The enterprise that does not innovate, ages and declines
“Necessity Is the Mother of Taking Chances,” — Mark Twain
We are all watching a very dramatic “Kodak moment.” Eastman Kodak recently filed for chapter 11 bankruptcy protection. Its stock now lists at less than a dollar and was delisted from the New York Stock Exchange. Employees are worried about their jobs, and suppliers are getting nervous.
How could this iconic American company facing the possible end of its existence?
At its height in 1988 Kodak had more than 140,000 workers churning out everything from cameras to motion picture film, floppy disks and pharmaceuticals. According to USA Today, it finished that year with $1.4 billion in profit.
Last year I met with a senior Kodak official, since retired, who was at an important meeting in the late 1980s. One of the young technological stars in the company was making a presentation to the CEO on digital photography. The meeting was scheduled to take two hours.
Five minutes into his presentation, the CEO slammed his hand on the table and said Kodak was a chemical processing company and would never turn its back on its known expertise. Chemical processing was its expertise. Digital would never be part of Kodak’s world. The meeting ended and the young man left in humiliation.
The Japanese company Fujifi lm smelled blood in the water. It led the explosion in digital photography which ironically was the technology that Kodak researchers had actually invented. They left Kodak in the dust.
Now let’s look at how a local, much smaller company handled a technological innovation that challenged its existence.
Sonny Ahuja started a new company in the perfume business and grew it successfully with brick-and-mortar stores at Northridge, Southridge, Capitol Court, Brookfi eld Square, Regency Mall in Racine, East and West Towne malls in Madison and the Fox River Mall in Appleton. He was also doing trade shows across the United States.
Roughly five years ago sales started to drop significantly with the rise of Amazon, eBay and other discount sites on the Internet. Perfume can be easily bought online, although it escapes me. Why? Because you can’t smell the stuff online.
But rather than put his head in the sand as Kodak did, Ahuja learned how to design e-commerce websites and launched Grandperfumes.com.
He then learned how to do search engine optimization (SEO) to attract visitors to the site, and then mastered social media so he now has 50,000 Twitter followers and 5,000 Facebook fans and friends.
“I did what I needed to do to survive,” Ahuja said.
Six years ago he barely checked his emails. Now he’s a social media consultant and an SEO expert focused on developing revenue producing websites.
Because cash was tight during this traumatic transition, he hired his wife Ami (Mrs. Milwaukee 2011) to help manage the perfume business. Fast forward…she now runs Grandperfumes while he focuses on growing his social media business.
As business leaders, we all have choices. Peter Drucker, the dean of American management theory until his passing, captured it best when he said: “The enterprise that does not innovate, ages and declines.” Truer words were never spoken.
Innovation and creativity requires learning new skills and adapting accordingly. This is never easy. If it were, success in the marketplace would be simple.
But remember this, when you use your God-given talents and intellectual horsepower to develop new skills you become a more fully developed human being. You will enjoy the pride that comes with learning new skills and developing new talents.
The CEO of Kodak refused to develop an understanding of digital technology because he was afraid to admit not knowing something. He lacked the humility of a true leader.
On the contrary, our local entrepreneur Sonny Ahuja embraced his lack of knowledge and now leverages his expertise to help others. Not only did he save his business and strengthen it, but he created a new business and another source of revenue. He was willing to take a risk.
Kodak is busy selling its assets and patents in order to survive. Sonny is busy growing his businesses that capitalizes on new technology in the marketplace. Who would you rather be?