By Oluwole Dada
In continuation of our series, this part will review the tragedy of organisations and products that succeeded brilliantly, built a dominant market position, earned the loyalty of millions of consumers and suddenly, at the precise moment the world began to move in a new direction, stood still. They watched the shift coming, discussed it internally, commissioned the research and read the reports but they continued doing what they had always done. Three products, namely Kodak, Blackberry and Nokia phones will be used to illustrate the phenomenon described above.
In 1975, a Kodak engineer named Steve Sasson built the world’s first digital camera. It was the size of a toaster, captured a 0.01-megapixel image, and took 23 seconds to record a single photograph to a cassette tape. Unfortunately, Kodak leadership felt the digital camera will cannibalise the existing film business. Kodak’s film business was one of the most profitable product franchises in the history of consumer goods. The company held approximately 90% of the US film market but they didn’t move with the consumer trend. The digital camera was not just a new product. It was an existential threat dressed up as an opportunity.
Kodak’s leadership made the choice that many organisations facing similar disruptions have made. They protected the existing business rather than cannibalise it themselves. They continued to invest in film quality improvement, in film processing infrastructure, and in the consumer habits that kept their model alive. They watched as digital photography grew from a niche technology into a mass market phenomenon. And when the shift in consumer behaviour reached the tipping point, Kodak had no digital foundation to stand on. The company filed for bankruptcy protection in 2012. The organisation that had invented digital photography had been destroyed by it.
BlackBerry is another pathetic story. Its case is even more instructive than Kodak’s because the organisation was not a slow-moving industrial giant. It was a technology company that had been one of the most innovative in its category. The failure was not one of incapability. It was one of identity rigidity. At its peak in 2009, BlackBerry, commanded approximately 20% of the global smartphone market and over 50% of the US enterprise smartphone market. The BlackBerry was not merely a product. It was a status symbol. It was the device that US Presidents carried.
Unfortunately, BlackBerry’s keyboard advantage became irrelevant in a world where the consumer’s primary interaction with their device was not typing emails but navigating apps, consuming content, and making purchases. BlackBerry’s market share fell from 20% in 2009 to under 1% by 2016. Apple and Android redefined what a smartphone was for. They shifted the category from a communications tool for corporate professionals into a consumer entertainment, commerce, and social platform. Blackberry recognised the threat, but they moved too slowly and defended the keyboard for too long. The lesson from BlackBerry is that when the consumer’s definition of what a category is for changes fundamentally, defending the old definition is not a strategy.
The Nokia story is another one depicting the consequences of actions of organization that refuse to adapt to changes in the environment. Unlike the case of Kodak and Blackberry, Nokia’s internal culture became so invested in the existing product model that the signals of change were suppressed before they reached the people with the authority to act on them. In 2007, the year the iPhone launched, Nokia held approximately 40% of the global mobile phone market. It was the largest mobile phone manufacturer in the world. Its manufacturing capability was formidable. Its distribution network reached into every corner of the globe. Its brand recognition in markets from Finland to Nigeria was unrivalled. By any conventional metric of competitive strength, Nokia was unassailable.
What Nokia lacked was a leadership culture in which bad news could travel upward without consequence. The internal research teams identified the touchscreen smartphone as a credible competitive threat earlier than most of the company’s external observers. The software capability gap between Nokia’s Symbian operating system and the emerging iOS and Android platforms was understood within the organisation. However, the internal culture described by former executives was one in which admitting a competitive vulnerability to senior leadership was career-limiting. By the time the threat was acknowledged at the level where the necessary investment and structural change decisions could be made, the window for a competitive response had narrowed significantly.
The lesson from the above three organizations is to ensure adaptability to changes in the external environment. It could be changes in consumer preferences or changes in technology, what is most important to organizations is that you keep your customers satisfied. Be customer centric!
Oluwole Dada is the General Manager at SecureID Limited, Africa’s largest smart card manufacturing plant in Lagos, Nigeria.
