No Company Can Sustain Itself on Brand Alone
“Me not working hard? Yeah, right, picture that with a Kodak. Or better yet, go to TimesSquare take a picture of me with a Kodak.” – Lyrics from “Give Me Everything” by Pitbull
We still ask interchangeably for a tissue or a Kleenex when we sneeze, and a photocopy or a Xerox when we need a printout. Not so long ago, Kodak was equally synonymous with a picture or a camera. Why? Brand and reputation. Why else would a “off the charts” hip-hop sensation validate the iconic 20th century brand that was once as ubiquitous as the phrase “Kodak moment” through a sponsorship deal?
Unfortunately, even the best brands and reputations can expire if they fail to consistently set trends and remain ahead of the times.
Although the cash-strapped company remains mum about selling off patents, people close to the company have indicated that Eastman Kodak Co. is preparing to seek bankruptcy protection in the coming weeks. This final act would be an anticlimactic end for a company that was once known for innovation, making it both a corporate titan and a common household name. In 1976, Kodak had a 90% market share of photographic film sales in the United States. By the late 1990s, a decline in sales of photographic film triggered a downward spiral, and the company hasn’t posted a profit since 2007.
Whether a fan or foe of Kodak, the idea that a 120-year-old company is now a penny stock scrambling to sell off some of its patent portfolio in an effort to avoid Chapter 11 is a staggering image for those of us who remember Bill Cosby’s Colorwatch commercials. The company has already begun making preparations for a filing in case those efforts fail, including talking to banks about some $1 billion in financing to keep it afloat during bankruptcy proceedings.
If only the simplicity of Kodak’s original slogan remained true today: “You press the button, we do the rest.” In a 21st century digital business world, nothing is that simple. George Eastman built the company from a set of core values centered on entrepreneurship, philanthropy and concern for his employees, pioneering “dividends on wages” and other profit sharing programs. Those are all critical fundamentals for driving a business, but there is one key factor missing from the list: sustainable innovation.
Contrary to that point, Kodak has always considered itself an extremely innovative company. And by all evidence, it has tried to stay true to that perception, with new products and services. Kodak Easyshare digital cameras have a “share” button that can tag pictures for email messages, Facebook, Flickr, the Kodak Gallery or YouTube. The feature echoes the aforementioned slogan Kodak used to sell its cameras in the late 19th century. But that may have been too little, too late. If a new logo and tagline were enough to turn a company around, the playing field wouldn’t be littered with well-known companies resorting to Chapter 11, from GM, Chrysler, Delta and American Airlines to Blockbuster, Borders and Harry & David.
In most cases, a key disconnect was somewhere along the path between idea creation and actual execution as opposed to companies innovations to reach their respective customers.
Sustained innovation is achieved when an organization is capable of innovating in all aspects of its business: management, divisions, operations, customers and suppliers. It requires a seamless, structured management approach that begins with board- and CEO-level leadership and connects all the way through technology investment and implementation. Above all the enterprise sustains innovation as a journey through it’s in a continual process of reinvention, invention and discovery.
Enterprises with a strong focus on innovation share three common principles that act as the glue, binding people together in productive collaboration. They are:
- Converged disciplines: Ideas aren’t isolated; they’re celebrated in groups that enable the entire organization to act as one entity. The convergence of business and technology management to ensure that no one unit or division is missing the opportunity to capitalize on new ideas and possibilities is key.
- Cross-boundary collaboration: No enterprise operates in a vacuum. Every manager, employee and contractor potentially has a piece of the puzzle to create a new breakthrough business opportunity. Suppliers, partners, distributors and customers are an equally valuable source of information and ideas.
- Innovative business structure: Not every organization can empower an unstructured development culture like the one-off exceptions that become market darlings; most require structure that compels convergence of disciplines, management, and operational units.
Assuming the above fundamentals are in place, enterprises must drive innovation on two levels: product and business model. Products must evolve with market dynamics and customer needs and desires. Consequently, business models must change or evolve as innovation creates or changes products.
To sustain product and business innovation, enterprises must build a flexible culture that can attract and empower a wide variety of talent. It is all too easy for organizations to fall into the “analysis trap” and focus on left-brain skills like process, measurement and execution. Sustained Innovation enterprises embrace right-brained skills: creativity, imagination, analogy and empathy. Unlike most organizations that separate analytical and creative individuals into independently operating departments (such as marketing versus engineering), innovative enterprises build teams that morph interactively as new processes and ideas unfold. This results in the creation of focus during ideation and analytical emphasis as market growth accelerates.
With Kodak, American Airlines or other companies teetering on the edge of the same slope, the impact this lack of innovation bears on the bottom line, is evident. The financial benefit of sustained innovation is measurable across many of the common fiscal metrics used by businesses. In capital efficiency, enterprises achieve better performance with return on capital and return on expenditures. In margins, enterprises recognize higher sales rates and EBITDA. In revenue and earnings, enterprises reap higher revenue growth and better EPS. And in volatility, enterprises have more predictable and stable stock prices and shareholder value. Numbers don’t lie – and at the end of the day, shareholder value must be driven by more than the smoke and mirrors of new logos, taglines and marketing campaigns.
Successful companies manage innovation from concept to commercialization so that good ideas not only get created, but turn into actual products and services that consumers want and buy. Teams that can sense and respond to customers and evaluate what works and what does not work characterize a culture of innovation, free of the organizational inertia—or friction—that is the enemy of change and its partner, innovation.
Faisal Hoque is the founder and CEO of BTM Corporation. He is an internationally known entrepreneur, thought leader, and was named as one of the Top 100 Most Influential People in Technology. A former senior executive at GE and other multi-nationals, Hoque has written five management books, established a research think tank, the BTM Institute, and become a leading authority on CONVERGENCE, innovation, and sustainable growth. His latest book, The Power of Convergence, is now available. © 2012 Faisal Hoque