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The high price of getting it right

Death of filmIn 1979 Wolfgang Gunther, a Xerox research chemist, went for an interview at rival company Kodak. After his presentation, one of the executives asked him how he saw the future of Kodak’s technology.

Gunther’s daughter Rita recounts his reaction in her book The End of Competitive Advantage: “I casually said ‘Of course, with cameras now recording on video cassette, 8mm movies have had it.’ I thought I’d blown the interview because he, sort of, freaked out and berated me”.

Kodak had absolutely nailed photographic film. In fact at that time, nobody had got it more “right” than them. Which is partly why within three years, it all started going so badly wrong, and why within thirty, they were bankrupt.

The problem with getting it right is that you think the job is done. You’ve answered the challenge posed by the market better than anyone else and, in Kodak’s case, built so many barriers around the technology, nobody else can get close.

But here’s the thing, the market moves. Customer needs change, technologies come and go, and those heavily invested barriers that were built to keep the competition out, ended up trapping Kodak in a commercial model that was about to go extinct.

That’s why it was so heartening to read Andy Clarke, CEO of ASDA Walmart, describing their new concept stores as “not the final solution, but we believe we’ve got more right than wrong”. Clarke’s words don’t just show a pragmatic objectivity about his new stores, they show a clear commitment to an ongoing process of development and discovery; a deep-seated desire to continue to learn and adapt; a recognition that the journey of innovation can never end.

As Churchill once said “Success is not final, failure is not fatal, it’s the courage to continue that counts.” Kodak saw their success as final, and that’s ultimately what led to their failure being fatal.

Bottom Line: Apparently, Tom Whiteley, the “freaked out” Kodak exec, went on to become a highly respected amateur palaeontologist. As Rita ironically points out, he spent his retirement studying impressive yet extinct creatures that failed to adapt to a dramatic, and catastrophic, change in their environment. Go figure.

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