A lesson in creative destruction for even the most disruptive student caught in the Kodak Moment

Summer 2015

A few years back I wrote the iconic brands of Kodak, Nikon, Canon, Olympus, Fuji, Polaroid have been displaced by start-ups like Flickr, Facebook and Instagram.

Meanwhile the early to mid oughties growth story that was digital cameras has turned into the disruptive story of the growth in smartphone cameras.

Now the question. Why has the analogue film business allowed itself to be overrun by social media and the camera phone?

The simple answer is they limited their strategic thinking to the business of taking pictures. They have been disrupted by start-ups who understood intuitively that they were in the much bigger business of profiting from memories.

People primarily use Facebook and Instagram to share photographs. And what are photographs but the Kodak Moment?

And what is the Kodak moment if not memories to be experienced with others and shared?

Facebook disrupted Kodak by becoming the new Kodak Moment.

Facebook will be disrupted when somebody else comes along and provides the world with a more compelling Facebook Moment. They will do the memory experience better than Facebook. The same thing applies to Google and yes, even Amazon.

The winners in the networked economy will do memory better than anyone else.

That was my thinking 5 years ago. Time moves on and the digital disruption, like life itself, is easier understood in reverse. So what does mining the "big data" now reveal about how social media disrupted the Kodak moment? And more importantly, what does it reveal about our ideas about how disruption happens?

For example: Clayton Christensen, in his seminal work "The Disruptor's Dilemma", suggests disruptive innovation is not a transformative product but one that significantly reduces the cost of entry for the customer. Disruption is a function of price. Incumbents are disrupted by new entrants offering a discount solution. Seemingly "More for Less" is the new capitalist's moment, if not Kodak's.

But does the data support the hypothesis? How good is the theory, the model, as a defence against the inevitable winds of disruption?

Let's map some trendlines and take a look.

The first is the growth in paper vs. digital photography. As you can see Kodak's paper empire crumbled in the mid-00's. Disrupted by digital.

But, assuming Kodak was aware of the "Disruptor's Dilemma" and the need for "creative destruction" why didn't it disrupt itself?

Truth is it did.

Kodak invented digital photography back in the 1970's. Invested billions in R&D over the ensuing decades. What's more it subsidised the price of its digital cameras to secure market leadership. It offered significantly more for less and yet it was still disrupted. Why?

The simple answer is it was disrupted, not by the competition, be they old or new, but by innovators who decided to offer Kodak's "cash cows" as free incentives to secure market share in, what appeared at the time, new and unrelated markets.

Mobile phone manufacturers offered digital cameras as a "value added feature" in their camera phone and smart phone offerings. Social Media start-ups like Facebook, Instagram and Flikr offered consumers a free database (Think: Digital Photo Album) to store and share their digital memories with friends, family and even strangers.

This then isn't so much the "Disruptor's Dilemma" as the Mobile Convergence Dilemma. The MobCon Dilemma. And it's not so much about "creative destruction" as market reappropriation. The scramble for market share as industries converge on top of one another across the digital landscape.

The question is no longer one of "creative destruction", at least within the context of disrupting oneself, but how can you take the profitable "cash cow" of a market leader and incorporate it into your digital product or service as a free "digital carrot" to quickly attract and dominate a niche market vertical across a global network?

This then is what keeps the market savvy digital marketing manager awake at night in 2015. Not what is my competition doing to disrupt me? But who is planning on giving my product or service away for free to consolidate or acquire a new market position? And whose highly profitable product or service should we be disrupting with a free digital offering?

You see the new paradigm isn't so much "More with Less" but "Everything for Nothing".

Or, MobCon Economics 101 (Circa 2007)