Case studies in business innovation: Readings for discussion Sample Pages

Case studies in business innovation

Readings for discussion

Marcos Benevides • Chris Valvona • Mark Firth

The next big thing

Innovations in strategy & planning

Creativity is not only for inventing new products and services. It is also an important part of strategy and planning. As we see in this chapter, companies that can creatively adapt to threats and opportunities in their market, and that can clearly understand the strengths and weaknesses of their products, are the ones that succeed. Executive Summaries

Reading

1

Kodak™ and the digital camera

Kodak became one of the most successful companies of the 20th century by innovating how we take photos. Their slogan, “You press the button, we do the rest” says it all. However, even though it innovated in other areas, Kodak failed to see threats to its business model in the digital age.

Reading 2

Tesla™ and the electric car

Tesla was started in 2003 by engineers who wanted to create a cool, fun, and fast electric car. Although they did not actually invent the technology, they understood the strengths of electric cars, and saw a clear opportunity in the market. Tesla’s success changed the car industry—and the world.

Reading

3

Netflix™ and video delivery

To Netflix, the small size and durability of DVDs suggested an opportunity. Instead of making people go to the video store, what if movies could be delivered right to their front door? Not only did the company innovate movie delivery with DVDs, they did it again with streaming.

Reading

4

Twitter™ and the new media

Twitter has been called many things: a social network, a microblogging service, an open and democratic way to connect people, and a dangerous tool for spreading misinformation. All of these are true to some extent but, at least in the beginning, Twitter was an idea in search of an opportunity.

Reading

5

Nintendo Wii™ changes the game

The Nintendo Wii was created as an easy-to-use but relatively low-tech console that focused on fun for the whole family. This strategy was different from its competitors, which mainly focused on faster and more high-tech hardware for hardcore “gamers”. Nintendo’s strategy was to not only focus on the current gaming market, but also target non-gamers.

Kodak™ and the digital camera

Background

The Kodak camera company is almost as old as photography itself. It was started in the 1880s by a man named George Eastman. Eastman did not invent the camera; his idea was to make photography so easy that anyone could do it. Kodak’s first slogan was, “You press the button, we do the rest.”

Kodak soon succeeded in popularizing photography. It grew into one of the best-known brands of the 20th century. By the 1980s, the company was so popular that its newest slogan, “It’s a Kodak moment” basically came to mean “Let’s take a photo” in popular culture.

Young people may not know the name “Kodak”. That’s

because, when digital technology was starting to become common in the 1990s, Kodak did not see the threat to its business model. This is especially interesting because, in fact, it was Kodak that invented the portable digital camera.

Analysis

Kodak did not become successful simply because it made cameras. In fact, its profit from cameras was lower than from other products. The company actually made most of its money from selling photographic film and paper.

Kodak followed a “razor-and-blades” business model. In this model, an expensive product, like a camera, is sold at a very low price. However, customers must regularly buy other items, such as film and paper, to continue using the product. This business model was very successful for Kodak.

The company also had an active research and development section. In 1975, a Kodak employee named Steve Sasson developed the first digital camera that was small enough to carry. This camera weighed 3.6 kg and could only take low quality black and white photos.

However, because digital cameras do not need film or special paper, Kodak gave up on the technology. At first, this seemed like a good decision. After all, professional photographers did not like digital cameras either; many insisted that they would never switch to digital.

It wasn’t until the 1990s that digital photography really took off with most people. By the 2000s, the threat was clear, but Kodak had missed its best opportunity to be a player in the digital camera market.

For a while, it seemed that digital and film cameras might co-exist. That was until the smartphone came along and put the final nail in the film camera’s coffin. Soon, by the early 2010s, the film camera market was dead.

Kodak tried to move in a new direction. It started selling printers and ink. This was another industry that used the razor-and-blades business model—but Kodak tried a new approach. Instead of making cheap printers and expensive ink, Kodak made expensive printers with cheap ink.

Their idea was that its customers would want highquality photographic prints, and so they would pay for better printers. Unfortunately, trends were again going in another direction—more and more, people wanted to store images digitally, not to print them.

Conclusion

Kodak developed an innovative technology, but it did not take advantage of it. It did not see the strengths of digital photography, nor the threat that digital posed to its core film and paper business. Kodak bet it all on its past and present successes, failing to capture the future.

Questions and extension tasks

What kinds of cameras have you owned? What do you use now to take pictures?

A company using the razor & blade business model sells the main product at a low cost, but it then sells the replacement or supply products at a high profit margin.

Discuss these examples:

• Printer and ink

• Video game consoles and games

Can you think of others?

3 In groups, think up a new product that uses the razor & blade business model. Present your idea to the class.

A B

Group Project: Joint venture

Make a joint venture proposal to another company.

Create small groups of 3-4 members. Each group represents a company from Chapter 3. If needed, make several groups per company.

Each group will present a joint venture proposal to another group.

Step 1

Think of some ideas about how your companies can work together in a joint venture.

Group 1

Tesla present to Group 2 Netflix

Idea:

Idea:

Group 2

Netflix present to Group 3 Twitter

Idea: Idea:

Group 3

Twitter present to Group 4 Nintendo

Idea:

Idea:

Group 4

Nintendo present to Group 1 Tesla

Idea: Idea:

Step 2

Prepare a detailed presentation about how your companies can collaborate with each other. Think about what each company does well, and what you could do together.

Step 3

Present your idea to the other company. Explain how your joint venture can be mutually beneficial, and explain how it addresses an opportunity or threat in the market.

Step 4

Q & A. The other company will ask you some questions about your plan. You can prepare by imagining what kind of questions they may ask you:

Q1:

Q2:

Q3:

Step 5

A different company will present a joint venture proposal to you. Listen to their pitch, then ask them any questions you have. Take notes on their proposal:

Q1:

Q2:

Q3:

Evaluation

Hold a company meeting and do a SWOT analysis on the proposal that was presented to you. Decide if you should enter into a joint venture with the other company. Report on what you decide, and give reasons for your decision.