Part 2. Vaporized: Why Photography Companies Fail.
So why do companies, including photography companies, fail? For the sake of brevity, let’s look at five leadership related issues.
First: Arrogance and pride on the part of leadership. Second: A lack of vision, Third, Leadership failing to see the warning signs. Fourth: Leadership doing something, just not the right thing. Fifth: Leadership ignoring the need for high performing systems and process.
In Part 1, we examined the first three factors. In Part 2 we look at the remaining two factors and our recipe for evaporation is complete.
Leadership Doing the Wrong Thing
According to the Harvard Business Review: “CEO George Fisher (1993-1999) knew that digital photography might eventually invade, or even replace, Kodak’s core business. Doubtless, he and other senior executives were tempted to ignore it. To their credit, they resisted that temptation. Fisher rallied the troops and aggressively invested more than $2 billion in R&D for digital imaging.”
So no one should argue that Kodak didn’t try to change. In the article Why Kodak Died and Fuji Thrived: A Tale of Two Film Companies, Oliver Kmia wrote, “Essentially, it’s not that Kodak didn’t want to change, it tried hard, but it did it wrong. Faced with a radical market disruption, it reacted energetically, but doing something and doing the right thing is different.”
Unfortunately for Kodak, they didn’t recognize the persistent decline in photo printing and the impact of competing in the low margin, low barrier to entry digital camera market and as a result, they pursued several flawed strategies. Kmia summarizes by saying. “Simply put, Kodak tried to replicate the silver halide business model in the digital world.”
“Just do it” may sound inspiring but it might inspire you to just do the wrong thing.
About a decade ago, the volume school picture industry was jolted when Lifetouch introduced hardware driven background replacement technology as a competitive point of difference. The market responded initially with arguably inferior software solutions. As is the case with most processes and software, improvements in quality and cost-effectiveness followed. Background replacement became a staple of the industry.
What was intended to create a competitive point of difference instead acted to increase the cost of doing business for an entire industry. Background replacement is a reasonable solution for providing more options to mom but the industry’s universal reaction to background replacement consumed school photographers focus, time and energy. Focus, time and energy that arguably could have been invested in improving image quality, the photographic experience, subject posing and expression, the consumer’s buying experience and relevant changes to the business model.
Issues that consumers are complaining about and reasons why consumer participation rates have declined.
Or you can take too long to do something…
In Chunka Mui’s article, How Kodak Failed, he cites research that had been conducted by the head of Kodak market intelligence Vince Barabba back in the 80’s. “Barabba conducted a very extensive research effort that looked at the core technologies and likely adoption curves around silver halide film versus digital photography. The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had the potential capability to replace Kodak’s established film-based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition.”
Mui writes, “History proved the study’s conclusions to be remarkably accurate, both in the short and long term… the problem is that, during its 10-year window of opportunity, Kodak did little to prepare for the later disruption.”
As we know when Kodak did “do something” it was too little, too late and wrong.
Mix in the final factor (often cited as the secret sauce in volume photography) workflow and systems and our recipe for failure is complete.
Leadership Ignoring the Importance of Systems and Process
Here’s a thought to consider – whether you have or have not defined a process, a way of doing something, someone in your business has. Someone is doing it right now and they may not be very good at it. Unfortunately, they are the ones who have determined how it’s getting done…efficiently, effectively or not. That’s a contributor to “leaving your business to chance.”
Systems represent the daily activities, processes, and procedures performed by staff to get the work done. Without well-defined and tested systems and processes, work is error-prone, efficiencies are impossible and consistency is unachievable. Used correctly processes standardize and simplify tasks.
The Lean Methods Group, in the article, The Top Ten Problems Faced by Business, explains, “We know from our knowledge of the patterns of evolution that, in reality, systems tend to become more complex as they evolve, then become simplified again. The problem is how to develop better systems-thinking capability so you can design your business models, processes, products and services in a way that minimizes unnecessary complexity.”
In other words, think about the initial introduction of green screen or more significant, the radical change brought about by moving from film to digital. Everything new seemed unfamiliar and complex. Over time we figured it out, becoming more comfortable with the unfamiliar and building processes that simplified the work.
Becoming familiar with something can mean we take that something for granted. Over the years it’s been interesting to encounter mature photography businesses that failed to standardize or to document day-to-day business procedures. The actions were taken for granted. In many cases that worked, until…the employee doing the job left, the school asked for a modification, the equipment failed, the bundle of forms was misplaced…you get the idea.
Without systems-thinking leaders may lack an understanding of all the components of their business and as such are unable to identify critical weaknesses, see the warning signs, make improvements and, “do the right thing at the right time.”
According to industry analysts and business researchers poor quality, ineffective processes and procedures can cost companies 20 to 25% of their gross revenues. I’d call that a form of evaporation.
Schools select a photography company after considering the company’s value proposition. Well-executed picture days are critical to most value propositions. Bad process means bad picture day execution – the bane of even the best salespeople and owners.
The same behavior that causes leadership to stick their heads in the sand to avoid what’s happening on the outside can cause leadership to avoid looking on the inside, to avoid seeing the trouble brewing inside their own company. Something is out of kilter; one or more of the functions that should be working together are not. Marketing is out of step with sales, operations can’t achieve desired service levels; in short, the internal operation is misaligned and out of sync with each other.
Employees inside the company blame one another for the problems they experience and eventually question the capability of the leader. Morale and quality suffer.
Students, parents, and teachers complain about the service, quality and problems they encounter and decision-makers question the capability of the photography company and its leader. Account retention and the business’s reputation suffer.
Volume photography fails when systems, processes, and operations fail. Internal costs increase, quality suffers, and profits evaporate as focus, time, and energy are spent reacting to issues and chasing quick fixes.
The result leaves the company’s future to chance. Employees quit. Mom exits the market never to return. Schools change providers wishing that they didn’t have to deal with school pictures.
And so…here are a few questions for you to consider.
Increased competition, innovation, and technological change are increasing the power of the customers we serve…mom and the school. It’s difficult enough out there without adding in any of the factors I’ve outlined. Here are a few questions for you to consider.
What’s the next disruption?
The digital revolution in photography has occurred and film and the silver halide process has been replaced. What’s the next disruption that could make digital feel like the good old days? Most of us know the answer. Mobile.
Millennials now make up the largest consumer segment in the economy; they represent $200 billion in annual buying power and they spend 5 hours a day on their mobile devices.
In an email I received from Manny Almeida, President, Imaging Division at Fujifilm, he said, “Photographers need to think about mobile as a way to extend their reach. It is how their customers are communicating and shopping.”
Daniel Newman, from Futurum Research, says, “Mobile is going to become the center of marketing. The evolution of mobile devices is one of the prime factors influencing the marketing world”.
Reaching and engaging today’s parents means delivering the experience they expect, when and where they want it – on their smart device. The behaviors that determined failure or success when the digital disruption occurred are the very factors demanding our attention today as mobile emerges as the next disruptor to our business.
Failure is bred by arrogance and pride, a lack of vision, an unwillingness to see the warning signs, doing the wrong things, and neglecting the importance of systems. If we don’t innovate we’ll evaporate.
What do you intend to do with this next disruption? Consider this quote from Theodore Roosevelt, “If you could kick the person in the pants responsible for most of your trouble you wouldn’t sit for a month.”
We will examine the leadership steps you can take to survive in the competitive volume picture business in an upcoming blog. Watch for Part 3, Survivors: Take the Right Action.