Kodak change—to obsolescence Based on this new business

Kodak developed the first digital cameras and invested heavily in
digital for many years. The real difficulty was that digital photography was
consigning Kodak’s business model—which was hard to change—to obsolescence

Based
on this new business model, Eastman’s invention changed the world of
photography. Later, Kodak developed serious capabilities in the fields of
chemistry, optics, and services. Then digital photography made its appearance.
Many mistakenly believe that Kodak dragged its feet in the digital age and
failed to develop digital technology, but this is far from the truth. In fact,
Kodak developed the first digital cameras and invested heavily in digital for
many years. The real difficulty was that digital photography was consigning
Kodak’s business model—which was hard to change—to obsolescence. In the digital
world, chemistry is irrelevant. There is no film, no developing. These were the
mainstays of Kodak’s business model. In digital photography, revenue is
generated not by the film, but by the device itself—because film and developing
are unnecessary. So all those service centres, all the chemical technology …
dropped off the radar. And the change went even further. Today, a camera is a
relatively rare purchase. Mass photography has shifted to mobile phones and
tablets—which also let you share your pictures with other people. The change
Kodak needed to make was not a technological one, but a change of business
model. In this, Kodak failed. The winners in the world of digital photography
are those that help people share their pictures (social networks and mobility)
and sell and distribute images. These are business models where Kodak’s capabilities
were of little use.

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While Kodak, at one time, represented the future, the future was
wrested from it by technological change. But while some entrepreneurs let the
future slip from their grasp, others see it coming. For instance, Zara

The
Kodak example shows what a business model is, and why it is important; it also
reveals the impact of technology on how we use things. Photography used to be a
handmaiden of remembrance. Images became available only sometime after the
event (a trip abroad, a celebration); they were shared among narrowly selected
circles; they came at a considerable cost. Now it is instantaneous. It is
easily distributed anywhere in the world, to anyone, almost at the same time as
the event being recorded. Pictures can be posted to open social networks or
circulated across large groups of viewers. Quite a different world.

While
Kodak, at one time, represented the future, the future was wrested from it by
technological change. But while some entrepreneurs let the future slip from
their grasp, others see it coming. For instance, Zara (the Inditex group)
emerged in the 1970s, when the textile industry in Spain was in decline, having
been hit hard by manufacturing in low-cost countries. Amancio Ortega formed a
new vision. His insight was that the answer was not to produce large volumes in
countries where labour was cheap. It was a matter of quickly making available
what women wanted—even if this meant higher production costs, because the net
price would be higher.4 This idea enabled him to build an empire of labels and
establishments all over the world.

While
the end product is still just a garment, the business model is radically
different. The key is to be sensitive to which specific garment is desired, and
then to design, manufacture and distribute it so that as quickly as possible it
can be in the hands of a buyer whose choice is already known to us. Today,
given the group’s sales volume, international expansion, and vast number of
points of sale, a lot of skill is needed to do what Zara does: to deliver what
a woman wants two to four weeks after her buying preference is detected. Speed
allows for minimizing advertising or dispensing with it entirely; this means
the net price is higher; and increased margins more than make up for higher
manufacturing costs. Zara’s business model is now a case study in all the
world’s business schools: the “fast fashion” model.