Professional Documents
Culture Documents
Kodak
Economies of
Scale
(Cost Advantage)
Kodaks
Razor and Blade
Strategy
Established Quality
Brand Name
(Price Advantage)
- Emergence of Digital
Imaging
- Kodaks inability to adapt
to this new Business
Kodaks Response
(a) Creation of a new division for digital R&D
(b) Huge R&D investments in digital technology
($5 billion; > 50% of total R&D spend)
Good Move?
Kodak recognized the need to
create capabilities and products
In digital technology
Questionable Move?
(a) Huge investment not necessary
given the uncertainty of digital tech
(b) Diversion of valuable resources from
competing with Fuji in film.
Good Decision
Questionable Decision
Good transitional
product
Cognitive Inertia
- companies get locked into
habitual ways of thinking
about their industry, and
and how to succeed in it
Cognitive Inertia:
The Role of Confirmation Bias
Based on prior experience and/or success, managers develop a point-of-view
about their business, and what determines success in it.
Traditional photography is all about consumables (the razor and blade model)
Therefore, digital photography is also about consumables!! (the Photo CD)
Increase Awareness
That cognitive inertia exists
Engage in
Deliberate Analysis
The Outcome
Inertia
Cognitive Inertia
- companies get locked into
habitual ways of thinking
about their industry, and
how to succeed in it.
Action Inertia
- companies recognize the
need to change, but they are
unable to act accordingly