Digital Transformation Part 2: Story time...

Down Arrow

Our recent blog post Digital Transformation: An Introduction, gave you a brief over view of what a digital transformation is and why you should do it. In this next blog we thought it would be a good idea to give you examples of companies who were originally leaders in their fields, but who didn’t take a proactive approach to the digital revolution and how their customers shopping habits were changing. 

Kodak vs All Digital Cameras Everywhere

Despite being a market leader for decades, Kodak filed for bankruptcy protection in 2012. The film and camera giant failed to embrace changing technology and found itself sitting alone at the analogue table while all the cool kids partied hard on the digital dance floor. 

But this is just the tip of the iceberg and the real story of Kodak’s demise is littered with missed opportunities and astonishing short sightedness.

Kodak was a major pioneer in digital photography with one of its engineers, Steve Sasson, creating the first ‘film less’ camera in 1975. But no one at the company could understand why anyone would want to see photos on a screen and the idea was shelved. 

Strike one.

In 1994 Kodak worked with Apple to create the Apple Quick Take digital camera, and the following year they launched their own offering, the DC40. At this point they were ahead of the game but due to not wanting to jeopardise their film business, Kodak didn’t take advantage of their early steps and fell behind. 

Strike two.

In 2005 they launched the Easy Share One camera which allowed users to send their pictures to friends using WIFI. This camera was the first of its kind and could have been a leader in the photo sharing revolution, but no one really bought it so Kodak ditched it and instead focused on printing technology. 

Strike three, and they’re out of the game.

 kodak.jpg

Source: Digital Camera Review – Easy Share One Wireless Digital Camera

In Kodak’s eyes developing digital photography could have undermined their main source of revenue, but instead of running both film and digital side by side so that when film use inevitably declined their digital arm could take over, they just crashed and burned with nothing to really show in either market. 

Blockbuster suffered in a similar way when it decided to ignore innovation and turned down an offer to buy Netflix for $50million, however those smarty pants at Apple did the opposite. Instead of being afraid that iPads would jeopardise their personal computer line, Apple went ahead and put them on the market anyway. It paid off as many people now have a MacBook, an iPhone, and an iPad, all running from the same system and communicating with each other, cementing Apple’s position in the tech market and increasing their profits (they currently have $202 billion dollars, cash in the bank). 

Kodak’s failure is an example of actually inventing digital technology or creating a digital disruptor and flat out failing to see its potential. But what about failing to change your business model to suit growing trends in the digital world?

Borders vs Barnes & Noble vs The Internet

In 2011 the Borders bookstore chain went belly up. This didn’t come as a huge surprise as the doom-mongering media had been saying for a few years that books and print media were dead, and they had already closed a number of their stores outside America, but what’s interesting is that Borders main competitor in the US, Barnes & Noble, is still in business. 

The difference between the two companies is that one embraced changes in the way we shop and attitudes towards digital, and the other didn’t.

According to Business Insider, Barnes & Noble embraced changes in the way that people shop for books by launching its e-commerce website in 1997, going on to introduce eBooks and an eReader (the Nook) in 2009. The Barnes & Noble digital strategy in its 2000 report acknowledged that online sales would impact in store sales, but countered that ‘if we pay a visit to our customers at home through Barnes & Noble.com, they will return the favor at our stores’.  

Borders, on the other hand didn’t do any of this. Instead Borders undertook a series of decisions which were to prove fatal to their business.  

So what went wrong? 

Their first mistake was to outsource their e-commerce business to Amazon. When customers clicked on Borders’ website they were automatically re-directed to Borders’ section of Amazon. Yes that’s right, Amazon; the company that has since become the main competitor to all bookshops everywhere. . It might have seemed like a great idea to use Amazon as a sales agent in this way to start with but all it did was ignore the changing world and basically sent good business elsewhere. 

Borders went on to invest in its stores, buying up and opening more huge shops across America, diversify its stock as it went along to include CD and DVD sales. Sadly this all happened at a time when people started shopping in stores less, and online more and downloading music and streaming films online, leaving the company with unprofitable outlets and surplus stock, alongside a poorly thought out web presence. 

 borders.jpg

Source: Business Insurance 

Borders did launch their own website in 2008, ending their deal with Amazon and they did also launch the Kobo eReader in 2010. But sadly it was all too late, and the company’s market share shrank by over $3billion between 1998 and 2011 when it filed for bankruptcy. 

Conclusion

Kodak was for a long time a major player, if not the player in print film, but by sticking too rigidly to what it knew best (film), and ignoring its own advances in pioneering digital engineering, it fell apart. But the opposite is true for Borders as they were just too late to the digital party and when they eventually got there they were exposed for wearing last year’s trainers. 

The moral of this story is: Don’t allow your company to fall behind and let your competitors laugh all the way to the bank. Digital transformation is not something that can be overlooked by any aspect of the business operation. So over to you, what has your business done to keep up with the changing face of the digital world in your industry?

SHARE
comments powered by Disqus

Get in touch today!

Start your project