FlatWorld Notes & Highlights

Kodak once had 145,000 employees, a market share near 90 percent,[1] and profit margins so good an executive once bragged that any products more lucrative than film were likely illegal.[2] No firm was closer to photographers. No brand was more synonymous with photographs. Emotionally moving images were known as “Kodak moments.” And yet a firm with so much going for it was crushed by the shift that occurred when photography went from being based on chemistry to being based on bits. Today Kodak is bankrupt, it’s selling off assets to stay alive, and its workforce is about one-thirty-fourth what it used to be.[3]

The fall of Kodak isn’t unique. Many once-large firms fail to make the transition as new technologies emerge to redefine markets. And while these patterns are seen in everything from earthmoving equipment to mini mills, the tech industry is perhaps the most fertile ground for disruptive innovation. The market-creating price elasticity of fast/cheap technologies acts as a catalyst for the fall of giants.

These attributes are found in many innovations that have brought about the shift from analog to digital. The first digital cameras were terrible: Photo quality was laughably bad (the first were only black and white), they could only store a few images and did so very slowly, they were bulky, and they had poor battery life. It’s not like most customers were lined up saying, “Hey, give me more of that!” Much the same could be said about the poor performance of early digital music, digital video, mobile phones, tablet computing, and Internet telephony (Voice over IP, or VoIP), just to name a few examples. But today all of these digital products are having a market-disrupting impact. Digital cameras have all but wiped out film use, the record store is pretty much dead, mobile phones for many are their only phone, in many living in emerging markets the smartphone is one’s only personal computer, Internet phone service is often indistinguishable from conventional calls, and while Internet voice calls are now common in many services, VoIP enabled Skype to be acquired for several billion dollars and at one time be considered the world’s largest long-distance phone company.[5] All of these changes were enabled by fast/cheap technologies, largely by the trends we see in the chart from the prior chapter labeled Figure 6.2.

The rise of social media is also part of this blown-apart marketing landscape. Now all customers can leverage an enduring and permanent voice, capable of broadcasting word-of-mouth influence in ways that can benefit and harm a firm. Savvy firms are using social media to generate sales, improve their reputations, better serve customers, and innovate. Social media powers the $32 billion+ influencer economy, while AI has ushered in the era of virtual influencers who have garnered millions of online followers and earned millions of promotional dollars along the way. Those who don’t understand this landscape risk being embarrassed, blindsided, and out of touch with their customers.

Search engine marketing (SEM), search engine optimization (SEO), customer relationship management (CRM), personalization systems, and a sensitivity to managing the delicate balance between gathering and leveraging data and respecting consumer privacy are all central components of the new marketing toolkit. And there’s no looking back—tech’s role in marketing will only grow in prominence. Analyst firm Gartner predicts that chief marketing officers are on a path to spend more on technology than any other function within the firm.