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Polaroid Case Study

A Case of Disruptive Innovation

Objectives

Be able to briefly understand about the term: "Disruptive Technology/Disruptive Innovation" To learn some lessons on innovation management through Polaroid's story

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What is Disruptive Innovation?

A disruptive technology or disruptive innovation is an innovation that improves a product or service in ways that the market does not expect, typically by being expect, lower priced or designed for a different set of consumers. Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A lownewlower-end disruptive innovation is aimed at mainstream lowercustomers for whom price is more important than quality. Whereas a new-market disruptive innovation is quality. newoften aimed at non-consumption (i.e., consumers who nonwould not have used the products already on the market).

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History of Disruptive Innovation

The term disruptive technology was coined by Clayton M. Christensen (Professor at Harvard Business School) and introduced in his 1995 article Disruptive Technologies: Catching the Wave. The article is aimed Wave. at managing executives who make the funding/purchasing decisions in companies rather than the research community. He describes the term further in his 1997 book The Innovator's Dilemma. In his sequel, The Innovator's Dilemma. Solution, Christensen replaced disruptive technology Solution, with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character.

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Examples of disruptive innovations

Disruptive Innovation/ Technology Desktop Publishing Downloadable Digital Media Mobile VoIP Word Processor Plastic Minicomputers Digital Photography Displaced or Marginalized technology Traditional Publishing CDs, DVDs CDs, GSM and Roaming Typewriter Metal, Wood, Glass etc. Mainframes Increasingly all chemical photography, Instant photography (Ex: POLAROID)

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Examples of disruptive innovations/ disruptive technology

(A graphic presentation)

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The Story of Polaroid

· Even more than 3 decades old, the story still hold some very useful lessons to today's managers on how today' to manage innovation. · In 1972, Polaroid launched the SX1972, SX70, the first fully integrated instant camera and film system, hailed by Fortune magazine as one of the greatest industrial inventions of the time. In achieving this amazing innovation, which made the cover of Life magazine, Polaroid also incurred a huge organisational and strategic cost.

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Brief History of Polaroid

Founded: 1937 (original company) Founded: Founder: Edwin H. Land Founder: Headquarters: Concord, Massachusetts, Headquarters: USA

June 1972: Launched the SX-70, the 1st 1972: SXfully integrated camera & film

Oct 2001: Polaroid Corporation filed for 2001: bankruptcy. It's assets (including the It' "Polaroid" name) sold to a subsidiary of

Brief History of Polaroid (continue)

April 2005: Petters Group Worldwide acquired 2005: Polaroid holding Company while Flextronics purchased Polaroid's manufacturing operations which is later sent its manufacturing to China. It stopped making Polaroid cameras in 2007 and will stop selling Polaroid film after 2009, to 2009, the consternation of some users. The renamed "old" Polaroid now exists solely as an administrative shell.

What had actually happened to the highly innovative company like

?

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Before we begin the story let's look at the video of Polaroid's SX-70

This video is an advertisement of the late SX-70 model of SXPolaroid. It was hailed Polaroid. as the greatest industrial inventions of the time similar to the way Apple was seen in the 80s or even now.

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The Story of Polaroid: Scene 1

Before innovation radically altered things, Polaroid are things, only: A small component manufacturer. Manufacture positive part of the instant film, the Pod. Focus more towards product design only . The technology behind the SXSX70 was so new that Polaroid's previous production network would have to be shaken-up. shaken- up.

Positive & Negative part of the instant film

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The Story of Polaroid: Scene 2

The rest was outsourced. outsourced. The manufacturing of the camera was contracted out to a number of companies such as Bell & Howell, and Howell, Kodak produced the colour negatives for which it received $1 for every film sold and reportedly made a pre-tax profit of 80%. pre80%.

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The Story of Polaroid: Scene 3

No doubt, the innovation was groundgroundbreaking. The technology was considered "technologically impossible" at that time. Polaroid were pushing the boundaries of not only technology but of science itself. They needed a chemical compound they called the 'opacifier', which would 'opacifier', cover the picture when the picture had developed. So they had to experiment, they didn't know if it was possible. But they decided to do it.

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The Story of Polaroid: Scene 4

Polaroid decided to do it by themselves even tough there are so many uncertainties. Their seemingly calm and successful relationship with Kodak was soon to be rocked by the new invention. Rather than re-negotiating their reexisting contract, Kodak broke off contract, all relations with Polaroid, Polaroid, essentially saying: "How dare you take us out of your production network." Later Kodak decided to network." compete with Polaroid.

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The Story of Polaroid: Scene 5

With the declaration of war, Polaroid decided to develop the new film ininhouse to outplay Kodak In addition to taking on all other negative production, saddling it with new and unwanted manufacturing expenses. Plus with the new pressure to compete with Kodak they decided to make the SX-70 more complex to SXbeat Kodak and convince investor.

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The Story of Polaroid: Scene 6

Later they decided to fit battery to every film rather than to the camera! A decision out of its time. Try to outsource and negotiate with a battery manfacturer, ESB. ESB manfacturer, ESB. tried to take the challenge but later failed. Dispute with ESB. Later Polaroid decided to take battery manufacturing in-house as inwell and became the biggest manufacturer of batteries in America that they never wanted to be.

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The Story of Polaroid: Scene 7

By the end of this innovation, Polaroid had become a fully-fledged fullyvertically-integrated manufacturing verticallycompany, which in the beginning they never intended to be. The advancement of digital photography made bad situation worse even tough they are among the early manufacturers of digital cameras. This is the point when Polaroid decline had started. Its highly revered, charismatic and brilliant President, Edwin Land became the first casualty of this affair. Polaroid never recovered, ultimately recovered, filing for Chapter 11 in October 2001.

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Lesson Learnt

It is imperative for companies to foresee/predict disruptive technologies that will effect the survival of the organization in the in future. Seemingly small, technical decisions can have disproportionately large effects that "ripple" across the overall production system and supply chain network and beyond to vendor networks and the financial markets. Companies should have also curbed its creativity and innovativeness, not to "over-innovate" over- innovate" Managers should make an effort to learn about the technologies embodied in their product. Tinkering with product architecture product. without realising how the production network works, competencies are arranged and modules are configured, can wreak havoc and lead lead to unexpected and undesirable consequences. Technical innovations have social analogues, implications for the analogues, network in which the firm is embedded. In Polaroid's case, technical technical decisions taken in the course of innovation ended up alienating important stakeholders, eventually leading to the fall of this highly highly creative company.

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Reference

Garud, R, and K Munir. "From transaction to transformation Garud, Munir. costs: The case of Polaroid's SX-70 camera." Research Policy 37, SXno. 4 (2008): 690-705. 690Carr, Kathleen. Polaroid Manipulations: A Complete Visual Guide to Creating SX-70, Transfer, and Digital Prints (Photography for SXAll Levels: Intermediate). london: Amphoto Books, 2002. Intermediate). london: Coupland, Douglas. Polaroids from the Dead. New York: Harper Coupland, Dead. Perennial, 1997. Iizuka, Naomi. Polaroid Stories. Woodstock: Dramatic Pub Co, Iizuka, Stories. 1999. Nicholson, Brian. "Transaction Costs and Control of Outsourced Accounting: Case Evidence from Britain and India." Social Science Research Network Working Paper Series 37 (2006): 16. Other online references used: http://www.wikipedia.com, http://www.wikipedia.com, http://www.jbs.cam.ac.uk/interactive/expert_comment/, http://www.jbs.cam.ac.uk/interactive/expert_comment/, http://www.polaroid.com http://www.polaroid.com

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