Here Today, Gone Tomorrow: Learning Lessons about Customer Needs from Kodak
Are you listening to your clients or customers? Failing to do so can have dire consequences for businesses of all sizes in all industries. The cautionary tale below details what happened to one of America’s largest and most successful companies because of its failure to stay abreast of its customers’ needs.
George Eastman and Henry A. Strong founded the Eastman Kodak Company in Rochester, New York, on September 4, 1888. Throughout most of the 20th
Century, Kodak dominated the photographic film market worldwide. Early on, the company understood its wide reach and name recognition and capitalized on them with its tagline “a Kodak moment” which suggested the consumer desire to record personal events for posterity – a clear sign that, at the time, Kodak understood its customers’ needs and desires. Tragically, it lost sight of what they wanted, and that spelled its eventual downfall.
From Kodak’s earliest years, the company’s profits were created through the interdependency of four product types that they believed consumers needed in order to take, collect, and view photographs: inexpensive cameras, photographic film, slide projectors, and paper on which photographic exposures could be printed.
In 1965, well before digital photography changed consumer practices in the photographic imagery marketplace, Kodak earned a patent for the new technology. However, from the beginning, Kodak did little to develop and explore that new technology and made assumptions about its impact. Kodak assumed that while digital photography would obviate the need for film and eventually for slide projectors, consumers, it thought, would still need cameras and photographic paper on which to print their digital photographs. Sometimes assumptions prove catastrophic.
When camera phones came out early in the 21st
Century, Kodak lost considerable market share for its camera sales, and when it lost its final product’s market share – for photographic paper, its downfall was complete. Even after the loss of camera sales, the company still assumed that consumers would use their phones to take photographs, but would print those photos on paper to store them, as they had long done in photo albums etc. That is not what happened.
Instead, consumers began uploading photos from their phones onto computers and then used their computers to play slide shows of their albums for their friends and families to view, much in the same way that people displayed film slide shows with slide projectors in the 1950s and 60s. Consider that digital photography made all four of Kodak’s core products obsolete: projectors, film, cameras, and photographic paper. A smartphone and a computer replaced all of them. In 2012, Kodak’s failure to anticipate changes in consumer needs forced it to declare bankruptcy.
There is a powerful lesson in Kodak’s failures. No matter what appeals your company’s products address: interdependency, price, quality, etc., all can be neutralized quickly because of developments in technology, and because of events and competition within and without the marketplace that might be completely beyond a company’s control. A failure to anticipate those changes becomes a failure to understand your customers’ needs.
For instance, when film was no longer needed because of digital technology, those other products that were interdependent on film – projectors, cameras, and paper – soon became obsolete. Likewise, no matter how inexpensive Kodak’s cameras were, people in the 21st
desired phones first and foremost, and when those phones became equipped with cameras, even the cheapest camera had no buyers. Finally, Kodak proudly proclaimed its photographic paper the best quality paper in the world, but paper quality did not matter once computers could project high definition images onto monitors hundreds of times the size of a conventional photograph, ultimately making paper useless.
Oftentimes, people think they are doing what they should be doing, and Kodak is a case in point. There is no question that it was one of America’s most respected companies. Its management and employees worked hard and produced great products, but Kodak allowed their internal interests to influence how they perceived their customers’ needs, and that is recipe for failure.
Customers want what they want. A company’s job is to find out what they want and provide it for them. It’s not the customers’ job to find out what companies have and then buy it simply because it’s for sale. Likewise, it’s useless to sell the benefits of your products unless those benefits align with the customers’ needs. So, we all need to ask ourselves: how well are we listening to our clients and customers?