Management Approach to Innovation - Kodak and Fujifilm - Essay Example

? s Kodak and Fujifilm Kodak and Fujifilm Introduction In 1888, George Eastman Kodak developed the first snapshot camera, which placed the foundation of one of the biggest firms the global corporate world has ever seen. Since then, Kodak invested enormously in its business of film and photography. After the inception of color photography, Kodak became one of the few companies that had the processes and knowledge to succeed. In 1962, the company acquired a benchmark of $1 billion sales. Since 1976, Kodak captured large market of camera and film in US (85% and 90% respectively). Photofinishing processes of Kodak soon became industry standard in terms of quality. It always had competitive advantage over its competitors due to the operation and scope of its business. This assisted Kodak for having sustainable growth for around 90 years. However, from 1980s and 1990s, Kodak began to encounter problems in terms of revenues, marker share, technological explosion, and competitors (Schreiner, 2012). As Kodak strives for survival, its biggest competitor Fujifilm enjoys the renaissance of innovation. For Canon and Nikon, innovations with sensors, Fujifilm emerges as a genuine threat to Kodak. In 2010, Fujifilm maintained its place in Fortune Global 500. Even though, the company is now striving to keep up with its current position by diversifying into new similar businesses. Fujifilm was established in Japan in 1934. It has made its place as a leader in videotape, motion picture photography, floppy disk, and audio tape industries. It is also involved in manufacturing camcorders, still cameras, chemicals and paper, photofinishing equipment, information and imaging products for medical and office use markets. The company introduced dry plates, motion picture film, and photographic paper. While Kodak goes bankrupt on 13 January 2012, its long time competitor Fujifilm is flourishing fairly well. The two businesses have a lot in common. Some of which is mentioned in the subsequent sections of this paper. Management Approach to Innovation At Kodak, decision-making process was extremely slow and people were afraid of taking risk. According to the new CEO, George Fisher, the previous management style attributed to the current condition of Kodak. It was so hierarchical that low-level employees needed to wait for top-management in every situation. To get over this inflexible hierarchy, he made himself accessible, and visible and encouraged employees to take more responsibility. Leadership of Kodak has also been inconsistent. The strategy of the company changes with every new chief executive. The biggest management flaw at Kodak was their monopolistic attitude. On the other hand, Fujifilm was efficient in anticipating change and taking quick decisions. Fujifilm took advantage from the weaknesses of Kodak and snatched the market share in a short span of time (Kotter, 2012). Impact of Management Differences The execution strategy of Fujifilm is what gave it an edge over Kodak. In 1980s, when Fujifilm observed the omens of digital doom it established a three-step strategy. i. To earn as much revenues from the film business as possible ii. To prepare for converting to digital iii. To establish new business lines (The Economist, 2012) Fujifilm looked for new venues for its specialization in film for instance, developing optical films for flat panel screens such as LCD. Since 2000, it invested approximately $4 billion in the business. It paid off very soon. In a short span of time, Fujifilm began to enjoy a market share of 100% in this area. CEO of Kodak, Fisher decided that its specialization lay in imaging. Therefore, he turned out digital cameras and offered it customer with a feature of posting and sharing pictures online. This production could have made Kodak more creative and nimble but he failed to outsource. Yet, Kodak managed to build a monumental business from digital camera but it persisted for only few years before the phones having camera wrecked it (The Economist, 2012). Approach to Ethics and Social Responsibility The approach to social responsibility and ethics of Kodak and Fujifilm is clearly reflected in the profitability of both the companies. Having an aim to exercise ethical practices and give back to community, those manufacturing standards were maintained which satisfied the customers. Corporate Social Responsibility and ethical business practices were maintained by both the firm, which provided them with positive public image. According to Business Ethics magazine, Kodak has ranked among ‘100 Best Corporate Citizens’ for four years. This list was based on analysis of 1,000 large corporations. On the publication’s list, the number of Kodak was 58th. This list is issued by Business Ethics based on quantitative measures of the company to seven major stakeholders including employees, shareholders, community, customers, environment, women, and minorities as well as overseas stakeholders (Businesswire, 2007). According to Srimalee, (2013), the threat to global climate change is driving many companies to stay concerned regarding the environment and to find ways for environmental awareness and sustainable business. Fujifilm is one such firm. For production, the company attempted to establish its plants that reduce CO2 and achieve zero waste. Customer satisfaction is one of the top priorities for the company in all business activities. The company conducts training program for employees and staff to meet customers’ demands. The company is also engaged in CSR programs to focus on education that can unveil opportunities for people to learn about technology and innovation (Srimalee, 2013). Impact of Ethics and CSR on Profitability The impact of practicing ethical standards and corporate social responsibility is evident by observing the brand image of the two companies. None of the company has involved in ethics violation activities, which resulted in positive brand image of these companies in mind of their customers. As mentioned earlier, Kodak had remained in Top 100 Best Companies due to its ethical practices. Fujifilm also did not stay behind in serving the community and other relevant stakeholders. For this reason, the bankruptcy of Kodak did not have any direct or indirect link with CSR. Fujifilm also enjoys upsurge in profits because of obliging with ethical policies and code of conduct. The profitability can decline due to any ethical violation or CSR mishap. Yet, there has never any case occurred which supported Fujifilm in maintaining and improving its current brand reputation. Adaption to Dynamic Market Conditions Culture of Kodak did not help the company. Despite of its number of strengths, such as rigorous approach to production, monumental investment in research, good relations with community, Kodak had transformed itself into a complacent monopolist. Another reason for a slow change in Kodak was that its top-level management which, according to Clay Christen; “suffered from a mentality of perfect products, rather than the high-tech mindset of make it, launch it, fix it,” (The Economist, 2012). According to the author of ‘Innovator’s Dilemma’, Clay Christen, the biggest blunder of Kodak was more like, “seeing a tsunami coming and there's nothing you can do about it” (The Economist, 2012). Fujifilm and Kodak both anticipated that the market conditions are going to change to digital from photographic. As compared to Kodak, Fujifilm was more vigilant and easily adapted to the change. This gave a competitive edge to Fujifilm over Kodak, snatching the dominance of Kodak in United States. Kodak lost its market share due to its slow response, which resulted in filing down for bankruptcy in 2012. Fujifilm had been expanding its businesses and reported higher profit across the world. Fujifilm adapt faster than Kodak because the CEO of the company broke the longstanding corporate traditions of Japan that were associated with the brand image of the company. For Kodak, due to the rigid mentality of its executives, it could not adapt to the changing market conditions (The Economist, 2012). Ways for Adapting Changing Market Conditions The corporate world often seems convinced that multinational or large organizations have not come up with breakthrough ideas in recent years. This is perhaps due to their incapability to adapt to change quickly and rigid corporate structures (Kumar, 2010). Below are mentioned three strategies with the help of which today’s companies may surpass. Staying Structurally Consistent Nowadays, every company is adaptive to change to certain extent. The competitive differentiators are those who remain structurally consistent with this type of adaptiveness on a routine basis (Kumar, 2010). Hearing the Truth about Business Companies can identify their prevailing image through several ways. Some of them include websites, blogs, mainstream press etc. These sources of media are sometimes skeptical, antagonistic, judgmental, or probing, yet they often provide a clear picture of what the company is today. Therefore, instead of ignoring them, their statements must be paid attention to in order to determine the present reputation of the company. Monitoring these Medias may help the company in controlling nay deviations that may arise in the way of adapting to new changes (Kumar, 2010). Talent Strategy This strategy states that especially in tech world, success comes to those who can attract and retain a small number of leaders and innovators. This phenomenon will never change. The company that contracts the best creative talent and competence aggregators, and retains them for the longest period will surely win the battle (Kumar, 2010). Conclusion Changing technology and fast-paced innovation demand tech companies to adapt to change as quickly as possible. The case of Kodak, as mentioned in this paper, comprehensively illustrates how destructive it can be to stay unconcerned and oblivious of the anticipated change. In contrast, those companies who not only anticipate the change but also remain pre-planned for that outperform its rivals. Structural flexibility is another option regarding how hastily management is able to respond to the upcoming change in industry and how quick it takes the decision. This can be illustrated through progress in technologies and new products. The last option is strategic flexibility, which determines the tendency of an organization to alter its nature to respond rapidly to the dynamic market conditions. Works Cited Businesswire. 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Retrieved from: http://www.psfk.com/2010/05/3-ways-companies-can-adapt-to-change.html Schreiner, Heather. (2012). The Rise and Fall of the Kodak Empire. Retrieved from: http://www.csub.edu/kej/documents/economic_rsch/2012-04-23.pdf Srimalee, Somluck. (2013). Fuji Xerox turns to what's best for customers, the community. The Nation. Retrieved from http://www.nationmultimedia.com/business/Fuji-Xerox-turns-to-whats-best-for-customers-the-c-30215578.html The Economist. (2012). The Last Kodak Moment? Retrieved from: http://www.economist.com/node/21542796 The Economist. (2012). Sharper Focus. Retrieved from: http://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived Read More