Jeffrey Pfeffer, in his great book “The 7 Rules of Power” declares that “success excuses (almost) everything.” Success also determines which stories about the origins of that success get told and which headlines are buried. This makes it all but impossible to know the real causes for why things worked out the way they did, inhibiting learning.
On learning, case studies and missing information
Human learning is like the scientific method. It requires us to assert a hypothesis, which can be formal or not, conduct an experiment, and see if what we thought would happen happened. We can then adjust our hypothesis to reflect the new facts we have hopefully uncovered.
Here’s the problem with a lot of our learning in business — it often takes the form of stories and case studies, which themselves are subject to what Phil Rosenzweig famously dubbed “The Halo Effect.” In other words, we’re not told the whole story, and so we make inferences about causality without really knowing what happened.
Let’s revisit one of the most famous “cases” of corporate decline, the long, sad story of Kodak.
Kodak’s demise was more complicated than it is usually portrayed
I was reminded of this in class last week when a participant observed that what killed off Kodak was the digital camera revolution. That is true, but not in the way the observer meant it. In a fascinating re-telling of the Kodak Story, Ron Adner points us to the real culprit — the improvement in the quality of screens which made printing photographs at home unnecessary. So, as Ron says, they won, but they won the wrong game, which we discuss in our Friday Fireside Chat.
Unlike those who say Kodak missed the digital revolution, they enjoyed tremendous initial success with digital tech. Indeed, in 2001 the company debuted its “easy share” line of cameras which were a huge consumer hit. By 2005, Kodak made the top-selling digital cameras in the United States. Unfortunately for the company, rapid commoditization meant little in the way of margins for their products.