A Case Study Report of KODAK: Failure to Embrace Digital Innovation

Abstract

Due to the failure in transitioning from traditional film to digital technology, Kodak, was once named a leader in the industry of photography. Despite developing digital camera, this company was reluctant to adopt and pursue digital innovation because of fears of damaging its profitable business film. This reluctance brought the company into abyss of business failure as their competitors adopted the digital photography market—stemming from a fear of cannibalizing its 70% market share in global film—led to an avoidable business failure. Kodak could have addressed this hurdle by adopting a diversified digital strategy (e.g., investing in R&D, a dedicated segment for digital transformation, and business partnership with other company pioneer in digitalization) at time it was first introduce to the market. Acceptance of digital innovation, while progressively phasing out traditional film products, would have better placed Kodak to compete in the embryonic market.
Kodak’s internal resistance to change and heavy dependence on legacy products, which highlights critical lessons in innovation strategy, made it difficult for them to adapt to digital trends. As mentioned in the study of disruptive innovation by Christensen’s theory which underscore the need for traditional firms to embrace new technologies proactively. Evidence found that companies, like Canon and Sony, focus on flexible and responsive approaches to emerging technologies were able to capture material market share in digital photography unlike Kodal who fell behind. The journey in business of Kodak emphasizes how important adaptability is, in the world of disruptive technology. Those firms in similar situations should invest in future technologies and foster an innovation-driven culture regardless how it will impact the legacy products. This mirrors an opportunity towards long-term sustainability and profitability.