Innovation Analysis: Innovator's Dilemma, Kodak, and Nokia's Future

This report examines the innovator's dilemma, a concept explaining how successful companies can fail in the face of disruptive innovation. It explores the difference between sustaining and disruptive innovation, explaining why companies struggle to adopt new technologies. The report uses Kodak as a case study, analyzing its failure to adapt to digital photography. It also discusses why big firms fail, highlighting the influence of executives and shareholders, and the tendency to prioritize short-term profits over long-term innovation. The report then presents an argument that Nokia might fail in the next 10 years if it doesn't embrace disruptive innovation and adapt to market demands, particularly regarding its operating system and competitive landscape. The analysis includes references to relevant academic literature on innovation and business strategy.

Running head: INNOVATION
Innovation
Name of the Student:
Name of the University:
Author’s Note:

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Q1. Explain what is meant by Innovator’s dilemma?
Innovator’s dilemma is one of the significant aspects that determine the success of the
companies in the end. The concept explains the reason for the successful companies to dominate
their industries fall in the face of disruptive innovation. Innovator’s dilemma can be explained by
understanding the difference and importance between sustaining and disruptive innovation
thereby, explaining why the majority of the companies both large companies and start-ups to
adopt disruptive technologies. As commented by Konig, Kammerlander and Enders (2013),
companies implement the strategy of sustaining innovation when it aims towards improving the
performance of the products based on feedback received from their loyal and target customers.
The companies consider their customer’s feedback in order to reduce the defects thereby, making
the product or the service faster and more powerful. However, on the contrary, the concept of
disruptive product highlights that the company has some defects with the products and services.
Therefore, a well-established and sophisticated company is unable to emphasize in such a
technology. The concept of disruptive innovation is the key to provide better services to the
customers in future.
As mentioned by Christensen and Raynor (2013), sustaining innovation is defined as the
approach that aims towards satisfying the current needs of the customers in the market. However,
on the contrary, disruptive innovation aims towards meeting the customer’s demand in future.
These two types of innovation are the core of innovator’s dilemma. In the short-term, the
sustaining innovation path seems to be more meaningful but can lead to the failure of the
company ultimately. However, on the contrary, the approach of disruptive innovation highlights
dedicating the valuable resources to a particular market for the benefit of the company in the
future. Disruptive innovation might be an unproven opportunity for the niche market but is often

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born from the need of the customers in the niche market that is neglected by the current market
offerings. The example of Kodak is an example of innovator’s dilemma. Kodak one of greatest
companies that excelled in taking photographs thereby, capturing moments and making
memories. Nevertheless, Kodak failed to consider the future needs of the customers in respect of
photographs. Therefore, the shift in the market demand from being based on emotionally moving
images to chemistry crushed the entire company.
Q2. Why do big firms fail? Can the Innovator’s dilemma explain the big firms’ failure?
The big firms fail to consider disruptive innovation as a threat because the companies
generally consider the viewpoints and opinions of the executives and the shareholders that are
associated with the firm. Thereby, the big companies listen to their target customers and
emphasize on the bottom-line. As a result, the customers do not prefer initially poor performing
new technologies launched by the big firms (Akiike and Iwao 2015). The disruptive technologies
launched by the big firms often have the worse margin compared to the initially dominant
incumbent offerings. The big firms fail to dedicate and use their resources, as the niche markets
do not look attractive and lucrative. As a result, the big firms fail to nurture the needs of the new
customer base by developing the technology to its complete potential (Rotheram-Borus,
Swendeman and Chorpita 2012). For example, the engineers of the big firms are appointed for
working on the cash-cow offerings but not questionable new staffs. Therefore, the big firms tend
to develop a blind nature that is created due to an otherwise rational focus based on the financial
performance and the demand of the customers. Therefore, the start-up companies already have
few of the innovative technologies launched in the market before the big firms demonstrate the
technologies for the new market and the customer base. As a result, the start-up companies have
already amazed and attracted the customers with the launch of the new technology. This

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eventually benefits in growing the customer base and increasing the sales. Therefore, the big
firms tend to catch up with the start-up firms, as there are chances that the start-up firms might
overpower the big firms thereby, resulting in their failure.
The big firms might have a hard time launching a successful innovation strategy because of the
innovator's dilemma. The dilemma arises for the big firms as they have a dominant presence in
the market due to which they need to protect their market position, business, and customers
(Sandstrom, Berglund and Magnusson 2014). Therefore, at certain instances, the big firms might
face a competitor from a start-up organization, as they might come up with an innovative and
better alternative for the customers by considering the future needs of the customers. Therefore,
the big firms encounter dilemma of whether to sustain the market in the field they excel but lose
great opportunities by emphasizing on innovations by considering the future demands of the
customers that would be fruitful in the end.
Q3. Explain why in your opinion; did Kodak fail to mention what did they do right and
what did they do wrong?
Kodak was one of its kind inventors in the photography sector, as the company launched
the first Box Brownie camera. The main feature of the camera included that the customers just
needed to click the bottom and the moment will be captured (Kotter 2012). The camera invented
by Kodak gained huge popularity among the standard moviemakers and the generations of still
photographers. Between 1963-1970, Kodak sold almost 50 million of Instamatic camera that had
little cartridges of film that helped in storing the image. Due to this huge popularity, Kodak once
had 145,000 employees along with 90% market share and well-marked profit margins (Gershon
2013). The profit margins of Kodak were so good that the shareholders and the company

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executives bragged that any other product that is as attractive as Kodak’s must be illegal. Kodak
had no market competition due to their highly innovative approach provided to the customers.
Emotionally moving images were known as “Kodak moments”. Therefore, in the 10 years time
in the business, Kodak was successful in creating a market base by providing the innovative
opportunity for capturing moments.
However, in the 10 years of the business, Kodak hardly prepared for the later disruption.
The company failed to visualize the need for the customers in the coming years. The company
repeated the same mistake the founder of Kodak, George Eastman avoided twice before he gave
up a profitable dry plate business before moving to films. Therefore, when Kodak invested in
colour films, it dominated the black and white films. In the 10 years time, the market shifted to
chemistry-based photography from photography based on bits (Weeks 2015). Therefore, the
major reason for failure for Kodak is that the company failed to consider, predict and analyse the
demands of the customers in the future. The inability of the management of Kodak to visualize
digital photography as a disruptive technology resulted in the failure of the company (Decker et
al. 2012).
According to the leaders of Kodak, using digital photography as the disruptive
technology meant killing the film. The company refused to make new ways by smashing the
golden egg of the company. Therefore, the launch of digital photography understood the needs
and expectations of the customers due to which Kodak lost the business and the customers.
Q4. Select a company and present an argument that it will fail in the next 10 years if it
continues to do things in the same way.

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Nokia was one of the giants of the mobile manufacturing industry that have encountered
huge competition in the past years from competitors such as Samsung and iPhone. Nokia might
fail in the next 10 years if they fail to consider the disruptive innovative technology in terms of
the software and demand of the customers. Nokia uses windows software as the operating
software. According to the present market demand, the customers prefer using Android software,
as they are easy to use and operate. Therefore, if Nokia fails to undertake strategies to change the
operating system of the manufactured phones, there are high possibilities that the company might
fail in the coming 10 years (Christensen, Raynor and McDonald 2015). Additionally, Nokia
tends to underestimate the competitors in the market. The laid-back attitude of the company
towards the competitors in the market and the overconfidence that they would catch-up with the
ever-changing technology will result in the failure of the company. Failure of Nokia to consider
the high-tech era and the continuous demand of innovation of the customers might result in
failure of the company in the next 10 years. Additionally, Nokia solely operated with the
Symbian software that was extremely difficult for the customers to operate the phones
(Guttentag 2015). Considering the demand of the customers, Nokia let go of the Symbian
operating system and opted for Windows as the operating system. However, by the time, Nokia
launched phones with Windows operating system; Android has captured huge market
successfully due to the user-friendliness. Therefore, if Nokia delays to incorporate Android as
their phone operating software, the company might lose its complete business in the next 10
years. As Kodak, if Nokia also fails to consider the developing business models that will help in
meeting the future needs of the customers. Moreover, the past records of Nokia highlight that the
company has launched disappointing phones with unintuitive, buggy and clunky operating
systems. On the other hand, competitors such as Samsung, HTC, and Sony considered the future

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demands of the customers and launched phones with the Andriod operating system, the facility
of dual sim and longer battery life (Horn and Staker 2014). Therefore, if Nokia is unable to
maintain the adequacy, pace, and demands of the customers, the company might be at risk in the
coming 10 years.

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References
Akiike, A. and Iwao, S., 2015. Criticisms on “the innovator's dilemma” being in a dilemma.
Annals of Business Administrative Science, 14(5), pp.231-246.
Christensen, C. and Raynor, M., 2013. The innovator's solution: Creating and sustaining
successful growth. Harvard Business Review Press.
Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. Disruptive innovation. Harvard
Business Review, 93(12), pp.44-53.
Decker, P., Durand, R., Mayfield, C.O., McCormack, C., Skinner, D. and Perdue, G., 2012.
Predicting implementation failure in organization change. Journal of Organizational Culture,
Communications and Conflict, 16(2), p.29.
Gershon, R.A., 2013. A case study analysis of eastman kodak and blockbuster Inc. Media
Management and Economics Research in a Transmedia Environment, Routledge, New York,
NY, pp.46-68.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Horn, M.B. and Staker, H., 2014. Blended: Using disruptive innovation to improve schools. John
Wiley & Sons.
König, A., Kammerlander, N. and Enders, A., 2013. The family innovator's dilemma: How
family influence affects the adoption of discontinuous technologies by incumbent firms.
Academy of Management Review, 38(3), pp.418-441.

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Kotter, J., 2012. Barriers to change: The real reason behind the Kodak downfall. Forbes, May, 2.
Rotheram-Borus, M.J., Swendeman, D. and Chorpita, B.F., 2012. Disruptive innovations for
designing and diffusing evidence-based interventions. American Psychologist, 67(6), p.463.
Sandström, C., Berglund, H. and Magnusson, M., 2014. Symmetric assumptions in the theory of
disruptive innovation: Theoretical and managerial implications. Creativity and Innovation
Management, 23(4), pp.472-483.
Weeks, M.R., 2015. Is disruption theory wearing new clothes or just naked? Analyzing recent
critiques of disruptive innovation theory. Innovation, 17(4), pp.417-428.