Nice Companies Finish First by Peter Shankman

Author:Peter Shankman
Format: epub
Publisher: Palgrave Macmillan
Published: 2013-02-07T16:00:00+00:00

“The most decisive factor for our success was how drastically we were able to transform our businesses when digitalization occurred.”

—Shigetaka Komori

Picture Loyalty to the Market

A closer look at one of Kodak’s winning competitors demonstrates the beauty and benefits of loyalty to the market as opposed to loyalty to tradition or an idea. Fujifilm came on the American scene in 1984 and won market share very quickly, in part by undercutting Kodak’s prices on film. Fujifilm’s success is a clear example of why developing products and businesses that serve the changing marketplace is much wiser than selling old products via brand recognition. Shigetaka Komori, Fujifilm’s president and CEO until June 2012, when he became chairman, came to the firm in 1963, a time when Kodak was the leader in film and photography. He looked on the competing American company with great respect and admiration.

Fujifilm, like Kodak, was also aware in the early 1980s of the growing technological developments in digital photography, but, like Kodak, it was still enjoying the enormous profits it earned from selling film. While Fujifilm did invest in digital technologies and tried to diversify into new areas, the people running the very profitable film division had the most clout (where there’s money—there’s power). Like the film people at Kodak, they were loath to admit that digital photography would likely dominate the consumer market in the not-too-distant future. Protecting turf and jobs can override concerns for the direction of a business and the marketplace—a knee-jerk reaction that should not be mistaken for loyalty. Job protection has short-term and narrow benefits that in the long term usually don’t pan out too well. It’s safe to assume that the natural pain of transition was risky for the film people—they may have feared mastering the new skills necessary to survive. That’s why it’s so important to educate employees and develop their skills as the market changes.

In 2000 Fujifilm’s strategy was based on the idea that film would go through a gradual decline over 15 to 20 years. Instead, the free fall of film sales happened quickly starting in the early 2000s. In just ten years, film profits at Fujifilm went from 60 percent to nothing. Komori understood that his company had to develop a team of employees who had mastery over the new technology and who could also develop new businesses. “We redefined the business. In times of massive digital photography, the classic film almost disappeared from the market. Just look what happened to our former competitors,” Komori told THEME, a reference site for photography, in May 2012.

As sales from film developing and printing dwindled, Komori saw an opportunity to shift developing services to self-service printing kiosks in stores. After all, people still wanted to have “hard” copies of some of the hundreds of pictures digital cameras made so easy to take. The paper and developing chemicals—as well as the printing technology—could all belong to Fujifilm if they had the people to develop the technology for them in-house. And so they did.

Fujifilm made a deal with Walmart to provide kiosks for self-service printing in its camera department.

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