Ignoring Innovation: Lessons from Kodak

In 2007 I joined an innovation swat team at Cornell in the Johnson Graduate School of Business. It was called the Business, Science, and Technology Initiative (known to the cool kids as BSTI). We were working with Kodak to come up with a completely new product that would appeal to our age group, the early 20s. For the next two years our team of nine would meet biweekly to research, experiment, and learn more about our fellow peers. I remember walking into the room on our first day. We sat down to write science fiction stories about how the world would look in 10-15 years. I really had no idea how this would pertain to Kodak or innovation at all. Were we going to build robots? Surprisingly our stories weren't crazy fantasies. We were pretty level headed and realistic people.

We broke down the stories into motivations, desires, fears and needs. Then we made a motivational profile. We zoomed out to a 176 need and want statements, and then zoomed into 20 key ones that we would work with.

Here's some of them:

  • I need to feel in control of my image.
  • I want to know what others think about me. (Later proved not to be a good idea by the infamous Juicy Campus)
  • I want to be able to act my age and not worry about how it will affect my search for internships and jobs.
  • I fear being judged or punished for one aspect of my identity.
  • I want to minimize inaccurate data/reports that are easily accessible.
  • I want to be able to be in different social circles and not have one circle judge me because of another circle.
  • I want to know what people expect from me.
  • I don't want my identities mixed/mashed between my different social groups.

To understand these needs, you have to also understand the timing of 2007. We were one of the first classes that were completely on Facebook from day one. We were constantly checking status updates, broswing people's profiles, and uploading every possible photo from the party the night before. I recently had to detag thousands of photos of my friends who now have babies, so I got to fully reminisce about how many photos we actually took back then.

I remember starting Cornell taking a digital point and shoot camera with me to every party. A few months later, I was using my stupid 1.3 mgpx flip phone to take most of my photos. Then, the first iPhone came out. It changed the game. Now we had better quality cameras in our pockets every day. Photos piled up. More people started getting iPhones. We were constantly connected to Facebook all day. Texting, monitoring, uploading.

Then a year later we got a reality check - internships. Everyone was applying for work over the summer. We knew the recruiters would be looking for drunken Facebook photos. These were the horror stories spread throughout school. You'd see people crying, "Lehman Brothers turned me down because I had a beer in my hand!" Security cracked down. We started filtering who could see our profiles. We were more careful about what we posted online. Those who weren't could be seen crying around campus.

All this played into what we were doing for Kodak. After figuring out our own needs and wants, we went out to interview our peers and get their perspectives. We each ran interviews to learn more about them and empathize. We came out with similar results, but the key focus was really around managing our identities in an online world, enhancing your image through photos, and community management.

The key needs became:

  • I need to gain as much relevant information as possible about my outer network for reducing the social “cost” of interacting with my outer network and for efficiently recruiting new friends to my inner circles.
  • I need to gain as much relevant information as possible about my relevant relations in order to impress them.
  • I need to be able to control my image and images, and when crossing the intended boundaries, they irrecoverably self-destruct.

After understanding the needs, we went into brainstorm mode to figure out what Kodak could do. We spent time talking with their team to understand their mission, their technologies, and their business. Over the next few months we came up with ideas, got feedback from peers, and refined them. Finally, we finished a presentation for Kodak in which we suggested many ideas, including the following:

  • Build advanced camera technologies into a phone that can produce high quality photos.
  • Build software into that phone that would allow you to do basic editing of photos to make them look better.
  • Tag the photos with GPS location so they can be uploaded to albums easily and shared with friends or individuals.
  • Tie photo albums to events in your calendars.

There were other aspects we included about mood boosting and event hosting (which you'll find in our write up called Market Driven Innovation) but these were the core elements I remember very vividly.

We were pretty excited about what we came up with. We could see the value for both Kodak and ourselves. I left that last day energized and waiting for a new product to come out. Then months passed. We heard nothing. Years passed. Again, nothing. I checked in at one point and heard they were evaluating it and waiting for a team to work on it. Years later I heard from former employees that point and shoot camera technology has been more appealing at that time to the management than phones.

Five years after we started in January 2012, Kodak went bankrupt. Four months later, Instagram was acquired by Facebook for $1 Billion. In 2013, Kodak emerged from bankruptcy. Two years later, and seven years after our suggestions, Kodak launched a phone. You probably haven't heard about it.

There's a few things I've learned from working with Kodak that make more sense to me now after working with many companies trying to innovate:

Having an innovation team doesn't make you innovative.

When you treat innovation like a standalone part of the business, you lose your competitive edge. You're not able to act on the ideas you come up with. Waiting for buy in, resources, and budget will push faster moving competitors ahead of you. Innovation has to be woven into all your product development teams. It should be something they think about on a daily basis, and are ready to start acting on immediately. Execution is 9/10th of the battle.

Don't get distracted by what you've always done.

Kodak fell into the common trap of doing things the same way they have always done. While they were enhancing their point and shoot cameras and film, the market was going full steam towards phones. There were definitely people at Kodak who recognized this (and spun up programs like BSTI), but corporate structure prevented those on the ground floor from getting good ideas to market.

Failing to recognize market signals is a great way to kill a company.

Your customers can provide an eye opening way perspective. You just have to listen to them. The research we did showed pretty vividly where the market was going. Many companies don't even incorporate these learnings into their product development timelines, instead falling into an endless loop of building things no one wants. Getting outside the building can change your perspective. But, make sure you are the ones going outside. It's more powerful for the people building the product and making the decisions to hear it themselves.

In reflection, I learned a lot through this project. It just took me a while to realize it. It ties into the premises that I teach today about talking to your customers and building products that solve problems. If you'd like to read more about the entire project, we wrote an article called Market Driven Innovation.