Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging
Some technology transitions are exceedingly difficult for incumbent firms to execute. The bankruptcy filing by the Eastman Kodak Company highlighted the difficulty companies faced when their core business transitioned from an analog to a digital world. Kodak's business was built on the sale of a complex manufactured product - color photographic film that was exceedingly difficult to manufacture - with correspondingly high barriers to entry. Over more than a century, it developed the complex chemistry and high speed coating technologies that enabled it to roll-coat tiny strips of plastic with as many as 24 layers of complex organic dyes and photosensitizers at thousands of square feet per minute. Its color film and paper products including Kodachrome and Kodacolor preserved many of the iconic images of the last century. Beginning in the 1990s, the company built a digital photography business, yet by 2012 the company was in reorganization and its prognosis was guarded. Kodak faced a particularly challenging analog to digital transition, like many companies that have faced the waves of creative destruction wrought by technological innovation. Why was an analog to digital transition in the core technology of a business particularly challenging? This note reviews some of the management research on how firms have fared with technology transitions, and then explains why the conversion of a technology from analog to digital is uniquely problematic. The challenge that faced Kodak is the same challenge facing companies like Panasonic and Sony, telecom equipment companies, and other industries now that the underlying technology through which products and services are built has changed. This note discusses technical aspects of the transition from analog to digital technology, and why incumbent firms like Kodak, Sony, and Panasonic experience such difficulties.
Swot Analysis of "Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging" written by Willy Shih includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Analog Kodak facing as an external strategic factors. Some of the topics covered in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging case study are - Strategic Management Strategies, Disruptive innovation, Product development, Supply chain, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, talent flight as more people leaving formal jobs, increasing commodity prices, supply chains are disrupted by pandemic , geopolitical disruptions,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Analog Kodak, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Analog Kodak operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging can be done for the following purposes –
1. Strategic planning using facts provided in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging case study
2. Improving business portfolio management of Analog Kodak
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Analog Kodak
Strengths Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Analog Kodak in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging Harvard Business Review case study are -
Analytics focus
– Analog Kodak is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Willy Shih can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Analog Kodak has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Analog Kodak has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Analog Kodak are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Analog Kodak has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Analog Kodak has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Analog Kodak is one of the most innovative firm in sector. Manager in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Analog Kodak is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Analog Kodak in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Analog Kodak digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Analog Kodak has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Analog Kodak has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Analog Kodak has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Analog Kodak in the sector have low bargaining power. Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Analog Kodak to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging, it seems that the employees of Analog Kodak don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Analog Kodak 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging can leverage the sales team experience to cultivate customer relationships as Analog Kodak is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Analog Kodak is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Analog Kodak needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Analog Kodak to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging HBR case study mentions - Analog Kodak takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Products dominated business model
– Even though Analog Kodak has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Analog Kodak products
– To increase the profitability and margins on the products, Analog Kodak needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Analog Kodak has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Analog Kodak is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Analog Kodak has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Analog Kodak has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Analog Kodak can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Analog Kodak has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Analog Kodak to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Analog Kodak can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Analog Kodak can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Analog Kodak can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Analog Kodak can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Analog Kodak can use these opportunities to build new business models that can help the communities that Analog Kodak operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Analog Kodak can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Analog Kodak can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Analog Kodak in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Analog Kodak to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Analog Kodak can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Analog Kodak can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Analog Kodak to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Analog Kodak to hire the very best people irrespective of their geographical location.
Threats Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging are -
High dependence on third party suppliers
– Analog Kodak high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Analog Kodak can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Analog Kodak business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– Analog Kodak needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Analog Kodak can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Analog Kodak
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Analog Kodak.
Regulatory challenges
– Analog Kodak needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Consumer confidence and its impact on Analog Kodak demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Analog Kodak.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Analog Kodak with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Analog Kodak in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Analog Kodak in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Analog Kodak can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging .
Weighted SWOT Analysis of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Analog Kodak needs to make to build a sustainable competitive advantage.
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