Decades ago, Polaroid was among the leading firms in the photography- and camera industry (Tripsas & Gavetti, 1997). The firm produced top-notch products and was widely known for its instant-photograpy cameras, that were able to directly print the photo after it was taken. Being a technology-driven firm, Polaroid focused on R&D and developing new camera technologies. One of these was the digital camera. Despite Polaroid’s early development of the digital camera, considered a disruptive innovation, the firm got disrupted by the technology itself. Polaroid failed to implement the technology, and remained its focus on instant cameras. How could this happen?
The development of a disruptive innovation comes along with risks and stuggles. Polaroid, being a top-selling firm, wanted to stay in the top position they were in. Having developed a new camera technology, they were afraid to introduce it to mass market as customers, at the time, did not want these products but were looking for instant cameras. We call this inertia or resource-dependence: a firm does not want to harm its revenue streams by investing in products the customer does not want. Ironically, Polaroid got disrupted by the digital camera technology. This is why, according to Christensen (1997) only start-up firms or market entrants are able to develop disruptive innovations. After ditching the digital technology and putting it on the shelves, Polaroid stopped being technology-driven and focused on their marketing efforts, introducing customized and playful versions of their wellknown instant-cameras.
How could Polaroid have averted their disruption, by a technology they developed themselves? First, Polaroid could have become an ambidextrous organization (O’Reilly & Tushman, 2004) by balancing investments between incumbent and new, potentially disruptive technologies. Second, Polaroid could have created a spin-off firm for the digital cameras, perhaps under a different name (Markides, 2006). That way, Polaroid may avert of internal competition between products. However, I argue that Polaroid could have focused on vision communication. Vision communication, as many scholars would agree, helps to steer consumer preferences and educate the market about new product propositions. In doing so, Polaroid could have remained a technology-driven firm yet also introduce their customers to new technologies. If Polaroid were to spread its ideas and vision about their disruptive technology to the market, I’d be convinced that we would nowadays walk around with a Polaroid-original digital camera.
References:
Christensen, C. (1997) ‘The innovator’s dilemma: when new technologies cause great firms to fail’, Boston: Harvard Business Review.
Markides, C. (2006) ‘Disruptive Innovation: In Need of Better Theory’, Journal of Product Innovation Management, vol. 23, pp. 19-25.
O’Reilly III, C. & Tushman, M. (2008) ‘Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma’, Research in Organizational Behavior, 28, pp. 185-206.
Tripsas, M. & Gavetti, G. (2000) ‘Capabilities, Cognition, and Inertia: Evidence from Digital Imaging’, Strategic Management Journal, 21, pp. 1147-1161.
Hi Lars,
Thank you for this interesting topic! This is a very interesting topic related to the video assignment, unfortunately I didn’t come up with this idea, but it gives a very clear example of a disrupted industry and what they did wrong. I like the way you think and how you come up with several solutions how Polaroid should have defend itself. Furthermore it gives directions for firms in other industries and how they could cope with disruptive technologies.
Especially the thing you mention about vision communication is important. Polaroid was one of the leading firms in this industry with a large followers base. They should have exploit this advantage, engage them more in their business and create new value for them.
One thing that I learned from your post is that you should not hold on too much on your own strenghts and your own business model. Eventhough Polaroid earned a lot of revenue because of the razor blade model. Do not underestimate new entrants. The digital camera industry was not solely a new technology, it created a new business model that disrupted the industry.