Unseating an Entrenched Competitor: A Case Study

Kodak. If you’re in the ballpark of my age bracket, you know that Kodak owned the market for film and developing. They were the entrenched #1 player. They dominated the film market and had a pretty nice business selling cameras and even projectors.

Their PR was excellent, people thought highly of them, they could seemingly do no wrong.

Today, they’re a struggling giant on the verge of extinction.

What happened?

Digital happened. Who needs film when you’re taking digital pictures? When digital camera companies are innovating at the speed of light, with several major players coming out with digital cameras of all types, in stiff competition with each other, providing more and more features and improving the picture-taking quality, what chance does a company have with film technology?

In an ironic twist of fate, Kodak created the first digital cameras and sat on the technology because they didn’t want to usurp their revenue stream for film.

In hindsight not a smart idea. The secondary lesson is that if you’re the entrenched player in the marketplace, you can’t sit on your laurels because sooner or later someone else is going to come along with a quantum technological leap and render your product(s) obsolete. Especially in today’s world.

Which highlights the main point of this post: to unseat an entrenched competitor you need a quantum leap forward in technology.

The key to this isn’t coming out with the “next generation” evolution, which is a euphemistic way of saying the next gradient step of development, but a leap forward that wipes out the need for the previous product.

Wireless replacing landline telephones. Smartphones replacing BlackBerry. Uber replacing the taxi.

If some Really Smart Guys ever got together and figured out a common-sense high-speed rail transportation system, the airline industry will be in serious trouble.

Case in point: I go back and forth between suburban Detroit and suburban Chicago. If I drive, it’s 5-6 hours depending on traffic. If I fly, it’s forty minute drive to the airport plus the parking shuttle, an hour flight plus get to the airport 90 minutes before the flight to get through security in time, get off the plane, trek through the airport, get my rental car, drive to my destination. Travel time? 5-6 hours, unless the plane is late.

Amtrak is about four and a half to five hours, plus an hour drive on the Chicago side with a cab or Uber, plus my drive time to the train station and a few minutes wait. And no security!

If there was a high-speed rail between Chicago and Detroit, say with a stop in Battle Creek or thereabouts, two hours travel time, smooth, price comparable to the airlines without the headaches of TSA and so on, what a game-changer that would be.

That investment is astronomical, new track, new right-of-way, station modernization at each end, fast ingress and egress from the stations which probably means new stations. Which is why some Really Smart Guys are needed to figure out a better way to travel.

That is an example of a quantum leap forward that obsoletes existing technology.

We’ve heard of “out of the box thinking.” It’s defining what the problem is and a better way to solve it–or sidestep it altogether.

Going back to the Kodak example, what is the benefit of digital? The answer is, anyone can do it, it’s a one-time expense for the equipment (not counting batteries!) and you don’t have to pay an arm and a leg for ongoing pictures. Digital opens up picture taking to anyone and everyone. Plus the camera quality is so incredible that anybody who can point the camera in the right direction can take a decent picture.

Built-in market need: taking and sharing pictures is something everyone wanted to do. Film developing restricted that to those who were willing to pay for it. Digital opened up the taking and sharing of pictures to the previously untapped market of the entire civilized world.

Digital obsoleted film and the company that dominated the film market.

The moral of this story: Identify the market need, figure out a better way to solve the problem, market it well, solve all the innumerable little details, and you’re going viral.

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