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 - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs,
increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
Ability to lead change in Strategy & Execution field
– Analog Kodak is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Analog Kodak in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Diverse revenue streams
– Analog Kodak is present in almost all the verticals within the industry. This has provided firm in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
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.
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.
Learning organization
- Analog Kodak is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Analog Kodak is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
High brand equity
– Analog Kodak has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Analog Kodak to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging firm has clearly differentiated products in the market place. This has enabled Analog Kodak to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Analog Kodak to invest into research and development (R&D) and innovation.
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.
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.
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 -
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging, is just above the industry average. Analog Kodak needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Willy Shih suggests that, Analog Kodak is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Analog Kodak needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Analog Kodak supply chain. Even after few cautionary changes mentioned in the HBR case study - Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Analog Kodak vulnerable to further global disruptions in South East Asia.
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.
Interest costs
– Compare to the competition, Analog Kodak has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Analog Kodak has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Analog Kodak even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Analog Kodak to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Analog Kodak can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Analog Kodak to increase its market reach. Analog Kodak will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Analog Kodak has opened avenues for new revenue streams for the organization in the industry. This can help Analog Kodak to build a more holistic ecosystem as suggested in the Competency-Destroying Technology Transitions: Why the Transition to Digital Is Particularly Challenging case study. Analog Kodak can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Analog Kodak in the consumer business. Now Analog Kodak can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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.
Shortening product life cycle
– it is one of the major threat that Analog Kodak is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Analog Kodak has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Analog Kodak needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
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.
Stagnating economy with rate increase
– Analog Kodak can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Analog Kodak will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
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.
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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