Dilemmas and Innovation: The Case of Kodak

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    • 00:10

      GERARD TELLIS: A great example of the dilemma facing firmsin the realm of innovation is Kodak.Kodak was the leader in the now all technology all firmphotography.And they were the best supplier and they had a huge marketshare.And a couple of years go Kodak went bankrupt.

    • 00:31

      GERARD TELLIS [continued]: How could a great company with leading market sharego bankrupt?Well, there was a new technology, digital technology,and that displaced film technologyand that's the new technology, which is dominant now.And Kodak was not able to get a footholdin the digital technology market.But they saw it coming.They not only saw it coming, Kodak

    • 00:52

      GERARD TELLIS [continued]: had most of the patents in digital photographyand they were not able to make the switchfrom the old technology to the new.And that's what I mean by the Incumbent's Curse.You're so tied to the old or the current successful thatcan't transition to the future.And Kodak as example A in the failure

    • 01:15

      GERARD TELLIS [continued]: to innovate because of being tied to a successful product.And the amazing thing is the product, the future,was right in they're labs deep in the organizationand they failed to see it.So why do great firms fail?And the reason is that the structure with the firmtends to be hierarchical.

    • 01:37

      GERARD TELLIS [continued]: Top down with the top leader giving directionsto his or her vice presidents and directorsand they, in turn, giving directions down.I think the organization of the futureneeds to be decentralized and needs to be bottom up.You need to devolve authority down within the organization.

    • 01:58

      GERARD TELLIS [continued]: You need to have champions of innovationcompete with each other, get supportin terms of talent and resources and that their ideas bubble up.You need to have competitions where these ideas are proposedto their own peers and there own peers judge and the best wins.

    • 02:18

      GERARD TELLIS [continued]: All this is bottom up type of innovation,which the new organization needs to have.And just recently Google broke up the companyinto a series of divisions or business units, each of themfocused on one area and the former CEOs of searchor of Google became CEOs of the parent holding company.

    • 02:43

      GERARD TELLIS [continued]: And their job is just to look for the futureand start off these business units whichcompete with each other.But each unit will be run by a separate teamand these different business unitscan compete with each other.And that's the notion of the organization for the future.it needs to be very decentralized and verybottom up.my various papers I have written about structures, tactics

    • 03:08

      GERARD TELLIS [continued]: and practices that firms can use in order to survive.But a good thing for a student isto pose the Kodak dilemma to students themselvesand ask them how they would resolve it ratherthan my telling them that.Because then that doesn't really connect with them.

    • 03:31

      GERARD TELLIS [continued]: Present them the dilemma and see if theycan come up with solutions to avoid thisfrom happening again.The best way for students to learn the lessonsis to take Kodak and then contrast itwith other organizations which are doing things differently.

    • 03:51

      GERARD TELLIS [continued]: So give the example of Kodak and the hierarchical structureor the pyramidal structure and then contrast it, for example,with Facebook.Where the founder and CEO sits in a large roomwith his engineers and works hard problems togetherwith them.

    • 04:12

      GERARD TELLIS [continued]: So the organization is very flat and they can see that lesson.Then you take Kodak and you contrast itwith Amazon where the CEO is constantlylooking at the next innovation and the next innovationand the next innovation and making surethat the company chases after this new innovation.

    • 04:32

      GERARD TELLIS [continued]: So there's a focus for the futureand a thirst for knowledge and new technologyso they see that message.And then you can Kodak and contrast itwith Google which broke up the company into various autonomousunits and just had a parent companyso that the CEO wouldn't actually come in the way,

    • 04:53

      GERARD TELLIS [continued]: or one unit wouldn't come in the way of another progressing.And so by a series of examples, onewould present these contrasting examplesand the students would draw the lessons.

Dilemmas and Innovation: The Case of Kodak

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Abstract

Professor Gerard Tellis discusses the Kodak Dilemma. Using Kodak as an example, he shows how a large, prosperous organization can go bankrupt in a short time if they fail to adapt to changing times.

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Dilemmas and Innovation: The Case of Kodak

Professor Gerard Tellis discusses the Kodak Dilemma. Using Kodak as an example, he shows how a large, prosperous organization can go bankrupt in a short time if they fail to adapt to changing times.

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