Failing to innovate: the risks of falling behind
While it’s true that harnessing innovation in line with corporate strategy can put companies ahead of the competition, new technology is moving at such a pace that a failure to capitalise on new technology, research and IP in line with business objectives can be a big mistake. There are plenty of lessons from the annals of business history which make it plain: without a rigorous strategy to capitalise on innovation, it’s easy to fall behind.
Let’s look at a few well-known examples of robust, successful companies, all of them household names, who lost their edge due to mistakes in capitalising on innovative and disruptive technology.
Shape the market to protect legacy tech: Kodak
In the 1970s, Kodak dominated the photographic film business, with a 90% market share in the US. While in the 1980s, inexpensive imported film produced by the likes of Fujifilm brought new challenges to Kodak’s dominance, the existential threat to this highly successful business came from digital photography.
The kicker? The digital camera was invented by a Kodak engineer, Steve Sasson, in 1975. According to Sasson, when he presented his invention to Kodak leadership, they saw th: ‘it was filmless photography,’ he said, ‘so management’s reaction was, “that’s cute, but don’t tell anyone about it.”’ A threat, but not a big one.
Of course, Kodak failed in their attempt to bury the digital camera, and in the hands of competitors it became a big threat to their business. Despite a history of recognising and capitalising on disruptive photographic technology - Kodak were quick to adopt colour film when that technology emerged, for example - and despite extremely accurate market research and technology forecasting which indicated they had a decade to adapt before digital photography would dominate the market, Kodak remained focused on their legacy business of photographic film and paper.
While competitors such as Sony and Canon were investing in digital cameras, Kodak attempted to shape digital photography to preserve sales in their legacy business areas. According to CEO George Fisher, Kodak ‘regarded digital photography as the enemy.’
This oppositional attitude left Kodak in decline as digital photography dominated the market, before being revolutionised again by the rise of the smartphone (more on that later!). Ultimately, as digital photography became overwhelmingly dominant and film faded into nostalgia, Kodak filed for bankruptcy in 2012.
Ignoring market signals: BlackBerry
BlackBerry revolutionised the definition of mobile phone, and might have been a key early contributor to the work from anywhere (WFA) culture taking hold today. In many ways the first smartphone, BlackBerry untethered email from the desktop, helping corporate workers take their jobs on the road. A status symbol for urban professionals, BlackBerry counted Barack Obama among loyal users, and there was even a popular blog cataloguing celebrity BlackBerry sightings.
Initially an enterprise tool which achieved consumer crossover through the visibility of its high-profile users, BlackBerry faced its first serious competition from external innovation with the introduction of the iPhone in 2007. Unfortunately, BlackBerry made a miscalculation: they saw the iPhone as a mobile phone with some fun extras which would appeal to younger consumers and leave their core market of high-powered professionals untouched.
For a while, this strategy seemed like it might work: perhaps users could have a BlackBerry for work and an iPhone for their personal life? But limitations in the BlackBerry operating system and its app store meant more and more users opted for the iPhone. And as the boundaries between work and personal life have become more porous - a trend BlackBerry helped introduce in the first place - fewer and fewer people have fundamentally different requirements for a work phone compared to a personal one.
BlackBerry released its final smartphone model in 2013 to disappointing sales, and as in early 2022 decommissioned the infrastructure and services which underpinned their devices. In 2023, there were 1.46 billion active iPhone users worldwide, and Apple’s flagship smartphone is equally at home sharing holiday snaps on social media and responding to urgent business emails.
Internal use only: Xerox
Xerox owes its success - underlined by the coining of an eponymous verb - to Chester Carlson’s ground-breaking invention: photocopying. Out of this tremendous success grew Xerox’s Palo Alto Research Center (PARC) which developed transformative innovations many of us interact with for hours every day.
PARC produced graphical user interface (GUI) technology and the computer mouse, Ethernet, and the Xerox Alto, one of the first recognisable personal computers (PCs). Despite sitting on a gold mine of disruptive technology, Xerox viewed the commercial development of these innovations as risky, particularly compared to the tremendous success of the photocopy business. Leadership preferred to invest surplus cash in safer places, such as insurance. Incredibly, the Xerox Alto was consigned to internal use by staff at PARC, and was not developed for the commercial market.
Others swept in to capitalise on these innovations, using Xerox’s own internal innovation to compete with them. Notable examples include Apple, which released the Mac in 1984, and Microsoft, which launched Windows in 1985. Not only did Xerox miss out on the commercial success of the IP it had developed, but watching other companies make good on their hard work proved too much for many PARC engineers who left to find roles where they could see their innovation thrive.
Xerox is still around, but the dominance of companies like Microsoft and Apple is a tantalising reminder of what they might have achieved if the incredible work of PARC engineers had been commercialised, rather than relegated to internal use.
Key lessons
Failing to embrace new technology, or lacking the resources to lead development of internal innovation can be costly - it can tip a dominant player out of the market position, or sometimes even out of the market altogether.
Kodak, BlackBerry and Xerox teach us 3 things about innovation:
Complacency kills: just because a company is a market leader and has maintained a dominant position for a long time, doesn’t mean that success will continue without innovation
Ignore emerging technologies at your peril: all three companies benefited from early access to disruptive technology but failed to invest in it. Competitors were only too happy to step in and gain an edge
Over-reliance on legacy business models is dangerous: despite clear signs of disruption, these companies failed to shift their strategies and clung to the ‘safety’ of the status quo while missing transformational opportunities
Avoid the innovation gap
Cambridge Future Tech (CFT) is on a mission to transform scientific innovation into world-changing impact. We help companies discover the scientific research and emerging technologies with the potential to disrupt the industry where they operate, whether internally or externally generated. From there, we provide strategic programmes to proactively build on existing business strengths to help grow these early-stage opportunities while bringing them into closer alignment with business operations and objectives.
Engaging with science is different, and traditional innovation methods often fail to capture deep tech opportunities - as we’ve seen in some of these examples. But at CFT, we’re built for deep tech: we help companies effectively discover and harness science. That means no waiting around for competitors to uncover or commercialise the next big thing: we’ll help you go out and find it, and then truly harness its power.
We help you keep your finger on the pulse with scouting to search out the most relevant new research and innovation for your industry, expertise in spotting tomorrow’s technology trends now, and experience in realising its impact. You can ensure you won’t be left behind.
If you're interested in exploring how CFT can support your innovation strategy, feel free to reach out. Get in touch now.