Kodak case

Kodak case

Project description
requirement: reading the attached article and answer 3 questions related to it (attached). no source and essay typed required. the questions need to be answered

separately, clearly and briefly.

Assignment 3
The description of the Kodak case is included in your ProCopy
packet.
Your case analysis should answer these 3 questions:
1. What is Christensen’s theory of disruptive technologies?
2. How was this theory extended in this paper?
3. What did the authors find were the main reasons that Kodak did
not respond appropriately to a changing, disruptive technology?

Disruptive technology: How Kodak missed the digital
photography revolution
Henry C. Lucas Jr.
*
, Jie Mein Goh
Decisions, Operations and Information Technologies, Robert H. Smith School of Business, University of Maryland, College Park, MD 20740, United States
article info
Article history:
Available online 25 February 2009
Keywords:
Innovation
Information and communications
technologies
Disruptive technology
Core rigidities
Case study
Qualitative research
abstract
The purpose of this paper is to analyze how a firm responds to a challenge from a transfor-
mational technology that poses a threat to its historical business model. We extend
Christensen’s theory of disruptive technologies to undertake this analysis. The paper makes
two contributions: the first is to extend theory and the second is to learn from the example
of Kodak’s response to digital photography. Our extensions to existing theory include con-
siderations of organizational change, and the culture of the organization. Information tech-
nology has the potential to transform industries through the creation of new digital
products and services. Kodak’s middle managers, culture and rigid, bureaucratic structure
hindered a fast response to new technology which dramatically changed the process of
capturing and sharing images. Film is a physical, chemical product, and despite a succes-
sion of new CEOs, Kodak’s middle managers were unable to make a transition to think
digitally. Kodak has experienced a nearly 80% decline in its workforce, loss of market share,
a tumbling stock price, and significant internal turmoil as a result of its failure to take
advantage of this new technology.
Ó
2009 Elsevier B.V. All rights reserved.
1. Introduction
The purpose of this paper is to explore how firms respond to challenges from rare transformational technology that
threatens a traditional, successful business model. We propose an extension of Christensen’s theory of disruptive technolo-
gies and illustrate the extensions with a longitudinal case study of Kodak. Kodak is unique in that it developed and patented
many of the components of digital photography, yet this new form of photography has had a serious, negative impact on the
firm. The two main contributions of the paper are the extension to Christensen’s theory and the lessons from Kodak’s unsuc-
cessful response to a major technological discontinuity.
The digital camera combined with information and communications technologies (ICT), specifically the capabilities of the
computer to store and display photographs, and the Internet to transmit them,
transformed the major customer processes asso-
ciated with photography
. The consumer could take many photos at virtually no cost, and delete unwanted ones by pushing a
button. Rather than waiting to develop a photo and then sending it by mail to another person, the customer uploads the pic-
ture to a PC and sends it as an email attachment to multiple recipients. If the customer wants a hard copy, she can print a
picture locally on an inexpensive color printer on a PC, send it to an Internet photo service, or go to a store that had a devel-
oping kiosk.
0963-8687/$ – see front matter
Ó
2009 Elsevier B.V. All rights reserved.
doi:10.1016/j.jsis.2009.01.002
*
Corresponding author. Tel.: +1 301 314 1968.
E-mail addresses:
[email protected]
(H.C. Lucas Jr.),
[email protected]
(J.M. Goh).
Journal of Strategic Information Systems 18 (2009) 46–55
Contents lists available at
ScienceDirect
Journal of Strategic Information Systems
journal homepage: www.elsevier.com/locate/jsis
1.1. Past research: Christensen’s theory of disruptive technologies
Christensen’s theory of disruptive technologies is one of the most popular for explaining the plight of the incumbent firm
facing a significant new technology. He proposes a theory of response to disruptive technologies in two books about inno-
vation (
Christensen, 1997; Christensen and Raynor, 2003
). He argues that investing in disruptive technologies is not a ra-
tional financial decision for senior managers to make because, for the most part, disruptive technologies are initially of
interest to the least profitable customers in a market (
Christensen, 1997
). The highest-performing companies have systems
for eliminating ideas that customers do not ask for, making it difficult for them to invest resources in disruptive technologies.
By the time lead customers request innovative products, it is too late to compete in the new market. The root cause of the
failure to adapt to disruptive technologies is that the company practiced good management. The decision-making and re-
source-allocation processes that make established companies successful cause them to reject disruptive technologies.
Christensen and Overdorf (2000)
present a framework for dealing with disruptive change that focuses on resources, pro-
cesses and values. Resources include people, equipment, technologies, cash, product designs and relationships. Processes are
the procedures and operational patterns of the firm, and values are the standards employees use to set priorities for making
decisions. Managers design processes so that employees perform tasks in a consistent way every time; they are not meant to
change. The most important processes when coping with a disruptive technology are those in the background such as how
the company does market research and translate it into financial projections, and how the company negotiates plans and
budgets. Employees exhibit their values every day as they decide which orders are more important, what customers have
priority and whether an idea for a new product is attractive. The exercise of these values constitutes the culture of the orga-
nization. Culture defines what the organization does, but it also defines what it cannot do, and in this respect can be a dis-
ability when confronting a new innovation.
1.2. Extending Christensen’s theory
When a firm is confronted with a discontinuous, highly disruptive technology, senior management has to bring about sig-
nificant changes in the organization at all levels. Our first extension to Christensen is to emphasize the change process re-
quired to adopt a disruptive technology. Senior management has to convince others of the need to move in a new direction.
Specifically we are interested in how middle managers change themselves and also bring about change in the organization
(see
Rouleau, 2005; Balogun, 2006
).
Christensen argues that the firm is not ready to adapt a disruptive technology because it does not see a demand from its
customers for the new innovation. He maintains that high-performing companies have systems in place that tend to kill
ideas that customers are not asking for. We propose to extend this part of his theory to encompass the culture of the orga-
nization, by which we mean the beliefs of employees, the way the firm organizes itself and the nature of the interactions
among employees (
Schein, 1983
).
1.3. A first extension: the struggle for change
In confronting a technological disruption, a firm faces a struggle between employees who seek to use dynamic capabilities
to bring about change, and employees for whom core capabilities have become core rigidities. Management propensities for
change drive the process (see
Fig. 1
). We describe this ongoing struggle using concepts from dynamic capabilities, core rigid-
ities and management propensities.
Dynamic
Capabilities
Core
Rigidities
Management
Propensities
Response to
Disruptive
Technology
Reduce capacity to change
Increase capacity to change
Attack Rigidities
Organize and marshal
capabilities for change
Fig. 1.
A framework for responding to disruptive change.
H.C. Lucas, J.M. Goh/Journal of Strategic Information Systems 18 (2009) 46–55
47

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