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The Kodak Brand Lesson: Your Heritage is Not Your Future

By Alan Brew

Kodak’s recent filing for Chapter 11 bankruptcy protection is a historic comedown for a brand that once defined American industrial power and innovation.

The photography empire founded by George Eastman started at the end of the 19th century, dominated the 20th and did not last long into the 21st.

The company felt a tremendous impact from the shift to digital photography — a technology Kodak invented — and away from film, where Kodak once earned 70% margins and enjoyed a 90% market share in America.

Yet its problems were not unlike those of other big American technology near-monopolists had to deal with in the 20th century. National Cash Register (NCR) was once one of the world’s top computer makers, but has been reduced to making ATM machines. Westinghouse, once an industrial powerful equal to GE, has morphed into CBS, the broadcasting company it acquired and now licenses the once noble Westinghouse brand name to a ragbag of companies. Xerox, the pioneer of copying machines, is struggling in the competitive market for imaging products and services. Even AT&T, the telecom giant, was not able to replicate the dominance it once enjoyed in handling long-distance calls.

The moral of Kodak’s fate is that technology trends are often clearly visible, but changing a successful company is exceedingly hard.

Take Nokia for example. In 2007, the Finnish mobile phone manufacturer was at its power peak. It made 4/10 mobile phones sold worldwide and demand was exploding. BusinessWeek lauded the Nokia brand as the 5th ‘best’ in the world, one place behind GE. In June of that same year, Apple released the iPhone. The game suddenly changed. Today, the industry giant is struggling to reinvent itself in a market that shifted abruptly to smart phones. So too is RIM, the maker of the Blackberry, with their two joint-CEOs ousted by an anxious board concerned about Blackberry’s declining relevance and the poor performance of its tablet.

For Kodak, the shift to digital photography was equally massive and sudden and it failed to make the leap. Perhaps a new management team will be able to revitalize the brand identity. Its brand name is certainly recognized the world over, but for what?

Yet Kodak’s fate ought to be a lesson not just for today’s technology powerhouses such as Google, Microsoft and Facebook.

Digitization of content is laying waste to traditional industries that either can’t see the writing on the wall or choose to ignore it. Amazon and Apple between them have destroyed Borders, Blockbuster, Tower Records and (almost) Sears.

What gets you there won’t keep you there.

Iconic brands tend to lose their relevance long before the cash they generate begins to dry up. Once they lose their luster, they are nearly impossible to change.

The companies that survive are the ones who have no problem moving beyond their cash cow brands.IBM has successfully rebranded itself—and more than once. In recent years the brand deftly managed the shift from selling hardware to offering software and services.

Apple has done this over and over again, disrupting first the computer industry, then music, and now the mobile phone industry. Killing cash cow product brands has been the hallmark of every Apple product innovation since the Macintosh.

The marketplace moves too rapidly to rely on the momentum of scale, history and heritage. When brand heritage represents “old and tired”, it’s nearly impossible to change that perception in people’s minds.

Iconic brands make the leap to new relevance only when they focus on the two-stage strategy — essentially leveraging the cash-generating strength of the iconic brand to fuel the innovation of a new brand, and then “killing the cash cow” as the new brand takes full advantage of the momentum of the first.

Enlightened management with the intestinal fortitude to stay the course can slingshot their iconic brands and pave the way for newer and more relevant expressions of the original value that people continue to care about.

No brand, however strong, can count on continued success: market dominance is only a snapshot in time.