founder- Steve Jobs. If a company fails to improve itself, it will bite the dust just as Kodak suffered. Management gurus like Peter Drucker is one of the most innovative minds despite his age. He has this uncanny sense of seeing how businesses should market themselves in an evolving environment. In fact , he said that If an established organization , which in this age necessitates innovation, is not able to innovate, it faces decline and extinction. Drucker (qtd. in Trout, 2006) emphasized that Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business." Such words of truth should be the golden mean by companies today; moreover, Drucker emphasized the need to differentiate one’s products from the rest in order to survive the competition. Unfortunately, many businesses focus more on finances and operations and wonder later where they have failed. Although marketing does involve costs (along with innovation), it will be a constant source of revenue as long as the consumers are happy with the products. Innovation is often left behind because many managers are busy crunching numbers rather than developing ideas. Plus, innovation is often viewed by many business owners as costs, not as an investment. Innovation involves many creative processes that includes technology transformation as well as introduction of new strategies administered by the management (Shukla, 2009). Likewise, innovation, by itself, can be the main competitive feature of a company to rise above others like Google (Bouman, 2006). This just shows that innovation is not just an option but a necessity for a business to thrive nowadays. Indeed, there are many “me too” products produced in Asian countries like China which easily replicates functions or features. In order to stand out from the rest, innovation is the only course to take. Shukla (2009) reported that majority of companies today invest in innovation by putting money in Research and Development. This is a good indication that business owners are learning from lessons of other companies that paid a dear prize like Kodak. The best way to analyze the failings of Kodak is to look at its colorful history. The company goes a long way back in 1889 when it was founded by George Eastman; however, it is registered as a multinational company with headquarter in Rochester, New York (New Jersey Division of Revenue, 2008). Kodak was the market leader of its industry in the early part of the 20th century; it’s main rival then was Fujifilm. It’s main selling point revolved around the ease of taking pictures through the tagline “You press the button, we do the rest” (About Us Kodak). This mainly express the vision of its founder who wanted to make photography an easy and enjoyable task which has now become a rewarding profession for many people around the world. Kodak was good in advertising because it didn’t simply sold films; rather, it sold memories by promoting the Kodak moment. Kodak was successful for many years; in fact, it was ahead of its competitors since the engineers of this company developed a digital camera as early as 1975 (Milestones of Kodak). But as globalization came, along with all the electronic gadgets or devices from different parts of the world, the need to print films became almost obsolete. Hiltzik (2011) was very correct in explaining Kodak’s downfall by mentioning “Joseph Schumpeter’s forces of creative destruction.” Kodak products were good for a time but it did not act on the possible threats from the future. Traditional products became part of people’s collection but no more than that. As time passed by, the forces of globalization increased the expectations of consumers. The mobile phone is a good example of a device that has everything on it- a camera, a communicator, an entertainment device, among others. Apple again sets an example of how a product can make use of innovation to satisfy almost all the demands of its consumers through the iPhone. There are many reasons behind Kodak’s bankruptcy . Possibly, it could have rested on its laurels and started becoming complacent of its position as market leader for many years. An indifferent attitude towards change can be very costly; in the case of Kodak, many critics say that it has taken a wrong turn in its business decisions. In 2007, it still posted a good income; but as early as 2009, the “last spool of film was rolled out of from the Mexican factory” (Hirsch, 2011.) Early this January 2012, Kodak already filed for bankruptcy. By February, the company has decided to entirely abandon the digital image business and focus on” photo printing and high speed inkjet printers” (PC Magazine, 2012). The time between 2007 (when it last posted good income) and 2012 is five long years. The company should have felt the threat of digital imaging devices such as mobile phones. Kodak had good products that consumers have trusted for years; however, people’s needs change especially in this age of technology. Aside from innovation, Jacob Yoni in his brilliant article “How Kodak Could Have Avoided Bankruptcy” (Feb 2012) discussed the importance of timing as the main factor behind the fate of the once successful company. In a capsule, Yoni highlighted the blazing success of Kodak as it lead the development of digital images; sadly, Kodak ‘s decision makers where focused somewhere else. As aforementioned in the earlier part of this paper, many businesses often focus on other aspects of operations rather than looking at ways to make the product more marketable and innovative. Yoni’s article is incisive because it brings on the forefront strategies that Kodak could have taken. First and foremost, Yoni suggested that it could make money from its patents. The 11,00 patents of Kodak was worth billions of dollars that leading companies like Apple and Microsoft would surely use in their digital devices (Yoni ,2012). More interesting was the fact the Kodak CEO Antonio Perez have already a sense of things to come. Of course, no one else would be in a better position to see all the details of the company. He wrote a letter to the Board of Directors citing his reasons why Kodak should be sold. Instead, his appeal was ignored as the company owners decided to resuscitate the business. That simple decision made the company lose its money as it tried to recover a “300 million company instead of selling it for 5 billion” (Yoni, 2012). Today, Kodak is distressed and filed for bankruptcy. It even tries to pursue litigation against big companies like Apple about patents; however, this would not be the best recourse for a financially strapped business. Many business corporations and organizations should take Kodak’s plight seriously. It is a good case study of a leading company that has existed for more than century, yet went down because it failed to see the red flags along the way. It even led in product development of digital cameras, but did not explore ways to prepare for the onslaught of “creative destruction”. Even the stakeholders of Kodak are disheartened by what happened to this beloved company. The Kodak moments that represent good times may be just a memory after all. Works Cited Certificate of amendment to the restated certificate of incorporation of Eastman Kodak company" (PDF).New Jersey division of revenue. June 8, 2005. "History of Kodak." About Kodak. Kodak. Web. 02 May 2012. . "Use Innovation to Start or Grow Your Business." Businesslink.gov.uk. Businesslink. Web. 05 May 2012. . Milestones of Kodak: 1960-1979. Web May 01 2012. . Bouman, Andrew. "Why Innovation Is Important in Marketing." Ezinearticles.com. Ezine, 6 Oct. 2009. Web. 1 May 2012. . Fisher, Jim. "Kodak to Cease Digital Camera Production." PCMAG.com. PCMag, 9 Feb. 2012. Web. 05 May 2012. . Rosmanitz, Klaus. "Globalization - Advantages and Disadvantages." Ezine. 09 June 2010. Web. 3 May 2012. . Shukla, Amitabh. "What Is Innovation? Why Innovation Is Important?"  Paggu.com. 30 May 2009. Web. 05 May 2012. . Trout, Jack. "Peter Drucker On Marketing." Forbes. Forbes Magazine, 03 July 2006. Web. 02 May 2012. . Yoni, Jacob. "How Kodak Could Have Avoided Bankruptcy - Seeking Alpha." How Kodak Could Have Avoided Bankruptcy - Seeking Alpha. Seeking Alpha, 9 Jan. 2012. Web. 05 May 2012. . Read More