In 2012 Eastman Kodak filed for bankruptcy protection. Tragically, an ignominious fall for the once great iconic American company as well-known as McDonalds and just as beloved. Remember the mantra “Kodak moment?”
“Eastman Kodak is often mischaracterized as a company whose managers didn’t recognize soon enough that digital technology would decimate its traditional business. However, what really happened at Kodak is much more complicated — and instructive,” says the MIT Sloan Management Review.
The reality is Kodak did a lot to change course and reshape its outdated business strategy. Ultimately, according to the Harvard Business Review, “Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online.” But what Kodak failed to realize was, “Online photo sharing was the new business, not just a way to expand the printing business.”
Are You Managing Your Company With an Outdated Business Strategy?
For answers to that question and others, we spoke to a CEO. Mike Litwin was the CEO and general manager for Target Commercial Interiors, a one-time subsidiary of Target Corp. In the past few years, Mike led the 175-person firm through a major restructuring and rebranding (now, called Atmosphere Commercial Interiors) after Target chose to divest the $200 million business. He spent 2015 staffing and structuring the company for continued success while engaging with a trio of private equity partners to purchase Atmosphere from Target.
How to Categorize Your Strategy Options
Mike knows a thing or two about leading a company through its share of constantly shifting business strategies, notwithstanding preparing to sell Atmosphere. If you’re in the CEO seat, he says your top concerns are growing the company and thriving in an ever-changing landscape of new competitors, technology, economic conditions, and customer whims. He encourages leaders to put their business strategy ideas and thoughts into three distinctive “folders”:
- The first folder should include, “The parts of the company that need to be cut or reduced if they're not working.”
- His second folder contains what capabilities must the company add or expand to grow the business.
- And finally, the third folder should include where you need to improve existing capabilities within the business.
Like Kodak, threats to your business strategy could come from anywhere. Good CEOs must quickly size up the threat, decide if it could negatively affect the company, and if the answer is yes, alter your strategy to blunt its impact.
When to Update Your Strategy
For instance, Mike had to change course when the commercial interiors contractor went through the real estate recession in 2008-2010. He chose to divest the company of a division that installed commercial flooring after contract changes increased liability and risk to the point where the advantages of owning it no longer added anything to the income statement. In other words, Mike had to update his business strategy.
The CEO, turned EOS® (Entrepreneurial Operating System) Implementer, recommends senior leaders review the business strategy monthly. In today’s fast changing marketplace, a lot can happen in 30 days.
A healthy culture also helps, where senior leaders aren’t afraid to speak up and express honest opinions no matter how unpopular they may turn out to be. When Steve Sasson, the Kodak engineer who invented the first digital camera, showed it to senior leadership, he was told, “That’s cute—but don’t tell anyone about it.”
Finally, Mike notes that “A healthy culture is a product of your core values.”
Indeed, if you get your company’s core values right, you just might have a safety net in place to help you avoid falling victim to an outdated business strategy.