In this week’s Business Surgery, Cristin Malone comments on the importance of listening to the market.
How does a company that had a 90% share of the photographic film market in 1976, begin to have financial troubles just a few years later and eventually file for bankruptcy in 2012? I am referring to Kodak, whose factory was once the glory of Rochester, NY, and is now described as a relic as employment has plummeted from 62,000 to less than 7,000.
Kodak’s demise cannot be blamed on the economy. In fact, many sources point to the company’s late entry into the digital film market as its pitfall. As I thought further on this, I came across an interesting contributor article in Forbes, in which the author Avi Dan brings up a note-worthy point in his article entitled, “Kodak Failed By Asking The Wrong Marketing Question”. The author explains that although Kodak invented the first digital camera in 1975, the company was slow to market this new product in fear that it would damage its traditional film business. According to Dan, Kodak focused more on selling its film products than adapting to the new digital marketplace:
“The essence of marketing is asking first, “what business are we in?” and not “how do we sell more products?” … Kodak made a classic mistake: it didn’t ask the right question. It focused on selling more product, instead of the business that it was in, story telling.”
Arguably, the best way to determine “what business are we in?” is by defining who is our customer? It is clear that there was a disconnect between Kodak and its customers. It made me think, could the downfall of such a big company really come down to the fact that they ignored the needs of their customers?
“Immensely successful companies can become myopic and product oriented instead of focusing on consumers’ needs.” – Avi Dan, Kodak Failed By Asking The Wrong Marketing Question
Listening to your customers can be difficult, as it is not easy to tell if you are getting that gold nugget that will move your business forward or if you are receiving feedback that will soon be obsolete. Steve Jobs said it best:
“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
There is some truth in this statement, as understanding the market’s needs can actually result from providing them with what they think they want and measuring success – but how do you become innovative enough to know what to give them?
Regardless of how I approach all of these questions, I think Kodak’s failure resulted from not listening to the needs of the market. By listening, I am not just referring to simply listening to your customers, but are you listening to changes in the market, are you listening to the voices within your organization, and are you really understanding the impact of what you might hear?
Kodak may actually have been its own enemy; it was probably too big of a company to have one cohesive strategy and was not nimble enough to make the necessary changes. I do believe that whatever hindered Kodak from this decision could have been solved through research: it would have enabled Kodak to better understand how to listen and react to the needs of the market. A good research agency can help a company organize all facets of information (internal and external), and also help the company become more cohesive by providing actionable recommendations and key insights on potential opportunities.
What are your thoughts here? Does Kodak’s fall really come down to its inability to listen to the market? Or are there other issues that may have caused the company’s downfall?
Check out some articles on Kodak: