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Polaroid Case Study

A Case of Disruptive Innovation A Case of Disruptive Innovation

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ObjectivesObjectives

Be able to briefly understandBe able to briefly understandabout the term:about the term:““DisruptiveDisruptiveTechnology/DisruptiveTechnology/DisruptiveInnovationInnovation””To learn some lessons onTo learn some lessons oninnovation management throughinnovation management throughPolaroidPolaroid’’s storys story

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What isDisruptive Innovation?

A disruptive technology or disruptive innovation is anA disruptive technology or disruptive innovation is aninnovation thatinnovation thatimproves a productimproves a productor service in waysor service in waysthat thethat themarket does not expectmarket does not expect, typically by being, typically by beinglower priced or designed for a different set oflower priced or designed for a different set ofconsumers.consumers.Disruptive innovations can be broadly classified intoDisruptive innovations can be broadly classified intolowlow--endendandandnewnew--marketmarketdisruptive innovations. Adisruptive innovations. Alowerlower--end disruptive innovation is aimed at mainstreamend disruptive innovation is aimed at mainstreamcustomers for whomcustomers for whomprice is more important thanprice is more important thanqualityquality. Whereas a new. Whereas a new--market disruptive innovation ismarket disruptive innovation isoften aimed atoften aimed atnonnon--consumptionconsumption(i.e., consumers who(i.e., consumers whowould not have used the products already on thewould not have used the products already on themarket).market).

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History of DisruptiveInnovation

The term disruptive technology was coined byThe term disruptive technology was coined byClaytonClaytonM. ChristensenM. Christensen(Professor at Harvard Business School)(Professor at Harvard Business School)and introduced in his 1995 articleand introduced in his 1995 articleDisruptiveDisruptiveTechnologies: Catching the WaveTechnologies: Catching the Wave. The article is aimed. The article is aimedat managing executives who make theat managing executives who make thefunding/purchasing decisions in companies rather thanfunding/purchasing decisions in companies rather thanthe research community.the research community.He describes the term further in his 1997 bookHe describes the term further in his 1997 bookTheTheInnovator's DilemmaInnovator's Dilemma. In his sequel,. In his sequel,The Innovator'sThe Innovator'sSolutionSolution, Christensen replaced, Christensen replaceddisruptive technologydisruptive technologywith the term disruptive innovationwith the term disruptive innovationbecause hebecause herecognized that few technologies are intrinsicallyrecognized that few technologies are intrinsicallydisruptive or sustaining in character.disruptive or sustaining in character.

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Examples of disruptiveinnovations

Disruptive Innovation/Disruptive Innovation/TechnologyTechnologyDisplaced or MarginalizedDisplaced or MarginalizedtechnologytechnologyDesktop PublishingDesktop PublishingTraditional PublishingTraditional PublishingDownloadableDownloadableDigital MediaDigital MediaCDsCDs,,DVDsDVDsMobileMobileVoIPVoIPGSM and RoamingGSM and RoamingWord ProcessorWord ProcessorTypewriterTypewriterPlasticPlasticMetal, Wood, Glass etc.Metal, Wood, Glass etc.MinicomputersMinicomputersMainframesMainframesDigital PhotographyDigital PhotographyIncreasingly all chemicalIncreasingly all chemicalphotography, Instantphotography, Instantphotography (Ex:photography (Ex:POLAROID)POLAROID)

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Examplesof disruptiveinnovations/disruptivetechnology(A graphicpresentation)

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The Story of Polaroid

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Even more thanEven more than3 decades old,3 decades old,thethestory stillstory stillhold some very usefulhold some very usefullessons to todaylessons to today’’s managers on hows managers on howto manage innovation.to manage innovation.

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In 1972In 1972, Polaroid launched the SX, Polaroid launched the SX--70, the first70, the firstfully integrated instantfully integrated instantcamera and filmcamera and filmsystem, hailed bysystem, hailed byFortune magazineFortune magazineas one of theas one of thegreatest industrial inventions of thegreatest industrial inventions of thetime.time.In achieving this amazing innovation, which made the coverIn achieving this amazing innovation, which made the coverof Life magazine, Polaroid also incurred aof Life magazine, Polaroid also incurred ahugehugeorganisationalorganisationaland strategic cost.and strategic cost.

Brief History of Polaroid

FoundedFounded::1937 (original company)1937 (original company)FounderFounder::Edwin H. LandEdwin H. LandHeadquartersHeadquarters::Concord, Massachusetts,Concord, Massachusetts,USAUSA

June 1972June 1972::Launched the SXLaunched the SX--70, the 170, the 1

stst

fully integrated camera & filmfully integrated camera & film

Oct 2001Oct 2001::Polaroid Corporation filed forPolaroid Corporation filed forbankruptcy. Itbankruptcy. It’’s assets (including thes assets (including the"Polaroid" name) sold to a subsidiary of"Polaroid" name) sold to a subsidiary of

Brief History of Polaroid(continue)

April 2005April 2005::PettersPettersGroup Worldwide acquiredGroup Worldwide acquiredPolaroid holding Company whilePolaroid holding Company whileFlextronicsFlextronicspurchased Polaroid's manufacturingpurchased Polaroid's manufacturingoperations which is later sent itsoperations which is later sent itsmanufacturing to China.manufacturing to China.It stopped making Polaroid cameras inIt stopped making Polaroid cameras in20072007and will stop selling Polaroid film afterand will stop selling Polaroid film after20092009, to, tothe consternation of some users.the consternation of some users.The renamedThe renamed"old" Polaroid now exists solely as an"old" Polaroid now exists solely as anadministrative shell.administrative shell.

What had actually happenedto the highly innovativecompany like

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This video is an This video is an advertisement of the advertisement of the late late SX SX - - 70 70 model of model of Polaroid Polaroid . It was hailed . It was hailed as the as the greatest greatest industrial inventions industrial inventions of of the time the time

similar to thesimilar to thewaywayAppleApplewas seen inwas seen inthe 80s or even now.the 80s or even now.

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

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The Story of Polaroid: Scene 1

Before innovationBefore innovationradicallyradicallyaltered thingsaltered things, Polaroid are, Polaroid areonly:only:

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A small componentA small componentmanufacturer.manufacturer.

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ManufactureManufacturepositive partpositive partofofthe instant film, the Pod.the instant film, the Pod.

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Focus more towardsFocus more towardsproduct design only .product design only .The technology behind the SXThe technology behind the SX--70 was so new that Polaroid's70 was so new that Polaroid'spreviouspreviousproduction networkproduction networkwould have to bewould have to beshakenshaken--upup..

Positive & Negative part of Positive & Negative part of the instant film the instant film

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The rest wasThe rest wasoutsourcedoutsourced..The manufacturing of theThe manufacturing of thecamera was contracted outcamera was contracted outto a number of companiesto a number of companiessuch assuch asBell & HowellBell & Howell, and, andKodakKodakproduced theproduced thecolourcolournegatives for which itnegatives for which itreceivedreceived$1$1for every filmfor every filmsold and reportedly made asold and reportedly made aprepre--tax profit oftax profit of80%80%..

The Story of Polaroid: Scene 2

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No doubt, the innovation was groundNo doubt, the innovation was ground--breaking. The technology wasbreaking. The technology wasconsideredconsidered"technologically"technologicallyimpossible"impossible"at that time.at that time.Polaroid werePolaroid werepushing the boundariespushing the boundariesof not only technology but of scienceof not only technology but of scienceitself.itself.They needed a chemical compoundThey needed a chemical compoundthey called the 'they called the 'opacifieropacifier', which would', which wouldcover the picture when the picture hadcover the picture when the picture haddeveloped. So they had to experiment,developed. So they had to experiment,they didn't know if it was possible. Butthey didn't know if it was possible. Butthey decided to do it.they decided to do it.

The Story of Polaroid: Scene 3

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Polaroid decided to do it byPolaroid decided to do it bythemselves even tough there are sothemselves even tough there are somany uncertainties. Theirmany uncertainties. Theirseemingly calm and successfulseemingly calm and successfulrelationship with Kodak was soonrelationship with Kodak was soonto be rockedto be rockedby the new invention.by the new invention.Rather than reRather than re--negotiating theirnegotiating theirexisting contractexisting contract, Kodak broke off, Kodak broke offall relations with Polaroidall relations with Polaroid,,essentially saying: "How dare youessentially saying: "How dare youtake us out of your productiontake us out of your productionnetwork.network.““Later Kodak decided toLater Kodak decided tocompete with Polaroid.compete with Polaroid.

The Story of Polaroid: Scene 4

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With the declaration of war, PolaroidWith the declaration of war, Polaroiddecided todecided todevelop the new film indevelop the new film in--house to outplay Kodakhouse to outplay KodakIn addition to taking on all otherIn addition to taking on all othernegative production, saddling it withnegative production, saddling it withnew andnew andunwanted manufacturingunwanted manufacturingexpenses.expenses.Plus with the new pressure toPlus with the new pressure tocompete with Kodak they decided tocompete with Kodak they decided tomake the SXmake the SX--7070more complexmore complextotobeat Kodak and convince investor.beat Kodak and convince investor.

The Story of Polaroid: Scene 5

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Later they decided toLater they decided tofit battery tofit battery toevery filmevery filmrather than to therather than to thecamera! A decision out of its time.camera! A decision out of its time.Try toTry tooutsourceoutsourceand negotiate withand negotiate witha batterya batterymanfacturermanfacturer,,ESBESB. ESB. ESBtried to take the challenge but latertried to take the challenge but laterfailed. Dispute with ESB.failed. Dispute with ESB.Later Polaroid decided toLater Polaroid decided totaketakebattery manufacturing inbattery manufacturing in--househouseasaswell and became thewell and became thebiggestbiggestmanufacturer of batteriesmanufacturer of batteriesininAmerica that they never wanted toAmerica that they never wanted tobe.be.

The Story of Polaroid: Scene 6

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The Story of Polaroid: Scene 7

By the end of this innovation,By the end of this innovation,Polaroid had become a fullyPolaroid had become a fully--fledgedfledgedverticallyvertically--integrated manufacturingintegrated manufacturingcompany,company,which in the beginningwhich in the beginningthey never intended to be.they never intended to be.The advancement ofThe advancement ofdigitaldigitalphotographyphotographymade bad situationmade bad situationworse even tough they are amongworse even tough they are amongthe early manufacturers of digitalthe early manufacturers of digitalcameras.cameras.This is the point when PolaroidThis is the point when Polaroiddeclinedeclinehad started.had started.Its highly revered, charismatic andIts highly revered, charismatic andbrilliant President,brilliant President,Edwin LandEdwin Landbecame the first casualtybecame the first casualtyof thisof thisaffair.affair.Polaroid never recoveredPolaroid never recovered, ultimately, ultimatelyfiling forfiling forChapter 11Chapter 11in October 2001.in October 2001.