Unexpected Digital Transformation Journeys from Two Oldest Giants
Kodak and Encyclopædia Britannica are two well-known and oldest businesses. Kodak was established in 1888 and was famous for their camera and roll film, and Encyclopædia Britannica was the British Encyclopaedia published in 1768 for its first edition. When the storm of digital revolution strike on old giants, realizing the role-playing determines the fate of the business. To understand what it takes to succeed in digital transformation, we need to examine closely what is the key leading to two different paths, an inspiring and a depressing one.
The Element of Innovation
In the beginning, The Britannica has only three volumes, but it was both an impressed and innovative product since there was a breakthrough in the papermaking machine and printing industry during the second half of the eighteenth century. The ideas of bundling vast knowledge in a set of books help to spread literacy among people. During the Industrial Revolution, there was a continually growing and ever more literate population, and printing technology had significantly improved. The Britannica’s reputation was growing and had authoritative status among scholars, where the 9th edition was targeted especially for the scholars. Britannica continues to innovate even when the digital age has arrived, and there is little resistance to produce a digital version of The Britannica in 1994.
On the other hand, Kodak held a dominant position in photographic film and recognized the importance of innovation in the early years. Not many companies in the world could compete how innovative Kodak was as a company. Kodak was the king of patents and had 22,506 patents filed in America. Ironically, Kodak was the inventor of the digital camera since 1975.
Innovation is one of the crucial elements in the Digital Transformation. As we examine the innovation area of these two great companies, they both had a tremendous innovative ability of either inventing their products or utilizing the latest innovative products available to the market.
The Element of Competition
In any business, there are always competitors. It is not that bad because it drives improvements and innovation, and it also helps to build a healthy economy. Competition is indeed one of the key elements in Digital Transformation. For hundreds of years, there is not a real challenger for the Britannica because of its vast and completeness of information and its accessibility in every library. Until one day, there was a company coming from an entirely different industry, Microsoft, which created Encarta encyclopedia, a CD-ROM version that could be available in every personal computer. A strong challenger came from nowhere, and it had the potential of putting an encyclopedia in every home where there a personal computer. This serious threat could whip out Britannica literally overnight. A giant could fall and never stand up again.
On the other hand, Kodak was always well-aware of competition; they had always stayed ahead of the game with their innovative products, even in the time where there was not a real contender. A Japanese rivalry Fujifilm was still on its watch list, but Kodak was always the winner in term of market share. Let’s examine and discuss in-depth on what led to two different paths for these companies.
The Element of Value Creation
A giant like the Britannica or Kodak had been enjoyed a dominant position of the market for a long time, and it seemed like they were in control of the market. Indeed, the values that they created were exactly what the demand needed. At the time, it is easy to overlook any potential issues on the horizon. For Britannica, the business has gone through many decades and anticipated that revolutions are always in the path. From the beginning, they realize that they are the vehicle of spreading knowledge and have a mission of educating people in need. They are flexible in what medium that the encyclopedia can be carried, and they continue to look for the latest medium to carry their products whether it is in paper or digital format. Besides, Britannica carefully observed and understood that their customers’ behaviors were changing and growing to embrace new technologies and found its core customers lie in education segments of the population, such as schools, libraries, and home users. With a laser-focused marketing effort, they can develop various products to meet the evolving needs for education institutes and to establish special sales channels, includes an online subscription model. They have revamped its business model and the will and the courage to abandon the old business model of selling the paper format encyclopedia as their sole product. “By the time we stopped publishing the print set, the sales represented only about 1% of our business. We’re as profitable now as we’ve ever been.” said by the Britannica President Jorge Cauz. Britannica not only have survived from several fierce competitions like Nupedia and Wikipedia but also continues to thrive and maintains its leading role among the scholars and educational institutes. They never sacrifice its editorial quality and its long-standing mission of meeting the needs of society in the education market.
Kodak, on the other side of the story, had decided not to pursue its course to sell its digital camera; instead, they thought they could control the market by just selling the film cameras because of Kodak afraid that bringing the digital camera to the market impedes the earning of lavish profit from the film business. It could be greedy or stubbornness which had created a blind spot where it prevented Kodak to enter the digital camera. Kodak did not anticipate how fast the digital product had leaped from a digital camera to smartphones in just a matter of a few years. One mishap led to another, Kodak had lost the touch of what the customers wanted and failed to observe the dynamic changes in customer’s behaviors in the digital age. It was just too fast to maneuver and lost control of everything.
Nothing is permanent, and especially it is true in the age of digital transformation. Rather than acting as a product, technology can only serve as our tools to achieve what we meant to do. Kodak had failed to see its role in the industry and thought they were here to sell cameras. When there are no needs of cameras, Kodak went out of business [Filed bankruptcy]. They failed to realize that they are in the business of capturing people’s memories. It is the memories that truly define the value of what they offer, and not the camera itself. The story of Britannica is an inspired one. It has taught us a valuable lesson that knowing the actual role of what we are playing as a business or an organization determines our fates. Britannica clearly understood their significant part of providing quality educational materials to the people regardless of the medium it takes. The abilities to see the trends, creating new lines of products, be creative and innovative, maintained its high quality, have all contributed to staying active in the digital era, and perhaps, Britannica is ready for another decade to come.
The future belongs to businesses who can find their true roles and serve their customers’ needs regardless of startups or established companies. By realizing your true calling, you see clearly and steer your business in the right direction even in the storm of digital revolution.
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