Kodak Could Have Been in the Mobile Business By Now
This week was a tale of two brands.
On the one hand, Kodak. Kodak could have been the Apple of photography but last week, the iconic American brand filed for bankruptcy protection. On the other, Apple’s latest earnings figures surpassed analyst expectations. The difference? Not “design thinking” or great products, but contrasting attitudes towards the youth market and how those attitudes sowed the seeds of both failure and success in their organizations.
Kodak could have been, in so many ways. Kodak could have been in the phone business by now. It could be Instagram. It could have its own iPod but instead it had print and film.
In this article, I want to find out why. Why did Kodak fail? Why is Apple a sustainable success? What role did youth and the youth vision play in these organizations?
Students are a key Beachhead for Apple
(c) Flickr Jon Ingay
Apple’s Story: 20 Years of Youth Focus
Apple caught everyone by surprise. Jobs had gone and flagship products iPad and the iPhone were now into successive generations. Despite the weight of the analyst community pointing to an unsustainable run of profits, Apple delivered – record profits of $13bn for Q4 2011 making it, once again, the most valuable company in the world by market cap.
It wasn’t all iPad and iPhone 4S; Mac sales were up 26% too. Beneath the iPad headlines lay a story of customers migrating between Apple products, from iPod to iPhone, from iPhone to Mac and Mac to iPad. It’s this story that underpins Cupertino’s wider fundamental success and perhaps explains why products like the iPad3 will merely be icing on the cake.
Back in the mid 90s, when the world was buying its first desktop PC with Windows 95 installed, Apple published this remarkable video clearly demonstrating a long-term vision to capture the youth segment. Apple wasn’t selling concept technology but an idea of how the company could make the education and learning experience for young people better. It’s a vision that persists until today; Apple recently announced a suite of products aimed at helping young learners from a revamped iTunesU (University) to its new iBooks app for the iPad.
When I went to University, everyone used PC. To use a Mac you must have been left handed/an artist/socially dysfunctional or all of the above. Now, every almost every student owns a Mac – and most of them MacBook Pros. Apple’s clear focus on youth and education has yielded significant dividends over the last decade. Policies focused on educating teens and teachers through its K-12 education strategy, Apple Camp and discounts offered to students have slowly but surely won over a market that would mature in the current decade and turn customers into fans.
Kodak and Apple share many virtues. They were both pioneers in their respective fields: Apple the first to launch the home PC, Kodak the first to give the world a cheap, portable camera. But, Kodak is nearly a century older than Apple and its legacy perhaps was also its own downfall.
Kodak’s Story: Focusing on Great Products
When Kodak should have been focusing on the next generation of young customers in 2000, it found itself spouting enthusiastically about becoming a “world leader in digital cameras.” Unfortunately for Kodak, it was the very customers they had ignored that also helped make it irrelevant. 27% of all photos taken now are on phones and the most popular “camera” by volume of submissions reported on Flickr, isn’t Kodak or Canon, but the iPhone 3G.
When you look at Kodak you see a warning sign for the mobile industry; failure is hidden in the blueprint of the company culture. CEO Perez complained that Kodak was so hierarchical that he couldn’t get anyone to disagree with him. It’s a culture that isolated decision makers from the reality of the street by using focus groups (what would now be called “market research communities“) rather than immersion or ethnography and by employing creative agencies to override the company’s own instinct. The more the company speaks to itself, the less it becomes relevant, existing in a world of denial.
“FYI Kodak’s not dead yet, guys. You can still buy their amazing film. #believeinfilm @kodakCB”
CEO Perez identified the problem back in 2003 in a Business Week article where he lamented, “If I said it was raining outside my board would agree with me.” And, it’s here in this culture of top-down innovation that Kodak’s blueprint for failure is found.
The Apple-Youth Relationship
A decade of working closely with students meant Apple was sensitive to their needs. It was no coincidence that the first non-PC product they launched in the Jobs era was a small music player aimed at a market that had fallen out of love with the music industry. From iPod they made the iPhone and the rest is history. Without this close association with youth and without the frontline feedback garnered from their in-store Genius crew, Apple would – like Kodak and many IT players now – be at the mercy of the “Big Ideas” of their design or creative agency.
Kodak: The Perils of Design Thinking
Rather than develop solutions for a generation that wanted to share “memories” digitally, Kodak turned to film and printers. Who in their right mind would invest in a mass market photo printer these days? Kodak did. Stuck in their culture of denial, compounded by steep authority gradients that protected the company from the reality of what the next generation wanted, Kodak continued to toot their PR trumpet even while the ship was sinking.
“Kodak Hero Inkjet printers getting attention at CES – so many ways to print! – Google Cloud, smart phones!” tweeted their Chief Blogger on twitter, just days before the Chapter 11 filings. The same week, photo sharing website Instagram announced they were receiving 26 new photos and signing up 1 new user every second.
If Kodak had engaged youth back in the 90s, Kodak would have dumped print and film and be working on exciting products that would break new grounds. They would have given us a device for photos the equivalent of what the iPod was for music. Kodak could have created Instagram or The Flip but they didn’t. Like many tech brands today they were intent on becoming a global leader in selling their device.
Herein lies many of the challenges facing the mobile industry today – Design Thinking. Design Thinking prioritizes design and the product rather than the needs of the customer. While we all wax lyrical about Apple design, the interface etc, we forget that the reason Apple products are where they are today isn’t design but a solid understanding of customer need.
I’m often challenged in presentations because a lot of what I share is a message of change. “But…” IT managers will say, “we need results now, we can’t wait 20 years like Apple.”
Well, that’s where the culture of the organization contains the blueprint for failure. $13bn in profits didn’t happen in a vision from last quarter – that vision happened back in the 90s when Apple made a conscious decision to improve the lives and education of the next generation of customers.
There is an old Chinese proverb that reads:
“The best time to plant a tree is 20 years ago. The second best time is today.”
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