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August 01, 2006
Kodak Struggles With Innovating Its Business Model.
Of all the forms of innovation out there, surely business model innovation is the most difficult and Kodak's travails show why. The old fllm maker has been trying to make a transition to the future for the past decade, yet every time it gets close, that future changes.
The first shift was to digital cameras from film. The truth is that Kodak makes some of the best digital cameras in the world just won product design awards from the IDSA for them. Kodak innovated in the digital camera space by making it super easy for average consumers to download their digital images.
But the future changed on Kodak. The commoditization of digital cameras went so fast, it couldn't make much money on its cameras. The money was in the service side of imaging and the holy grail now is to create for photos what Apple created for music. A new ecosystem for taking, storing, sharing and managing images. That's the game and Kodak realized that this morning and got out of the product business by outsourcing its great cameras to Flextronics in Singapore.
Kodak isn't alone in striving to build an image ecosystem. HP is moving fast in that direction. So is Apple. Sometimes the future happens slow. Sometimes the future happens fast. Kodak is finding out how fast is fast. You need a corporate culture of innovation to prosper these days. Building one out of an old manufacturing/product culture is really hard.
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Just goes to show you that design does not mean anything in terms of business success. Although companies, and reporters, are quick to point at good design when a product is successfull, they fail to critically analyze it's impact in relation to more important elements such as advertising support, shelf placement, and distribution channels.
Posted by: First time poster at August 4, 2006 06:31 PM
I believe our entire era is moving from product design to business model design... Building a photo ecosystem is probably the relatively easy part - sketching and implementing a sustainable business model based with a value proposition designed around photos will be the difficult part...
Warm regards from a business model designer in Switzerland, Alex
Posted by: Alex Osterwalder at August 9, 2006 09:25 PM
Ya it could be a clssic case study. It shows you just cannot sit on your success, you would be run over by competition if you don't plan to commercialize your innovations,especially in the technology arena.
But i am pretty sure Kodak would bounce bck
Posted by: AMEYA at March 12, 2007 12:06 PM