This is what happens when change catches up with you.
"The world is changing very fast. Big will not beat small any more. It will be the fast beating the slow." -- Rupert Murdoch
One of the few things that is certain in this world is change. And in a world where technology is advancing so rapidly, change is happening ever more quickly. Companies need to adapt to this change as fast as they can.
A leader in innovation
Let's take the example of Eastman Kodak (NYSE: EK.US). The firm has a long and distinguished history. George Eastman created the business in 1880, and from the beginning it was a leader in innovation.
Pretty soon, Kodak was the major film and camera producer in the world. It entered the Dow Jones Industrial Average index in 1930, where it stayed all the way until 2004.
As late as 1976, Kodak commanded 90% of film sales and 85% of camera sales in the US. Make no mistake, this was a company that dominated its markets and was feared by its competitors.
A technological tsunami
But today we find that the firm's share price has crashed. From its 1997 peak of $90, the current share price stands at just 82 cents. Tens of thousands of jobs have been lost, and Kodak is a shadow of its former self.
What happened? Well, the company was hit by a technological tsunami as consumers moved in huge numbers from film-based cameras to digital cameras.
This is a prime example of how quickly technological change can happen, and the devastation it can wreak. In a matter of a few years, a technology that had lasted a century was rendered obsolete. Could Kodak have done anything about this? Well, yes actually.
Guess who invented the digital camera?
First of all, believe it or not, it was Kodak who invented the digital camera, way back in 1975. In 1986 Kodak scientists invented the first megapixel sensor, making digital cameras a viable reality.
Yet Kodak's executives were incredibly complacent. This could have been the business's opportunity to dominate the new age of digital photography, just as it had dominated the age of film.
But, perhaps so used to Kodak ruling the roost in photography, the company's management lacked imagination and did not see what was just around the corner. For them, a world without traditional film was unfathomable. So, instead of pumping investment into digital technology, they sat on their hands and let other companies take the initiative.
Years passed by with Kodak taking little action. Firms like Fuji and Canon successfully launched their own digital cameras and invested heavily in research to keep improving their products.
Too little, too late
In 2001, film sales started to collapse. At around this time Kodak made its move in the digital market, with its EasyShare family of digital cameras. Once the Kodak machine got moving, the company made substantial headway in the digital market.
But the business failed to anticipate how fast the digital camera market was becoming commoditised. As more and more companies entered the market, profit margins were squeezed. And Kodak's high cost base meant it just could not compete with low-cost Far Eastern manufacturers. Market share started to drop.
What's more, a myriad of other devices such as mobile phones and tablets could also now take pictures. Meanwhile, film sales were falling like a stone.
So the company hastily changed its strategy. Instead of making everything in-house, it slashed jobs and outsourced its manufacturing. It also invested in the high-margin printer ink business. But it was all too late. In 2012 the firm is still in the middle of this turnaround, but it has been burning through its cash reserves at a prodigious rate. Bankruptcy, I'm afraid, is just around the corner.
So what lesson can we learn from the decline and fall of Kodak? Well, change -- especially technological change -- can happen at lightning speed. No company can rest easy. You need to anticipate change and, when change comes, you should embrace it. It could make all the difference between success and failure.
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