Thursday, January 19, 2012

Digital Casualties

How you are you keeping up in our digital and globalized world?  Hopefully you're faring better than Kodak who, after 130 years in business and at one time enjoyed a 90% marketshare, filed today for Chapter 11 bankruptcy. 

Once a blue chip company, Kodak actually developed the digital technology that has since cannibalized its own market.  That sad irony is only heightened by the many good decisions of Kodak's management which included setting digital aside in order to focus on products and services because this is what their customers wanted (at the time).  But as the seminal, The Innovator's Dilemma demonstrates, the path of blind customer service can kill innovation and is littered with the corpses of once thriving organizations.  


On the other hand, we have the entertainment industry.  Music, film and television companies have been fighting for years what consumers want: digital access to content.  The music industry brought us the bitter fight over Napster and the recent efforts of SOPA and PIPA have created a firestorm with popular websites shutting down in protest to successfully sway Congressional supportSOPA and PIPA are backed by the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) who see their power, and their bottom lines, disintegrating. Many of these industry players are as old as Kodak and have held a monopoly for close to a century.  But the democratization of content production and distribution, made possible by the digital technology and the Internet, is disrupting these old business models.  

I feel for the entertainment companies at the center of the SOPA/PIPA controversy and who are struggling to protect their copyrights and battle piracy.  I am an advocate for artists and content creators who should be compensated fairly for their work.  After all, without protecting the talent, perhaps this SNL skit is a glimpse of a bleak future in entertainment. 


As is indicated by Kodak's bankruptcy and MPAA/RIAA's flailing efforts to save their skin, these old business models are dying hard as the new business models struggle to take shape.  It is easy to look backwards to understand how business "should be done".  As we recently discussed in our Digital Consumer class, it took decades of observation of traditional business to come up with the classic Four P's (price, promotion, product and place) taught in every Marketing 101 class.  But with the advent of digital marketing and digital consumption... well, that's still a new frontier and the business principles governing success are still being discovered.

Its not just business models that are being disrupted, however.  The bankruptcy of Kodak and the struggles of the entertainment establishment are centered in the respective "company towns" of Rochester, NY and Los Angeles.  As these cities struggle with the economy they are a microcosm of larger shifts happening throughout the United States and the rest of the world.  They reflect the Brookings Institute's latest study which reveals a very real economic and power shift from the West to the East.


A look at an interactive map from the study illustrates that its not just certain cities and certain industries that are struggling to adapt to the new realities of a digital world.  As the U.S. and Europe struggle, other regions are gaining ground.  Competing as individuals, as organizations and even nations require re-shaping business models and business practices.

Hopefully you're not filing for bankruptcy or facing a radical shift in your specific industry, but are you keeping up in the digital landscape and adapting? If not, why not?  As I tell tech-phobic clients, "give it a try... its not like you can break the Internet!"  A great place to at least start is with Groundswell: Winning in a World Transformed by Social Technologies and The Facebook Effect: The Inside Story of the Company that is Connecting the World.  After all, if you're not learning... you're dying.

No comments:

Post a Comment