How can an organization made up of very smart people still make stupid decisions? How can the whole be less than the sum of its parts?
These questions come to mind when I hear the word “Kodak.” Several decades ago Kodak prided itself on its cutting-edge technology and its innovative products. Kodak was able to capture nearly 90% of the American photographic film market by the mid 70’s. Its logo was as recognizable as McDonald’s’ and the phrase “Kodak moment” worked its way into the vocabulary of many Americans.
Then, right at the peak of Kodak’s market dominance, one of its scientists developed the first digital camera. Kodak executives took a look at the bulky device, called it “cute.” Then they handed it back to its inventor. They had no idea they had just been handed the future of photography. What is more, the digital camera was the very technology that would ultimately destroy their company. Kodak’s death was slow and painful. It took three decades, with many missed opportunities to adapt its business model to the new technology that was changing its market forever.
Like any living thing, a company has to use its sensory power to pick up changes and threats in its environment. Next, it must respond effectively. If it doesn’t adapt, it will die. Really effective organizations do something even better, though: they anticipate how their environment will change and plan accordingly.
In the beginning of its troubles, Kodak did a reasonable job sensing the change in its environment. When Sony introduced the first digital camera to the market in 1981, the Kodak’s leadership assembled a team to assess the threat. The team concluded that Kodak still had about 10 years before digital cameras would do damage to its core business. But even though the treat was miles and miles away, Kodak behaved like a deer frozen in the headlights. Change proved too difficult for Kodak’s leadership to execute. Although the individuals were smart, the organization was stupid—and Kodak died.
Our economic, social, and political environment is about to be transformed by computers that can understand spoken language, cars that drive themselves, 3D printers that can make parts out of plastic and metal on demand, robots that can be taught how to perform rote tasks, software that writes news stories, modified algae that excretes petroleum, gene therapies that repair faulty DNA, etc… Fortunes will be won and lost faster than ever before. Kodak had 30 years to change and failed to do so. Our organizations will have far less time. Survival will require two things:
1.) Organizations that are aware of what is going on outside of their four walls
2.) Leaders who know how to lead and manage change
It is humbling—and a little bit scary—to realize that we are not stronger than the ever changing environment that our organizations operate within. But leaders who acknowledge this fact can begin the work of building organizations that are as intelligent and adaptable as the people that comprise them.
“Kodak Brownie Flash III” by NotFromUtrecht – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Kodak_Brownie_Flash_III.jpg#mediaviewer/File:Kodak_Brownie_Flash_III.jpg