Strategy Advisory
Purpose is Paramount
In the mid-20th century, Kodak was synonymous with photography. It pioneered film technology, sold cameras to the masses, and built a brand that embodied the joy of capturing life’s moments. The company was wildly profitable, but its leadership became fixated on maintaining film sales at all costs, due to the pressure they felt to maximize shareholder value.
Ironically, Kodak itself invented the first digital camera in 1975. However, rather than embracing this disruptive technology, Kodak executives feared that digital cameras would eat into their highly profitable film business. Instead of leading the transition, they suppressed innovation and continued doubling down on film sales.
During the 1980s and 1990s, Kodak remained profitable, but it increasingly ignored market shifts in favor of squeezing every last dollar out of its film business. Meanwhile, companies like Sony, Canon, and Nikon leaned into digital technology, capturing the future of photography.
By the time Kodak finally pivoted to digital cameras in the 2000s, it was too late. The smartphone revolution wiped out the traditional camera market, and Kodak found itself obsolete. In 2012, the company filed for bankruptcy, a shocking downfall for a company that had once owned 90% of the U.S. photography market.
Kodak’s original mission was to help people capture memories. But in the chase for short-term profits and increased shareholder value at all costs, it lost sight of the future and ultimately destroyed itself. The lesson is clear: Prioritizing profits over purpose can be fatal.
Redefining Strategy
Over the past 50 years, business strategy has principally focused on the 3 C’s – customer, competitor, company. In other words, to identify the needs, wants, and behaviors of a target market in order to tailor a product or service accordingly; to analyze the strengths and weaknesses of competitors in order to gain competitive advantage; and to understand internal capabilities, resources, deficiencies, and unique value propositions, in order to position a business effectively in the marketplace.
These seem like reasonable activities don’t they? Isn’t it favorable, even healthy, for a business to seek profit, to seek sustainability, even to seek a return for its shareholders? And to do so by understanding customers, competitors, and ourselves is not only reasonable – it is noble – right? Well, maybe….
In the right context, yes, all of these activities can be helpful. But, as illustrated by Kodak’s sad story, when all of this is done with the ultimate objective of increasing shareholder value, disaster awaits. The evident problem then is that nearly all “business strategy” principles and practices heralded for decades have primarily centered on the enrichment of shareholders. Which is truly sad, because businesses and nonprofit organizations alike are far more worthy, more honorable, and more important than that.
But there is hope, for a new day is dawning.
What is increasingly being questioned and debated is the notion that making money for shareholders is the “be all end all”, the sole reason for existence of a company. The growing emphasis in this dialogue are considerations like employee well-being and social impact, both worthy of elevation. But, also, neither worthy of holding the mantle of “primary purpose for existence.”
Said another way, money may be the means for existence, but it should never be the purpose for existence.
We believe that the old-world definition of strategy needs to be reconsidered. Not only does it fail to focus on what is most important, but it does so without engendering lasting change. The aim of strategy should be to create tomorrow’s competitive advantages faster than competitors mimic the ones you possess today. The secret to doing this lies in the corporation’s ability to learn, which is the most defensible competitive advantage of all.
At Discern, we believe strongly that an organization’s mission is the reason it exists. Therefore, any and all strategy should be toward that end – fulfilling its mission.