Yes, exactly. Toyota is refusing to take the L on this because Toyota is the market leader in gas-electric hybrids and Toyota is not the market leader in EVs. This is business strategy 101.
>This type of thinking is what hurt Kodak ultimately I think. They invented the first digital camera, then scrapped it because they made money in film.
There is nowhere near as much money to be made in the digital camera market. They failed to adapt, but at the same time, there was no saving what was an immensely large company even if they did adapt.
Film revenue for Kodak was $16 billions in 1996, adjusted for inflation that would be $30 billions, that number will make anything digital look like nothing (15 billions is the current revenue for the entirety of the digital sensor market in current dollars and Sony has 43% of that pie, a share that has been dropping as more competitors have entered the market and as Samsung kept improving.). You see a Sony sensor in many phones, but Sony doesn't make anywhere near film-era Kodak revenue on that side of their business. The higher end camera business is more profitable, but it doesn't sell much in volume, and the low end of the camera business has almost disappeared because of smartphones. (Canon, the biggest producer of digital cameras, has all but ceased making compact cameras apart from their G7X model. You can still find other models on the market but they're older unsold stock and refurbs. They also announced they would stop producing new DSLRs and will solely focus on making a narrow range of mirrorless cameras. To put it bluntly, the digital camera market is in a very unhealthy state. Don't solely look at price tags either, Leica for example makes some of the most expensive cameras on the market but.. their revenue is $400 millions, not even $1B)
This is all correct, but kinda shifting timelines.
For example, if Kodak had been first to digital, that doesn't mean they'd have had to give up any film at all. And since they were first, they could have set margins where they liked. Whether it would have survived and thrived...who knows. As others have pointed out, computers weren't commonplace back then.
Digital cameras did get commoditized, nearly 30 years after Kodak had invented it. So obviously, by today they'd had to have move on. High end sensors, glass, heck even cloud computing, something akin to Google Photos... there's no telling where they could have been if they'd have leaned in early.
That said, you point out the sensor market is 15 billion today... and Sony has about half. This is way, way more money than Kodak makes anymore. Today Kodak is at about a billion revenue per year.
In this context, it's sort of interesting to compare Google's approach of trying a million ideas, then killing the ones that don't take off or don't make money. Maybe that's how you stay ahead of the game and don't become a Kodak, which failed to sustain an experimental new business for long enough. Google takes quite a lot of shit for this approach (understandably).
But are any of Google's side projects an existential threat to their main business of search / ads in the way that digital cameras were to film for Kodak?
Kodak and Sears are my favorite example of this sort of thing, Kodak not only invented the digital camera, they also had a robust business in the 90s of developing color film onto both prints and a CD. Instead of seeing the writing on the wall, they resisted digital because it cut into both film, and their existing way of getting those pictures onto computers.
Sears, after dominating mail-order for a century, marketed Prodigy, a successful early dial-up network. But they were by that point heavily invested in malls, and were beat out as the 21st century's Sear's, Roebuck and Co. by a bookseller.
I think the way to look at cases like these is to recognise organisations aren't monoliths, but a mass of individuals each tugging in their own direction. Clearly, there were inventors, progressives and visionaries within these companies that correctly predicted future trends and were trying to steer the ship to capitalise on them, but for some reason, other voices drowned them out.
And that right there is why a good CEO can make or break a company. They don't have to be experts in everything, but they need to be good enough to tell which of their experts working for them to believe, or to bring in outside expertise when needed.
Completely agree. I think the darker side though is that successful individuals must not only have good ideas, but advocate for their ideas effectively. I still haven't figured that one out, personally
Sears I think hurts the most. I used to love looking through the catelogs as a kid. It felt so futuristic.
All they had to do was have the foresight to move that model onto the internet. They had the supply chain, warehousing, etc. They may have even been able to have done their own logistics, since every city had a Sears. Kinda how Walmart does deliveries now.
And as you mentioned...they got crushed by a bookseller :(.
The problem for Sears was that mail-order was killed off by malls and big box before web-orders took off. Sears was losing 150M a year on catalog in the early 90s. If they didn't invest in malls and strip malls, they'd have been out of business before web shopping was significant.
Amazon was the right size to grow with the market. Amazon didn't even start selling clothing until 2002.
Which is why I always find Service Merchandise the more interesting case study than Sears. Service Merchandise was an "upstart" trying to hit Sears where it lived in the 90s and basically was the American vanguard of what today we tend to call the Ikea model (and which Amazon keeps hinting they might do at some point): (relatively) big just-in-time fulfillment warehouses with attached showrooms.
Service Merchandise hit some weird bad luck in early franchising (and franchising may have been the wrong choice/it's own bad luck) and accidentally got somewhat region-locked into the US South East, but the business model was from today's perspective ahead of its time, directly addressed that "mall shopping need" while still keeping what made catalogs and drop shipping useful (and relatively efficient just-in-time logistics).
It would be an interesting "game" to play 20/20 Hindsight with those companies -- knowing what we know now, how could they have successfully navigated into the new world.
Sears seems like it could have transitioned if it didn't have its head up its ass. The death of film means Kodak would have to constrict and double down on printing, and simultaneously expand their general chemistry efforts into new markets (which I believe they did but too little too late).
How a company that was focused on their legacy customer relationship system and logistics operations lost out to a company that was focused on building the future of customer relationships and logistics is a lot less difficult to understand.
I remember it differently. Also, actual history is different too.
> Bezos finally decided that his new business would sell books online, because of the large worldwide demand for literature, the low unit price for books, and the huge number of titles available in print.
Yeah, they sold books, I didn't say they didn't. The couple paragraphs above the one you link talk about Bezos wanting to participate in the internet business boom and then the ones you link talk about commerce.
Selling books was never the ambition, it was only the path.
Yes they only sold books at that point because it was the easiest thing for them to sell (thus the MVP). IIRC they did not hide their ambition to go beyond that.
Toyota is different. They’re also making EVs… they’re just not _only_ making EVs. If EVs really start to take off on their own, Toyota will already have multiple offerings to fill that gap
Companies can't change their DNA any more than an individual organism can. Kodak was right to avoid digital photography - and in fact they probably should have stuck with film a little while longer even if it is niche. The public perceives DNA switches all the time, but that's an illusion generated by a free market and it's ability to plug in new sources of value (and unplug old ones) relatively seamlessly.
Yes, a companies DNA can be quite an obstacle to survival in changing markets, but that sounds like a cheap excuse for bad management. The reality is rather: nothing stays forever. All technology markets are in a consistant change and you always have to adapt your company constantly, if you want to survive or even prosper.
One good exampel is Apple. They were a computer company which was doing well again after the return of Jobs. Then came the iPod. And revenue exploded. But when the rumors of a phone appeared, a lot of people would comment: no, they won't do that as that would eat into their cash cow iPod. But we know how this ended. They released the iPhone, grew multiple times the size the company was and eventually even stopped making iPods.
Back to Kodak: they did invent the digital camera, but at a time it was way too early for being a product. But more importantly, they did bring some important digital cameras to the market in the late 90ies, the first usuable DSLR were Nikon/Canon cameras equipped with Kodak guts. They started the professional digital camera market. Without Kodak, it might have happened years later.
And at that moment, when the writing for film was clearly on the wall and they actually had managed to kick start its killer, they dropped the ball. Good management would have seen that they could "protect" film sales only on a per-quarter basis, but it was a dying business. They should have used the billions of cash they still had, to gain a solid foothold in the digital camera business, perhaps even outright bought Nikon, which was limping for a while.
Or invest strongly in all the adjacencies of digital imaging, which they did far too late.
Is this also arguing that Netflix should have stuck with being a DVD-by-mail company rather than pivoting into being a streaming company?
I think you can find examples of failed pivots and successful pivots but I'm not sure that "big companies should stick with their current cash cow and never pivot" is a best practice.
The remains of Kodak does make film today, albeit in fewer varieties than they once did, and with far less production capacity.
Any yes, people are all over it to the point that the most popular varieties can be difficult to find in stock, and prices have climbed significantly from a few years ago.
There's people now trying to recreate the Polaroid instant film technology and keep it alive. Even when those cameras were current, the pictures they made looked like crap.
Nobody was ready to make use of digital images until computing was enough of a presence in daily life, digital storage was cheap enough, and sensor resolution increased to compete with casual use of film. That wasn't going to happen in the 70s or 80s.
Yeah, why would Toyota want to go all in on EV and lose the ICU/Hybrid market lead that they worked so hard to accomplish? And ICU/Hybrid are still dominating sales worldwide. You see those who go all in EV are usually those brands with not much to lose (like Volvo).
It's not like they're not going in EV, they are just doing it at their pace (which is slow typical of Toyota).
Tesla already got the first mover advantage. Kia/Hyundai/Ford etc are fighting for second place. The gap between second and the rest won't be as large as Tesla vs second.
> Yeah, why would Toyota want to go all in on EV and lose the ICU/Hybrid market
The same reason Apple went all in on the iPhone and dropped their lucrative iPod business. You drive your car on the road that takes you to the next level, not the familiar one that's heading off a cliff.
Tesla has already lost the lead in sales. BYD (Chinese brand) took over for the lead for Plug-in EV sales this year. Tesla's has decreased over time and will likely continue to decrease. Kia and Ford aren't really in the picture (among top 5 sellers). Volkswagen, SAIC and Volvo are selling more EVs than Hyundai.
