How Complacency Killed The Giant (and can do the same to you)

What if you had the secret to success in your back pocket – then forgot it was there, and sat on it? Complacency can cause the same kind of damage; if you doubt me, consider the Kodak Company, whose choice to shrug off disruptive innovation in favor of holding tight to the status quo didn’t end well – at least, not for them.

Ironically, Kodak was founded by an innovator, George Eastman, whose disruptive idea shattered the status quo. George Eastman’s idea was that the still camera was too bulky, too heavy, and not user friendly to the average person, so he left the USA for London in 1879 to start a company that would revolutionize the photo industry. London was then the centre for photography and business and therefore the perfect place to start a photography business. The first Kodak camera was preloaded with enough film for 100 exposures. It cost $25. When you’d used the whole roll of film, you returned the entire camera to the manufacturer. For $10, the manufacturer developed your film and returned your camera to you preloaded with a new roll, along with your photos.

This revolutionary idea propelled Kodak into a position of market domination that they held for many years – but somewhere along the line, the company lost the innovative edge that had gotten them to the top in the first place. What makes the story even worse is that the very technology that ultimately brought Kodak to its knees was developed in its own R & D division. 

The first working digital camera was created by Kodak employee Steve Sasson and it began with a 30-second conversation with his supervisor at the Eastman Kodak Co., Gareth Lloyd, who gave him a very broad assignment: ‘Could we build a camera using solid-state imagers?’ Completing their final voltage-variation test in December 1975, Sasson and his chief technician, Jim Schueckler, persuaded a lab assistant to pose for them. The image took 23 seconds to record onto the cassette and another 23 seconds to read off a playback unit onto a television. Then it popped up on the screen. You could see the silhouette of her hair, but her face was a blur of static; by simply reversing a set of wires, the assistant’s face was restored and digital photography was born.

Sasson recognized that this eight-pound, toaster-size contraption, which captured a black and white image on a digital cassette tape at a resolution of .01 megapixels, ‘was a little bit revolutionary’. Crude as it was, he’d created the first digital camera and he saw its potential. Given Kodak’s roll in the popularization of revolutionary ideas in photography, he expected the company to see it too.

To his surprise, the initial corporate response to his invention of filmless photography was basically, ‘That’s cute, but don’t tell anyone about it’. Sasson’s show-and-tell presentations over the next year met with a lot of curiosity, but mostly annoyance, as executives talked about all the reasons why the invention would never work. It would be a quarter century before the Eastman Kodak Company tardily climbed on the digital bandwagon.

Kodak’s transition to a new world of photography was hindered by the poor use of intel. Around 1981, the head of Kodak’s market intelligence was Vince Barabba. He conducted extensive research into new core technologies and the likely adoption curves around film versus digital photography. The results of the study produced both good and bad news for Kodak. The bad news was that digital photography without a doubt had the potential to replace Kodak’s film business. The good news was that it would take some time for that to occur. Kodak had about ten years to prepare for it.

Yet, during its 10-year window of opportunity, Kodak did … absolutely nothing. Effectively the company chose complacency over innovation, and the status quo over risk. And the result was that in January 2012, Kodak filed for bankruptcy.

Just because you’re the leader today doesn’t mean you can safely put your head in the sand. The company that does will be passed up by those with the guts to take risks in search of glory.