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Three Insights from Kodak that Could Save Your Business

Vintage R&D principles from Kodak’s C.E. Kenneth Mees

Conversations about corporate innovation often rely on a handful of iconic examples, such as Apple, Google, and Amazon. When it comes to companies that fail to innovate, one company in particular is arguably the most cited: Kodak. But we can learn as much about how to innovate from Kodak as we can from the others.

Sure, article upon article upon case studies abound on what went wrong at Kodak. A giant at its peak – the company employed more than 145,000 people in 1988- Kodak’s technologies made photography and film something that regular people could afford. Its products were the ‘new and now’ items: check out how Kodak sold its home movie camera in the 1950s, or this vintage commercial for its flash cubes, for instance.

But now we know how the story goes: newer, cheaper technology disrupted the giant’s core film business and finally put Kodak into bankruptcy in 2012. What makes Kodak’s downfall such a poignant case study is that it had the tools to survive disruption. The digital camera technologies that eventually destroyed its core film business were first invented in Kodak’s labs. And yet, century-old advice on R&D and innovation from Kodak’s first head of research seems like it could have been written for last month’s issue of Fast Company.

Kodak’s approach to R&D was first developed by Charles Edward Kenneth Mees. Born in 1882 in England, Mees was ‘acqui-hired’ by George Eastman in 1912, when the company purchased a British startup called Wratten and Wainwright, Ltd, where Mees was a partner and led new product development. Eastman was primarily interested in Mees and his work. At the ripe age of 30 Mees, moved to Rochester, New York, and set up the first Kodak research laboratory.

Just four years later, Mees published an article in Science entitled “On the Organization of Industrial Scientific Research,” a treatise on how companies ought to pursue R&D, that would later become a book. Recognized as a leader on the subject, by then, Mees was a star. If they had been around at the time, he’d have been profiled by Alexia Tsotsis for TechCrunch, kept Om Malik’s number on speed dial, and been invited to speak at The Code Conference. Maybe he’d have more Twitter followers than @ev. Things have certainly changed since 1916, but Mees had a special clarity on how to drive innovation. Here are three principles from his treatise.

One: it’s all about people

These days we read article after article about ‘human capital’ and we think our ‘knowledge economy’ is a new thing. But Mees argued in 1916 that for established companies to compete against nimbler, disruptive startups, they must focus on hiring and retaining people who are capable of keeping the company on the bleeding edge. “Manufacturing concerns and especially the powerful, well-organized companies who are the leaders of industry in this country can, of course, retain their leadership for a number of years against more progressive but smaller and less completely organized competitors,” Mees wrote, “but eventually they can ensure their position only by having in their employ men who are competent to keep in touch with and themselves advance the subject.”

Forget any other type of competitive advantage: retaining minds capable of true innovation is priority number one. Mees believed that brains are ultimately “the final insurance against eventual loss of the control of its industry by any concern.” It’s not only important to retain the best talent to fend off disruption from below – it’s the only way to beat established competitors. “In fact, at the present time it seems clear that the future of any industry depends upon its being able to command a sufficient supply of knowledge directed towards the improvement of the product and the development of the methods of that industry, and that any failure in this respect may involve eventual failure.”

Two: only companies that retain the ability to invent will survive in the long run

Many companies worry about where to put their efforts when it comes to innovation. How much time should be spent on improvements in processes and/or on ‘innovations’ in supply chain or manufacturing that create value, versus effort developing new products or even new markets? And hey, aren’t all these things ‘innovation’? It’s kind of a squishy word, right?

Mees was clear that a well run operation will of course focus on areas of immediate commercial concern, including sustaining innovations that create immediate value. But, only those companies that can invent will show marked success over the long term. If a company cannot support R&D activities that look beyond the immediate future for returns, the company is not likely to enjoy longevity. The units put towards these activities will be “engaged largely on work which for many years will be unremunerated and which, for a considerable time after its foundation, will obtain no results at all which can be applied by the manufacturer.” There must be room for pure exploration if there is to be opportunity for truly disruptive innovation.

Three: get your ideas out of the office

Even before the days of endless technology conferences, Starwood points and airport lounges, Mees was a believer in the power of getting out of the office. He wanted his researchers to get themselves out into the community of practice, to expose their ideas to external scrutiny. He felt publicizing results and participating in conferences and meetings with others in industry helped to stimulate people by creating deadlines and more pressure to ‘finish’ their work: “when a piece of work is written up for publication, the necessity for finishing loose ends becomes manifest and that work which is published is therefore more likely to be properly completed.”

These days there are more ways than ever to expose your new idea or product to the world. In many ways, we live in a world that is perpetually in ‘beta.’ A recent paper by Alfred Spector, Peter Norvig and Slav Petrov at Google proposed a new box of tools, suggesting that “open source releases, standards specifications, data releases, and novel commercial systems that set new standards upon which others then build, are increasingly important.” Broadly speaking, sometimes it’s best to set a deadline and show your work. Who was it that said sometimes you just have to ship it?

Who knows whether Mees – the man who established and directed the laboratory responsible for the invention of Kodachrome film- could have helped Kodak manage the transition to digital technologies any better than it did. But the 34-year-old writing for Science knew a thing or two about creating an idea factory. For years after his retirement in 1956 and well beyond the time of his death in 1960, Kodak enjoyed a dramatic upward trajectory. The company broke $1 billion in sales in 1962. Less than twenty years later, sales crossed $10 billion.

It’s hard to argue that Kodak failed because of a lack of ideas – even after its bankruptcy, its extensive patent portfolio continues to generate value for the company. Rather, Kodak failed because it did not know how to disengage from a business it had relied on for decades. You can’t blame the R&D team for that.

So, next time you’re looking for ideas on how to organize for innovation, consider these lessons from Kodak. Just don’t tell that to your boss.

This post is writen by Justin Hendrix is Executive Director of NYC Media Lab and is reprinted by permission

About the author: NYC Media Lab

NYC Media Lab connects companies seeking to advance new media technologies with university labs and talent in New York City. Launched by the New York City Economic Development Corporation, NYU-Poly, and Columbia University, NYC Media Lab is a public-private partnership encompassing all the universities of NYC. NYC Media Lab corporate members include AT&T, HBO, Hearst, Time Warner Cable, and Verizon. The Lab tackles the big questions facing the media industry today, with the goal of generating research and development, knowledge transfer, and talent development.

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