Monday, 26 August 2013

On innovation and management

In the past month I've been reading a lot and two particular articles caught my eye. The first article I found interesting was a case study by Suleimanagich  (2013) of how even successful implementations of new technology, e.g at the project level, doesn't guarantee success if the company strategy isn't correct.This is the story of how Kodak had invented a digital sensor before any digital cameras were available on the market. This seems to be a common assessment of Kodak's fortunes - they slipped up by not pursuing the innovation - for example "Kodak's Missed Opportunities" by Bergstein (2012) or The Economist's (2012) "The last Kodak moment?".

So at this point in my journey I was thinking, why did Kodak fail? Which brings me onto the second article I found interesting this month. Avlesson and Spicer (2012) puts forward a stupidity-based theory of organisations, could this offer an explanation on why Kodak failed? Did Kodak suffer from what they describe as a "functional stupidity"? They describe this as:

"functional stupidity is inability and/or unwillingness to use cognitive and reflective capacities in anything other than narrow and circumspect ways. It involves a lack of reflexivity, a disinclination to require or provide justification, and avoidance of substantive reasoning. It is related to the intertwined elements of cognition, motivation, and emotion. In many cases functional stupidity can produce positive outcomes in the form of significant benefits to organizations and employees. The narrow and circumspect use of reason, high levels of means-ends oriented intelligence, and the partly positive outcomes, differentiate functional stupidity from ‘pure’ stupidity."
(Avlesson and Spicer, 2012, pg. 1201) 

Going by the CEO's interview in 1995 they certainly seem to have had the his backing, although there is evidence of some lack of reasoning through this quote from a former engineer:

“He told my boss to tell me to stop writing computer proposals, because Kodak would never be a computer peripheral company…not on his watch, at least.”

by why would a senior executive be so against opening up a new market? one clue is earlier on the article where an 800% mark-up on the production costs of a roll of film is mentioned. In that environment you need what the Agile community calls safety - a sense that some risks and the potential to fail are not allowed by how you learn on your way to becoming successful.This blog post by Elssamadisy (2013) describes safety and how productive and high quality agile teams need it.

An alternative theory based on work by Teece (1986) is that for an organisation to make maximum advantage of innovation it needs control of complimentary assets, for example knowledge or products. In this case the sensor and digital image recording is only one component of a camera, Kodak did partner with a Nikon and Canon to produce early high end cameras but they were bulkier re-badged versions of the original cameras. Both companies soon developed in-house digital ranges as the technology matured, Kodak didn't have control of the product so it was easy for the market to slip away from them.
Reading around the subject a bit more I have found a Fortune article from 1995 (Nully and Rajiv 1995) where apparently the main issues were known by the CEO at the time and he did want to build on the digital products. The Economist (2012) is rather damming in its assessment of Fisher's leadership in this period and the outcome for Kodak. Perhaps that's the key, the management at the project level worked, in getting the first still digital camera system, but the leadership throughout Kodak was not suited to what they had. More on innovation and leadership later ...

References

Alvesson, M. and Spicer, A. (2012) "A Stupidity-Based Theory of Organizations". Journal of Management Studies, 49: 1194–1220. http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6486.2012.01072.x/abstract 

Bergstein, B. (2012) "Kodak's Missed Opportunities" 19 January 2012, MIT Technology Review Available at http://www.technologyreview.com/view/426647/kodaks-missed-opportunities/


Elssamadisy, A. (2013) "Why Are Most Agile Adoptions Failing?", 20 June 2013, Industrial Logic, Available at http://www.industriallogic.com/blog/why-are-most-agile-adoptions-failing/

Nully, P., Rajiv, R. (1995)  "Digital Imaging Had Better Boom Before Kodak Film Busts". Fortune, Vol. 131 Issue 8, p80-83.

Suleimanagich, K. (2013) "Kodak’s Problem Child: How the Blue-chip Company Was Bankrupted by One of Its Own Innovations", petapixel.com, http://petapixel.com/2013/06/10/kodaks-problem-child-how-the-blue-chip-company-was-bankrupted-by-one-of-its-own-innovations/

Teece, D. J. (1986) "Profiting from technological innovation: implications for
integration, collaboration, licensing and public policy", Research Policy, vol.
15, no. 6, pp. 285–305.


The Economist (2012) "The last Kodak moment?" 14 January 2012, The Economist, available at http://www.economist.com/node/21542796

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