Question

In 1975, still the early dawn of the computer era, Kodak invented the first digital camera. At that time, Kodak had 85% of the U.S. market share for cameras and 90% market share for film. By the late 1980s, 1-hour film processing shops were delighting customers who hated waiting days to get their photo prints, and Consumer Reports ranked stores using Kodak chemicals and technology as having the best picture quality. Amid this market domination built on a century of chemical-based photography innovations, Kodak failed to successfully pivot from chemicals to computers even after investing over USD 2 billion in digital technology research and development. Kodak’s investments were focused on how digital photography could strengthen its traditional photography business, not replace it. Sony, Hewlett-Packard, and other companies embracing digital technology entered the photography industry with a new proposition for consumers while Kodak simply continued to protect its vast investments in chemical technology.

Required:
A firm takes on an entrepreneurial orientation (EO) when it adopts the processes, practices, and decision-making styles that are associated with an entrepreneur. Use the case study to apply the three dimensions of Entrepreneurial Orientation, namely Innovativeness, Proactiveness, Risk-taking and the Four Types of Innovation model.

Answer 1

Kodak's failure to pivot from chemical to digital photography, despite inventing the first digital camera and heavily investing in digital R&D, illustrates a lack of entrepreneurial orientation, characterized by insufficient innovativeness, proactiveness, and risk-taking in comparison to its competitors.

Step-by-step explanation:

Entrepreneurial Orientation (EO) encompasses Innovativeness, Proactiveness, and Risk-taking, as well as embracing the Four Types of Innovation model, which includes Product Innovation, Process Innovation, Position Innovation, and Paradigm Innovation. Kodak's initial step towards digital photography with a massive investment of over USD 2 billion showcased a commitment to innovativeness, but the company's approach reflected an aim to augment rather than transform their existing chemical-based photography business. This indicates a lack of proactiveness in recognizing and adapting to the market shift towards digital technology. Furthermore, Kodak's reluctance to fully embrace the digital revolution, despite creating the first digital camera, demonstrated a reluctance in risk-taking and a hesitation in product and paradigm innovation, as they prioritized the protection of their traditional film business over the potential of the new digital market.

On the other hand, other companies such as Sony and Hewlett-Packard, which had no previous stake in chemical photography, eagerly entered the photography market with fresh product and process innovations. They exhibited a more aggressive entrepreneurial orientation by proactively identifying the potential of digital photography and risking their resources to create a new consumer proposition. Their actions disrupted the market and ultimately led to Kodak's diminished role in the photography industry.

While Kodak did make considerable investments in digital technology, their lack of a strategic pivot to fully embrace digital photography until it was too late illustrates a shortfall in entrepreneurial orientation, which precipitated their decline in market share as competitors took the lead with more innovative and proactive approaches to technology and consumer needs.

Answer 2

The case study of Kodak provides an opportunity to analyze the Entrepreneurial Orientation (EO) dimensions and the Four Types of Innovation model. Let's apply these frameworks to the Kodak case:

1. Entrepreneurial Orientation (EO) Dimensions:
a. Innovativeness: Innovativeness refers to the degree to which a firm is willing to introduce new ideas, products, or processes. In the case of Kodak, they demonstrated innovativeness when they invented the first digital camera in 1975. This invention showcased their ability to explore new technologies and ideas. However, as the case highlights, their subsequent focus was primarily on leveraging digital technology to enhance their traditional photography business rather than embracing it as a disruptive force.

b. Proactiveness: Proactiveness relates to a firm's tendency to seize opportunities and take action before competitors. Kodak's early invention of the digital camera demonstrated some proactiveness, as they recognized the potential of digital technology in photography. However, their subsequent inability to effectively capitalize on this innovation and adapt to changing market dynamics suggests a lack of proactive decision-making and missed opportunities.

c. Risk-taking: Risk-taking refers to a firm's willingness to pursue uncertain ventures and tolerate potential failures. Kodak's early investment of over USD 2 billion in digital technology research and development showcases a willingness to take risks. However, their risk-taking was largely confined to exploring how digital photography could enhance their traditional business model, rather than fully embracing the disruptive potential of digital technology.

2. Four Types of Innovation model:
The Four Types of Innovation model categorizes innovation into four types: product innovation, process innovation, position innovation, and paradigm innovation. Let's examine how Kodak approached these types of innovation:

a. Product Innovation: Kodak's invention of the first digital camera can be considered a product innovation. However, their subsequent focus on protecting their chemical-based photography business rather than fully embracing digital technology limited their ability to fully capitalize on this innovation.

b. Process Innovation: Process innovation refers to changes in how products are produced or delivered. Kodak's investments in digital technology research and development could be seen as process innovation efforts to enhance their existing photography business. However, they failed to fully leverage digital technology to transform their processes and business models.

c. Position Innovation: Position innovation involves repositioning a firm's products or services in the market. Kodak's focus on protecting their existing market dominance in film and chemicals rather than repositioning themselves in the digital photography market limited their ability to pursue position innovation effectively.

d. Paradigm Innovation: Paradigm innovation involves challenging and changing the dominant industry assumptions and practices. Kodak's failure to fully embrace the potential of digital technology and their reluctance to disrupt their existing business model prevented them from pursuing paradigm innovation.

In summary, while Kodak demonstrated some degree of innovativeness, proactiveness, and risk-taking through their early invention of the digital camera, their subsequent strategic decisions and focus on protecting their traditional photography business hindered their ability to fully embrace digital technology. They missed opportunities to leverage disruptive innovation and failed to adapt to changing market dynamics, ultimately leading to their downfall in the digital photography era.