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Rule Breaking Series #2: Expanding into different categories

Looking through a different lens

Every product goes through a life cycle: from early adoption to commoditisation to obsolescence. Sometimes you innovate to extend the maturity period, but sometimes new technology comes along that makes the product you offer… obsolete!

Hopefully, before that happens, you’ll realise the need to act to stay in business and you’ll take the right action. You can search for new sources of growth, new sources of business. Of course, you’ll need to innovate. But … how do you go about that if your existing product is facing obsolescence?

The good news is that innovation isn’t always about coming up with completely new concepts, but rather expanding into different categories using existing resources. It can be in finding new ways to extend what already exists beyond their current applications and even into different industries.

The ability to pivot

Ah, the buzzword of the pandemic era - pivot! But pivoting has to be done when your products or services no longer serve a purpose. 2020 revealed how important it is for businesses to stay nimble and be able to pivot, expanding into different categories when market forces shift demand for their products and services. The Covid-19 pandemic fast-tracked the move towards digitisation for companies across the globe, forcing them to innovate to bring solutions and services online. In some cases, this pivotal move is vital for a company’s survival. Take the fortunes (or not) of Kodak and Fujifilm for example. These were two companies serving the same market for years. Their individual reactions to market irrelevance sealed their fates.

A pivot in the wrong direction

The fall of Kodak is a well-known story. But the rise again of its rival Fujifilm just goes to show what can be achieved with the gumption to make it work no matter what it takes.

Kodak’s demise in the face of photo digitisation is often oversimplified as a failure to move with the times. In truth, the company DID attempt to move to the digital space, even expanding into different categories, but wrong decisions made along the way sealed its fate and it simply didn’t go far enough. It didn’t look far enough beyond its own category. Yes, it made an attempt to pivot to digital camera production, it just wasn’t a fast or diverse enough move.

And perhaps worse, the company’s decision to sell off its Healthcare Imaging branch, just as baby boomers were reaching retirement age and the demand for medical digital imaging was bound to increase, was incredibly short-sighted and further revealed just how out of touch the company was with the demands of the markets it served.

For a company far-sighted enough to future-proof its marketing with its “Kodak Moments” tagline, it’s a shame it couldn’t do the same with its product offerings.

A timely audit

Fujifilm’s smart move to diversify, on the other hand, was its saving grace. Understanding that the digitisation of film and imaging would radically alter demand for its film products, Fujifilm tasked its R&D team to conduct a year and a half technological audit and came up with a list of existing in-house technologies that could match future markets. The powers that be were on to something. They knew that if they didn’t act fast and turn what they already had into something new, they’d be going the same way as Kodak.

Time to do or die

Something drastic needed to be done. There is not much that is more drastic than flipping from one industry into a completely different one. But Fujifilm recognised early on that Fujifilm technologies could be adapted for use in other industries that weren’t dying. We’re talking expanding into different categories such as cosmetics and highly functional materials. It seems like a far stretch. But Fujifilm’s foresight and willingness to adapt were its saviours:.

  • It accurately predicted the boom of LCD screens and invested heavily.

  • It adapted its research into collagen, from which its photo film was derived, to focus on the cosmetics market.

  • Fujifilm’s research into oxidation, a process connected to the ageing of human skin and to the fading of photos over time, led to the successful launch of its Astalift makeup line in 2007

It didn’t stop there – next step, Pharmaceuticals

Over nearly a century of research, Fujifilm amassed some 20,000 chemical compounds, originally developed for photo film, which it now applies as ingredients for its new pharmaceuticals division. This division is currently developing drugs to combat cancer as well as neurodegenerative and infectious diseases. The Fujifilm story continues.

So be like Fujifilm, not like Kodak! Don’t wait until the market forces you to pivot. Kodak was too complacent in a niche that became obsolete. It’s time for your company to start looking through a different lens so you don’t get caught off guard.

You’ll need to look at what capabilities, skills and assets you currently have, and which might be used in a different way. Can you innovate by expanding into different categories using the assets you already have? Don’t get comfortable with what you’ve got. That’s just one step away from moving backwards. Instead look ahead, look at what’s possible outside your existing zone of comfort and be more like Fujifilm, willing to adapt by expanding into different categories to stay relevant.

Remember, innovation is not always about wracking your brains for the next big thing. Who knows, your secret sauce might be right under your nose. Talk to us to find out how Controlled Disruption can help you discover that secret sauce.


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