HR lessons from Kodak’s turnaround

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In 2005, photography giant Kodak filed Chapter 11 bankruptcy and laid off 50,000 employees, representing the collapse of an iconic, world-renowned company.
Kodak’s decline serves as a cautionary tale for HR, who should always be aware of any communication gaps between senior management and on-the-ground workers. Although Kodak originally conceived of the digital camera and even had it patented, it didn’t align that innovation with business goals.
“People at the top hadn’t done their job, and that includes the HR people. Kodak had the potential to be a great business but they didn’t do what they had to do, which was close that disconnect between the people who invented the digital camera and had a view of where the world was going, and the people at the top,” said Professor Paddy Miller of IESE Business School and author of Innovation as Usual.
Miller points to three common phenomena preventing innovation from becoming business results. These include:
  • A flawed approach – instead of trying to facilitate innovation in a top-down fashion, HR should drive it from the bottom up by allowing groups and teams to organically create inventive products
  • Separating entrepreneurship from innovation – when HR executives emphasize core competences, they shouldn’t consider innovation as a byproduct of entrepreneurship. “I know a lot of people who are amazingly innovative but are not entrepreneurs. They think wildly, they come up with wild ideas, but they don’t know how to package it up,” said Miller.
  • Size – in large organizations, stability may be prioritized in an attempt to control behavior. HR should convince business leaders that outliers are acceptable, and may be the ones most capable of brilliant idea formulation.
While it may be challenging for some senior leaders to embrace disruption, it may help if HR finds a challenging but acceptable middle ground.
“We’ve got the wrong message: it should be disruptive and it should be incremental,” said Miller.
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