If you’ve clicked on this article, you must be interested in the Polaroid history. More specifically, how did Polaroid fail as a company?
The Polaroid Corporation, founded in 1937, is still remembered for its instant film and cameras. Even to date, when someone is talking about instant photography, they use the term Polaroid.
Yet the company isn’t a trendsetter anymore.
Let’s get right into it!
A little background to Polaroid Corporation
Polaroid’s vintage cameras allowed people to snap and print pictures instantly without any of the hassles.
The brand became famous for its ability to produce instant prints in the 1970s, and its sales reached $400 million in the late 1960s.
They had such a strong footing and value proposition in the market that when Kodak announced instant film cameras in 1976, Polaroid sued them. Proclaiming their patented instant photography process, Polaroid asked for $12 billion for infringements of its patents by Kodak. And, of course, a cease to instant picture production.
Although the case lasted for ten years, in the end, Polaroid won the case and received $909.5 million.
By 1991, its revenue reached $3 billion.
Here’s what went wrong.
Factors that led to the failure of the Polaroid company
Polaroid executives refused to diversify
Polaroid once had an enormous 65% gross margin on instant film. It was the key component of their business plan. It determined the company’s economics. As a consequence, Polaroid executives decided not to diversify.
Even its founder, Edwin Land, was unwilling to spend more on electronics. Instant film was everything to them. This resulted in severe financial mismanagement, including sizeable investments in digital imaging R&D.
The top management sanctioned 42% of its spending on it.
The problem was that they already were at the top for instant imaging solutions. Instead of business innovation, they kept believing hard-copy prints would always remain the top trend.
The age of digital photography
The management’s reluctance to change and not innovating brought the company a lot of problems. It is true that Polaroid was able to limit competition in the instant camera market and maintain a successful company in the camera industry by utilizing patents to protect the technology.
However, Polaroid’s business plan operated similarly to the conventional razor blade model. The sale of the film was the foundation of Polaroid’s business, and the company created novel cameras to increase sales.
They were concerned with consumables rather than hardware, which made the arrival of digital photography a very difficult period for them.
With the evolving of technologies, there has been a shift in market trends from using instant cameras to digital photography. Since the 1960s, Polaroid’s R&D section had been working on digital photography. By the 1970s, Polaroid owned 15% of the US camera market, and the business only grew from the US market.
Despite this, digital imaging accounted for nearly 42% of all R&D expenditures in 1989. Furthermore, the business attempted and failed to market its video cassettes and camcorders, just as it researched and developed its digital camera. They even experimented with 35mm photos and scanners. However, it was insufficient.
Its competitor, Canon, was quickly developing digital cameras, which became popular in the market. This had put Polaroid at a disadvantage compared to Canon. Overall, Polaroid’s inability to keep up with the innovation in digital photography contributed to its decline in the market.
Aversion to innovation
In his 1985 letter to stockholders, CEO I. MacAllister Booth reasoned, “As electronic imaging becomes more prevalent, there remains a basic human need for a permanent visual record. Whether that record fulfills an emotional requisite in the visual diaries of amateur photography or provides practical data in an industrial or scientific setting, the universal insatiable appetite for visual communication and portable information will be constant, reflecting a continuing need for instantly available, high-quality print media.”
Polaroid officials maintained their belief in the value of the paper print throughout the 1990s.
Gary DiCamillo, CEO from 1995 to 2001, said in a 2008 interview at Yale, “People were betting on hard copy and media that was going to be pick-up-able, visible, seeable, touchable, as a photograph would be.”
So, when customers refused to buy the print, Polaroid was surprised and too late.
Gary DiCamillo said, “It’s amazing, but kids today don’t want hard copy anymore. This was the major mistake we all made: Mac Booth, Gary DiCamillo, and people after me….That was a major hypothesis that I believed in my marrow that was wrong.”
In the 1980s, Polaroid tried to reinvent itself and announced that it would enter the US electronic video market with its own line of Polaroid videotapes. But they failed. There were already strong competitors in the video industry and Polaroid couldn’t penetrate the blue ocean.
Since we have already established that the executive decision was to not shift their strategy to match the latest consumer trends, they became over-reliant on only one solution.
The lack of innovation failed many companies. And what added fuel to the fire was- assuming that the customer’s preferences will never change. Such thinking resulted in JCPenny’s Bankruptcy, Blockbuster’s Failure, Sony Walkman Failure, and many other company disruption stories.
Is Polaroid still in business?
Polaroid was once a pioneer in instant photography. The company failed to recognize the shift towards digital cameras and printing, which impacted its instant film sales. Polaroid’s inability to embrace digital technology and diversify its product offerings led to its decline.
In October 2001, Polaroid filed for bankruptcy after the sales of film cameras fell and its brand and assets were sold off. In May 2017, Polaroid Corporation was acquired by its largest shareholder of the Impossible Project and was renamed Polaroid Originals in September 2017.
We cannot stress enough that companies that fail to adapt, innovate, and meet changing customer needs are more susceptible to decline in today’s dynamic business environment. To stay ahead of the competition, companies must leverage an innovation management guide and a professional tool.
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