20 INDIAN MANAGEMENT AUGUST 2019

Two companies, Kodak and Fujifilm ruled the coloured photographic films world
market. After the demise of colour film business, Kodak went bankrupt while
Fujifilm saw the end of photographic business well in advance and went into
producing other products, ensuring its survival and growth. So what went wrong? STRATEGY
DR ASEEM CHAUHAN, SUHAYL ABIDI, DR MANOJ JOSHI, AND
DR ASHOK KUMAR

A tale of two
companies

K
odak and Fujifilm, ruled
the world of photosensitive
material for half a century.
At a time in 2000, the
colour photographic film
formed nearly 60 per
cent of Fujifilm’s sale. It
also contributed to two-thirds of its profit. At
Kodak, it was 90 per cent of their business and
60 per cent gross margin, a veritable stable
cash cow for over 50 years.
But there was an aftershock. Digital
photography was about to replace films. A
much profitable industry was about to collapse,
as sales started dwindling and the decline was
sharp between 2000-2010. Did anyone foresee
this? A collapse was on the anvil.
As CEO of Fujifilm Komori Shigetaka, who
was brought in to stem the company’s slide,
writes in his memoirs, “It was clear to me that
this was not the time for makeshift measures.
Our only choice was to initiate radical reform,
including the downsizing of our photography-
related businesses.” VUCA had made a sudden
strike, blindfolded them in a very short time.
There had to be something more than strategic

INDIAN MANAGEMENT AUGUST 2019 21


In today’s fast-changing to renew their resources and
and uncertain world, it is capabilities. The task was
uphill with no clues in hand;
all the more necessary for it required deep thinking.
the leadership to make the Kodak too had reached
organisation ready to read the fork on the road. It
and analyse weak signals. too had to make the same
decision. It decided to
continue with business as
usual and ultimately faced bankruptcy in 2012
and total oblivion later. Meanwhile, Fujifilm,
over a period of ten years and an investment
of $10 billion, changed its product mix and
today, is stronger than ever. What was the
differentiator? Did Fujifilm bounce back as a
resilient leader?
Both were sitting over identical resources,
ABOUT THE AUTHOR
a wealth of patents on collagen, the basic
Dr Aseem science and technology of photosensitive
Chauhan is
Founding Trustee, materials. Fujifilm took a strong decision on
Amity Education its traditional business. It revisited its core
Group. He
presently serves as strengths. The company used its patents and
Chancellor Amity technologies developed around collagen and
University.
nanoparticle formulation in the cosmetic and
22 INDIAN MANAGEMENT AUGUST 2019
© Shutterstock.com
other newer business fields. Kodak missed the
bus as it did not invest in newer technologies.
What was the difference? Kodak behaved like
a slow-moving organisation while Fujifilm was
agile. Agility and foresight were the answer. So
what is foresight? It is the ability to read the
weak signals emanating from the distant future,
understand its implications—both threat and
opportunities—and envision the likely future.
Industry watchers were already predicting that
days of photographic films were numbered but
few listened. Thereafter, each company had
roughly 20 years lead time to effect changes in
their product mix to ensure survival.
Both Kodak and Fujifilm were leaders in
collagen technology with hundreds of patents
issued in their names. Kodak allowed this
resource to go waste while it chased market
share in the colour film market, getting
smaller year by year. Fujifilm, on the other
hand, focused its R&D on seeking alternative
products that can be profitably derived from
collagen technology. Over a decade, it spent
over $10 billion in developing such products.
 STRATEGY

The world is vastly more One diversification it did was
complex and unpredictable to go into the anti-ageing line
of cosmetics, which too has a
than we have allowed base in collagen technology.
ourselves to see and the In today’s fast-changing
tools we take for granted and uncertain world, it is
are no longer working to all the more necessary for
the leadership to make the
predict the future.
organisation ready to read
and analyse weak signals.
They may or may not emanate from your
industry. Infact it requires the ability of the
whole organisation, and not just the top
leaders, with eyes focused both on the near
term and the horizon, sometimes beyond it
too. While leaders at the centre may still see
a stable business, those on the periphery may
already feel the pressure of disruption. These
people—medical representatives, showroom
sales personnel, and vendors are the ones
who develop the foresight first, though in a
fragmented manner.
All of us are used to looking for cyclical
change—biological cycles, weather cycles,
and business cycles. Economists have been
extrapolating past cycles to predict the future
and they have been increasingly wrong; a
recent example is the global banking crisis of
2008. The world is vastly more complex and
unpredictable than we have allowed ourselves
to see and the tools we take for granted are
no longer working to predict the future.
Therefore, we must look at the future anew.
How many of us are trained to look outward?
According to Amy Webb in The Signals are
Talking, “The future doesn’t simply arrive
fully formed overnight, but emerges step by
step. It first appears at seemingly random
points around the fringe of society, never in
the mainstream. Without context, those points
can appear disparate, unrelated, and hard to
connect meaningfully. But over time they fit

ABOUT THE AUTHOR

© Shutterstock.com

Suhayl Abidi is
consultant with
Centre for VUCA
Studies, Amity
University.

INDIAN MANAGEMENT AUGUST 2019 23

 into patterns and come into focus as a full-
blown trend.” Therefore, you must strategically
monitor trends and plan for the future
emerging trends, as they shift from the fringe
to the mainstream. You can begin by creating
an organisation that collects data, identify
emerging trends, develop strategies, and view
a future in which your best strategy often
requires creating as many possibilities as we
can. Too often, leaders with
narrow focus on business
For monitoring trends, the growth and quarterly profits,

organisation must cast a ignore the signals, wait too
long to take action, or plan
wider circle of talent rather for only one scenario.
than just the CEO and his/ The future does not come
her senior colleagues. suddenly. It only seems so
because developing trends are
not visible to us unless we are actively looking
for them. Electric vehicles have been there
since the beginning of the 20th century. Even
in its present form, it has been in existence for
over 20 years now and it will be another 20
years before they seriously challenge internal
combustion engine. One should remember
that the shift from photographic film to digital
took almost 25 years.
© Shutterstock.com
at the middle and junior levels. And they must
be allowed to utilise at least 25 per cent of
their time—apart from the work assigned—to
future thinking. It should look for mavericks
to seed this group—people who are inherently
curious, will question everything, are ready to
speak out, and do not respect authority. This
group should be
 Peer driven and free from the existing line

For monitoring trends, the organisation must and staff organisation

cast a wider circle of talent rather than just the  Self-learn and have the ability to synthesise

CEO and his/her senior colleagues. They are vast amounts of information from contrasting
so much involved in the day-to-day operations sources and make it more meaningful
and enhancing growth and profitability, that  Have the ability to think creatively and

they may miss the emerging trends if these are
not within their business radar. They should
create an anticipatory organisation as described
in the book of the same title by futurist Daniel
Burrus. Our fear and rejection of the unknown
collaboratively. This helps in projecting newer
ideas and pitching unfamiliar questions, which
will eventually lead to new ways of thinking
and generate unexpected answers.
 They should be able to spot trends from those

has been an ongoing thread throughout history. are just trendy—separate hard trends that are
ABOUT THE AUTHOR We are comfortable making incremental certain to happen, such as demography, from
Dr Manoj Joshi changes and trick ourselves into believing that soft trends that might happen.
is Professor of
Strategy, Director,
we are changing the status quo as a prelude to As the group or groups mature through
Centre for VUCA moving into the future. collaborative learning, they become capable of
Studies, Amity To start with, the organisation must create a delivering better and better outcomes.
University.
multidisciplinary future or anticipatory group This is the beginning of an anticipatory

24 INDIAN MANAGEMENT AUGUST 2019

 STRATEGY

© Shutterstock.com
Organisations which have organisation, which Organisations which have the first-mover
the first-mover advantage continuously fine-tunes advantage not only make informed decisions
its business strategy based but also take lead in broader context by taking
not only make informed on signals, both weak and other stakeholders along in educating and
decisions but also take strong. As more data becomes influencing the investors and legislation.
lead in broader context by available, various scenarios The digital age was destined to come and the
taking other stakeholders are filled in to make informed Fujifilm leadership viewed it not as a crisis but
decision possible. There an opportunity. Today Kraft-Heinz, the giant
along in educating and
should be opportunities food company is facing the same challenges
influencing the investors for continuous dialogue as Kodak. It did not see the shifting trend
and legislation. between the anticipatory towards healthier food and early this year lost
group and other parts of the over $15 billion from its market value. The
organisation and beyond. shares were plunging for the past two years but
The CEO must regularly interact with other the management’s total attention was focused
CEOs and senior leaders not from just their on cutting costs and boosting profit, just like
own industry but from other businesses too. Kodak. The company has now brought in a
People who are regularly interacting with new CEO. The first thing he should do is read
the external business environment such as Innovating Out of Crisis: How Fujifilm Survived
ABOUT THE AUTHOR
salesmen, and supply chain professionals are (and Thrived) As Its Core Business Was Vanishing, by
Dr Ashok Kumar likely to learn new trends faster than others. Shigetaka Komori.
is consultant with
Centre for VUCA By the time your competitors have worked
Studies, Amity out the future, you are already ahead in
University.
working out your third or fourth scenario.

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