Innovation: the First Step to Survival: 3 Steps to Harnessing Innovation for your Future

Terry Villines SVP PhaseOne

The first three months of 2012 have proven, once again, the existence of a br and life cycle— and that those who do not re-invent themselves to stay relevant ultimately face demise. 

Kodak—once the darling of Wall Street—files for bankruptcy, while Apple—whose stock was trading at $14.68 USD pre-split in 2001—is now trading at over $600 USD per share, and is considered the most valuable company in the world.

Many say that what led to Kodak’s failure was their lack of innovation.  That may be your perception, particularly in comparison to Apple, considered the gold st andard in developing categories no one knew they needed—MP3 players, smart phones, tablets, the list goes on.  (In reality, Apple was not the first in many of these categories.  But who among us recalls those early br ands??)

Yet, I would argue that what sets these two organizations apart was their DIFFUSION of Innovation – how they gained acceptance of their innovations!

E.M. Rogers, in Diffusion of Innovation defines “Diffusion” as the process by which an innovation is communicated through certain channels over time among members of a social system.

You can’t argue that Kodak wasn’t innovative.  They invented the digital camera.  Today, it is proposing to sell 1,100 of its digital imaging patents, just 10% of those it holds.  What they did not do, however, was take the lead in gaining customer acceptance of those innovations – others did!

Best practice Diffusion of Innovation

Apple on the other h and, followed Rogers’ model almost in text book form.  Take the introduction of the iPod as an example:

  • Rather than focus on the device’s memory in terms of bits and gigs, Apple’s communications highlighted the RELATIVE ADVANTAGE of the iPod to its customers – “1,000 songs in your pocket” was the headline when the iPod was introduced in 2001.
  • As the iPod became available for PCs, it was marketed for its COMPATIBILITY
  • Apple Stores encourage h ands-on TRIALABILITY
  • Celebrity endorsements demonstrate OBSERVABILITY
  • While marketing messages are always SIMPLE

Apple certainly aligned itself with these innovations, going so far as to change its name from Apple Computers to Apple in 2007, freeing itself from the ties that bound it to the computer industry.  One must ask if Kodak ever saw itself as more than a film company.

The 3 Lessons of Innovation

But, the lessons do appear to be clear:

  1. While short term profitability is required to satisfy shareholders, future forward thinking (5, 10, 20 years out) is required.  Where are you going?  Where do you want to be?
  2. Define who you are and what you do in a way that allows for innovations / evolutions as markets and your customers’ needs changes.  Apple redefined itself from a computer company to a broader technology company – literally changing its name.
  3. Certainly don’t believe that if you build it, they will come.  Gaining acceptance and adoption of a category shifting innovation is a science, as outlined above.  There are key steps to take.  Skip them at your own risk.

Time will tell if Apple can maintain this momentum.  Kodak’s fall didn’t happen overnight.  It was founded in 1880, spending decades enjoying its leadership position.  In comparison, Apple is only a baby.  Let’s check back in 100 years to see if Apple still is the darling it is today.

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