What You Can Learn from the Failures of Kodak and Nokia

Consequences of Resisting Innovation

Remember the “Kodak moment”?

The ability to capture memories into a picture using a personal device was what Kodak gifted to the world. Unfortunately, Kodak decided to cling on to analog cameras far too long, and eventually lost the game.

Nokia too has a similar story.

In 1979, Nokia created the first cellular network in the world. By the 1990s, Nokia was the leader in the realm of mobile phones. When its competitors started focusing on data and the internet, Nokia didn’t care. The company instead continued to focus on its hardware. Nokia did have great hardware. But the smartphones took over the market with better software features.

Some companies tend to innovate less as they turn successful.

When companies turn successful, the following things will have a higher probability to turn true 1. The urgency of innovation might die 2. Leadership might change or get too comfortable with the way money is made 3. Within the company, minds with new ideas might be silenced 4. Company might develop a perspective that views more innovation as a threat to the existing system

The Urgency For Innovation

When a startup is in its infancy, there is a great urge for innovation. This is because only disruptive or breakthrough innovations will help them succeed. After succeeding, some companies continue the innovation path while others find a reason not to do so.

Nokia and Kodak found good reasons not to innovate after reaching a certain business model.

The first hand-held digital camera was invented by Steven Sasson in 1975 when he was working at Kodak. According to Forbes, Kodak management didn’t want to promote it. Kodak made huge revenue in form of selling films and other physical components of the analog cameras. Scared of risking the sales revenue, they decided to stick with the analog cameras. In 1981, Kodak even conducted a market research study under the leadership of Vince Barabba, who was the head of market intelligence at that time. The result of the study was in favor of not promoting digital cameras because ‘market adoption would take a long time’. During this time, Sony and other companies started investing in digital photography.

The exact reason why Nokia didn’t invest much in software isn’t known. The Symbian OS was Nokia’s attempt to do it well. But even while developing Symbian, the core focus was always the hardware.

The Right Leadership

It’s hard to define what perfect leadership is, but it certainly is one that appreciates innovation. Without the support of executive leadership, no company can innovate.

Kodak could have continued its reign if it had promoted, Steven Sasson’s work. Instead, the leaders were more concerned about the short term benefits. When the company started to lose its grip, the CEO resigned. This was followed by a series of new CEOs who didn’t stay too long. Constand change of leaders negatively affects corporates.

Nokia owned a lot of patents. So it’s not right to say that they didn’t innovate. But the direction in which they innovated led to Microsoft acquiring Nokia. “We didn’t do anything wrong, But somehow we lost,” said the Nokia CEO in his last speech. Not innovating in the right direction is often not considered as wrongdoing.

Discouraging and Silencing Others

It is human nature to resist change and ignore those who don’t agree with us. But in an organization, this nature will not work out in the long run. The silencing usually occurs when someone in power feels threatened or a system that is currently working smoothly is challenged. Bringing about a handheld digital camera was seen as a threat to the smooth profit brought in by photo-films and other analog consumables. Similarly, leaders at Nokia took too long to grasp the power of software. Nokia’s attempt to use Symbian OS to compete with Android by open sourcing the OS failed cause they did it only in 2008. They should have done it early.

Viewing New Innovations As Threats

Generally, when any technology is introduced the society views it as a threat. The steam engine was rumored to have made the farm animals sick. AI and robotics are still believed to take away most jobs. This behavior can sometimes be seen in big corporates as well. Organizations that bring in breakthrough innovations can sometimes fail to welcome radical innovations. Often personal gains or fear of loss form the foundation for it.

Losing the profit from analog consumables was a big issue for the people at Kodak. They knew digital would take over someday, but the longer it didn’t do it, the longer they would make a profit. Somehow long term failure wasn’t bothering anyone and the hand-held digital camera looked like a big threat.

The world will keep on changing. The world needs to progress and prosper through new innovations. If one person, company or nation stops or slows down innovation, it doesn’t mean that new ideas will die. Another person, company, or nation would bring it up one day or the other. The ancient civilizations of Indus valley, Mesopotamia, China, and Egypt all developed farming methodologies without depending on each other. If one ruler would have stopped it at one place, that doesn’t mean that it would have not happened elsewhere. Similarly, a leader or group of leaders resiting innovation will only slow down new ideas, they won’t be able to kill it. The idea will someday re-surface and take over those leaders and organizations. Nokia and Kodak are the best examples of this.

If you found this useful, do support by joining Medium membership program or by clicking the follow button or by offering coffee ☕️ Thanks in advance 🙂