Organizational change can signal boom or bust for multinational enterprises (MNE) with no preference on who ends up being labeled a winner or loser. Change means an MNE must adapt to remain competitive in the business environment (Moran, Abramsom, & Moran, 2014) whether that environment is economic changes, technological advances or global expansion into emerging markets in Asia. In early 2012, Kodak, a titan in the film industry suffered the devastating consequences from failing to adapt and institute organizational changes which resulted in bankruptcy.
In an attempt to explain the tragic demise of the conglomerate, Kotter (2012) wrote, “The Kodak problem, on the surface, is that it did not move into the digital world well enough and fast enough”. Schein’s (1980) planned change theory suggests an organization will not change unless it is motivated to. His theory also indicates that change must be initiated through key members of the organization like the Chief Executive Officer (PSU, 2015). Kodak’s problem was the CEO and the executives at the top were complacent and failed to take action when people within their hierarchy offered ideas (Kotter, 2012). The technical experts within the company were not able to properly motivate and “unfreeze” the senior leadership towards adopting new technology being implemented by competitors like Fuji. Why did they fail to realize the need for change?
One possible explanation for the complacency on the part of the corporate executives could have been anticipatory change which is defined by Moran et al. (2014), as the awareness that the company has reached its growth limit and is compounded by the senior management who may have been caught up in feelings of success or invincibility. Kodak was used to being on top of the market and failed to accept that the competition was passing them by in the digital technology environment. By the late 1980’s, making strategic decisions like changing CEO’s and slowly integrating technology was too little too late to turn back the tide and bankruptcy followed. Perhaps Kodak’s fall could have been avoided with a solid strategy for change based on Schein’s (1980) model which tells us unlearning something is unpleasant. But in this scenario, it is hard to imagine complacency and the status quo would have been preferred to bankruptcy.
Kotter, J. (2012, May). Barriers to change: The real reason behind the Kodak downfall. Forbes, Retrieved from http://www.forbes.com/sites/johnkotter/2012/05/02/barriers-to-change-the-real-reason-behind-the-kodak-downfall/
Moran, R.T., Abramsom, N.R., Moran, S.V. (2014). Managing cultural differences. Thousand Oaks, CA: Routledge.
Pennsylvania State University, (2015). Lesson 5: Learning and change in a global setting. Retrieved from
https://courses.worldcampus.psu.edu/fa15/olead410/001/content/05_lesson/04_page.html
Schein, E. H. (1980). Organizational psychology. Englewood Cliffs, NJ: Prentice Hall.
pkh5062 says
Kodak’s ethnocentrism and that type of leadership doomed them to failure. They “suffered from a mentality of perfect products, rather than the high-tech mindset of make it, launch it, fix it,” says Rosabeth Moss Kanter of Harvard Business School.(Fool.com).
Kodak failed to use the resources that were available to them. Instead of trying to learn what their competitor, Fuji was doing, in an effort to remain relevant in a digital age their mindset was not adjusting and adapting to the business environments. It unfortunate that they have not seen the results that they hoped for after their plan for recovering from bankruptcy; their crisis change was too little too late.
If other companies wish to avoid this type of demise, it is important that the invest time, energy and resources in proactive measures to address change in business climate, change in competition, change in consumer preferences, change in technology and so on. So how can this be done?
An interview was done by Bateman & Crant with some proactive businesspeople in North America, Central Europe and Southeast Asia. Although culturally diverse they were able to offer key points to do so.
•Scan for change opportunities
•Set effective change oriented goals
•Anticipate and prevent problems
•Do different things or do things differently
•Take action
•Persevere
•Achieve results
References
Bateman T and Crant, M.J: Proactive Behavior: Meaning, Impact, Recommendations. Business Horizons, May/Jun 99 Vol. 42 Issue 3. Retrieved from: http://homepages.se.edu/cvonbergen/files/2013/01/Proactive_Behavior-Meaning_Impact_Recommendations.pdf
http://www.fool.com/investing/general/2014/03/24/how-kodak-is-recovering-from-bankruptcy.aspx