Several people
gave thoughtful responses regarding the role of research at Kodak and in large
organizations in general. Yet all were rooted
in the underlying assumption that if research identifies a digital opportunity,
then digital must be the solution. Case
closed. To this native Rochesterian, that
myopic viewpoint ignores the nuance of conducting business in my hometown – and
the critical factors that one must acknowledge in order to understand what
really happened over at Kodak.
I am a vocal advocate for (and creator of) business-influential
research; I would love it to be the case that strong market research could have
prevented Kodak’s current woes. And I am
not ruling out the possibility that somewhere in the walls of Kodak Park, there
were misguided or misused research reports, researchers with inadequate
influence, or executives with a rampant distrust of research they needed to
heed.
The thing is, it didn’t take market research to see what was happening in the
photo/imaging space 10-15 years ago. It took a trip to Best Buy. Kodak wasn’t
ignorant to digital cameras, they invented them. In 1975.
(If you don’t believe me, look it up on Wikipedia.)
The scenario at Kodak runs deeper than market projections
and customer satisfaction. And it’s incumbent
upon us as researchers to understand all of
the business dynamics, not just the consumer-related ones. When I think about the sustainability of
Kodak, a few points of consideration immediately come to mind:
1) A full scale change in a company’s entire business model
requires visionary and powerful leadership. And the courage to take the bullets when you shred
apart a dying but familiar cash cow operation, lay-off thousands of hard
working employees, and make the other thousands of loyal employees unhappy by
forcing change. Not too many CEOs want
to be the person to spawn that blood bath, and then clean it up.
2) Stockholders think short term. Film had a huge profit
margin, and Kodak had nearly universal market share in the US. Digital has minimal profit margins, and some
big competitors that make Kodak a more minor player. I’m going to wager an educated guess that stockholders
were not lining up telling Kodak to make a change that would render the company
unprofitable for a few years, in order to be sustainable in the long run. That is not typically the way the stock
market works with companies that have been around for 100 years.
3) Kodak employed tens of thousands of manufacturing workers
in the US. I have to imagine that there
was some political pressure to save their jobs.
4) Rochester itself is arguably in a talent pool crisis, as
alternative employment opportunities are limited. I went to one of the best
public high schools in the country, 20 minutes from Kodak HQ. Dozens of my friends went off to Harvard, Michigan,
Dartmouth, Penn, Cornell, Stanford... and almost none of that intellectual
firepower came back to Rochester. The Wall
Street Journal makes a very convincing argument that Kodak was never going to
turn around and innovate in Rochester, and as much as I have a soft spot for my
birthplace, I agree. (You can find the
article here: http://online.wsj.com/article/SB10001424052970204124204577153053662634584.html?mod=googlenews_wsj)
Now put yourself back in Kodak's shoes: a) needing to entirely reinvent a 100+ year
old company, b) either moving locations altogether or staying in a market that
struggles to attract talent and has to compete with the likes of Silicon
Valley, and c) knowing that any change means eliminating of tens of thousands of
local jobs and training the remaining tens of thousands on totally new skills.
In hindsight, it seems clear that Kodak needed to run with
digital technology when its engineers first invented it. But in practicality, it’s not too difficult
to see why they didn’t.
So what
responsibility do researchers have for influencing the business? As
researchers, we can and should strive to be heard, and to influence business
decisions – otherwise our function lacks purpose. But if executive management is to trust us
and consider us part of their team, we also need to understand the full
spectrum of what it is we’re influencing.
In influencing the long term success of a company, we might also be influencing
the short term loss of jobs, the deteriorating vitality of a city, and the declining
value of stockholder portfolios. With
the responsibility of success comes the responsibility of failure, and the
humility to understand that external powers of influence will sometimes win out
in spite of our efforts.
