In the 1970s and 1980s, Kodak was completely aware of digital cameras. In fact, an engineer who worked for Kodak created the first prototype of a digital camera back in 1975. With its low-quality, toaster-sized digital camera in tow, Kodak had massive disruptive potential.
To capture this opportunity, Kodak would need access to talent with advanced technological skills who could help transform the company from a traditional film company into a digitally focused business that would revolutionize this new wave in technology. First, they’d need people who understood fast-moving microprocessors and powerful computer chips, and then eventually they’d need people with expertise in telecommunications, fiber optics, wireless networks, and the internet.
Why would a film company like Kodak need access to digital specialists with deep expertise in telecommunications? Because the inextricable link between computers and communication blossomed into the unique disruptive opportunity that would eventually overtake the photography market entirely: advanced smartphone technology with high-quality built-in cameras.
Identifying High Potential Employees
However, Kodak’s senior management team did not realize that the significant technological breakthroughs — and the shifts in consumer preferences that occurred as a result — would require such a substantial and timely response. They didn’t shift their business model; they didn’t invest in high potential employees with advanced technical knowledge and specialized skill sets. Frankly, they didn’t prepare for the disruptive digital revolution at all.
The team missed the mark entirely, and instead of making a smart, strategic business decision based on accurate market research, analysis, and assessments of risks and opportunities, they continued to think of themselves as a chemical-based film and printing business. Instead of hiring digitally savvy talent, they invested time, energy, and resources into hiring chemical engineers and professional photographers who would develop more complex traditional film processes and chemically treated photo paper.
What’s the Job-to-Be-Done?
It’s no secret that Kodak filed for bankruptcy protection in 2012. Despite how many deeply passionate professional photographers exist in the world, it should come as a surprise to anyone that the majority of people do not care about the quality of the camera at all. Consequently, the job-to-be-done for Kodak’s customer at that time was not to help them take or print better quality pictures. In fact, it was something far more simple: take pictures as quickly and conveniently as possible and then (eventually) share them with their friends and family online.
“Ever-evolving market demands have placed a premium on speed and innovation, mandating that companies operate with agility.”
At a critical time when Kodak needed to pivot most, senior management had to face a harsh reality: they had hired all the wrong people with all the wrong skills. They didn’t have access to high-quality software engineers, computer scientists, and programmers who could help them develop the product that their customers actually wanted. As a result, Kodak didn’t stand a chance at capturing this disruptive opportunity.
Audit Core Competencies
Back in the ‘60s and early ‘70s, creating a steady, never-changing business model worked. Business leaders didn’t have the kind of data that’s available at our fingertips now, and consequently, they could ignore upcoming market trends and potentially still find success. Perhaps back then they could take an inventory of their internal skills and assess their core competencies every 10 years or so. But such is not the case anymore.
Ever-evolving market demands have placed a premium on speed and innovation, mandating that companies operate with agility. In today’s disruptive business landscape, executives must invest human capital where it’s needed most. Access to the right skills at the right time is crucial to getting mission critical work done fast enough to stay competitive.
Why Cross-Functional Collaboration Is Imperative to Business Agility
The ability to pivot in an instant is imperative for innovation and future growth. However, to operate with this kind of agility, business leaders must break down traditional functional silos and create highly collaborative cross-functional teams made up of both internal and external workers. This is why business leaders must regularly reevaluate their core competencies and determine the skills and expertise that are core to their business. Then they can decide which full-time, in-house roles they absolutely need and who should fill them, and which skills and expertise they can leverage on a project basis from sources outside their organizational walls.
“Business leaders must regularly reevaluate their core competencies and determine the skills and expertise that are core to their business.”
Determine Internal Skills Versus External Skills
Start by asking three key questions:
- Do you know which skills are core to your team and where there are gaps in expertise?
- Are important initiatives — especially speculative, innovation-centric ones — at risk because of a lack of access to the right talent?
- When internal talent is insufficient from a skill gaps, expertise, or bandwidth perspective, do you turn to external resources?
Classify capabilities into three categories:
Core Skills and Expertise
Core skills and expertise define an organization. These functions and corresponding work are the most essential to a firm. There’s no way to access these capabilities from external resources without begging the question of what the organization’s purpose is.
Critical but Non-Core Skills and Expertise
Critical but non-core skills and expertise are very important to a company. If not accessed and utilized well, these functions and corresponding work may place an organization at a competitive disadvantage and result in great risk.
Non-Core, Non-Critical Skills and Expertise
Non-core, non-critical skills and expertise are day-to-day operations that, even if optimally utilized, provide no competitive advantage. Although still important, these functions are unlikely to harm an organization in the short term.
The functions that fall into each category will vary from business to business, but identifying where skills and expertise fall along this spectrum will enable all companies to streamline and variabilize one of their largest traditional fixed expenses: general and administrative costs.
Doing this in a data-driven way requires business leaders to understand the skills and expertise needed to execute against the work that needs to get done, realized in greater detail through breaking down larger, more monolithic units of work into smaller, time-constrained, mission-based projects. This ensures alignment among strategic objectives and initiatives and individual work streams and projects.
Disruptive forces are impacting nearly every industry. Business leaders have resources available to help them rapidly adapt, however, the failure arises when they don’t respond with new business models that embrace the changes, e.g., Kodak’s staggering missed opportunity in digital photography. Don’t let your company miss a unique disruptive opportunity by ignoring the market’s urgent demands.