Objectives

Polaroid Case Study

A Case of Disruptive Innovation
Be able to briefly understand
about the term: “Disruptive
Technology/Disruptive
Innovation”
To learn some lessons on
innovation management through
Polaroid’s story
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What is History of Disruptive

Disruptive Innovation? Innovation
A disruptive technology or disruptive innovation is an
The term disruptive technology was coined by Clayton
innovation that improves a product or service in ways
M. Christensen (Professor at Harvard Business School)
that the market does not expect,
expect, typically by being and introduced in his 1995 article Disruptive
lower priced or designed for a different set of Technologies: Catching the Wave.
Wave. The article is aimed
consumers. at managing executives who make the
funding/purchasing decisions in companies rather than
Disruptive innovations can be broadly classified into the research community.
low-
low-end and new-
new-market disruptive innovations. A
lower-
lower-end disruptive innovation is aimed at mainstream He describes the term further in his 1997 book The
customers for whom price is more important than Innovator's Dilemma.
Dilemma. In his sequel, The Innovator's
quality.
quality. Whereas a new-
new-market disruptive innovation is Solution,
Solution, Christensen replaced disruptive technology
with the term disruptive innovation because he
often aimed at non-
non-consumption (i.e., consumers who recognized that few technologies are intrinsically
would not have used the products already on the disruptive or sustaining in character.
market).
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Examples of disruptive Examples

of disruptive
innovations innovations/
Disruptive Innovation/ Displaced or Marginalized disruptive
Technology technology technology
Desktop Publishing Traditional Publishing
Downloadable Digital Media CDs,
CDs, DVDs
Mobile VoIP GSM and Roaming
Word Processor Typewriter
Plastic Metal, Wood, Glass etc.
Minicomputers Mainframes
Digital Photography Increasingly all chemical
photography, Instant
(A graphic
photography (Ex: presentation)
POLAROID)

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 The Story of Polaroid Brief History of Polaroid
Founded:
Founded: 1937 (original company)
• Even more than 3 decades old, the
story still hold some very useful Founder:
Founder: Edwin H. Land
lessons to today’
today’s managers on how
to manage innovation.
Headquarters:
Headquarters: Concord, Massachusetts,
USA
• In 1972,
1972, Polaroid launched the SX- SX-
70, the first fully integrated instant June 1972: SX-70, the 1st
1972: Launched the SX-
camera and film system, hailed by fully integrated camera & film
Fortune magazine as one of the
greatest industrial inventions of the Oct 2001:
2001: Polaroid Corporation filed for
time.
bankruptcy. It’
It’s assets (including the
In achieving this amazing innovation, which made the cover
of Life magazine, Polaroid also incurred a huge
"Polaroid" name) sold to a subsidiary of
organisational and strategic cost.

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Brief History of Polaroid

(continue) What had actually happened
April 2005:
2005: Petters Group Worldwide acquired
to the highly innovative
Polaroid holding Company while Flextronics company like
purchased Polaroid's manufacturing
operations which is later sent its
manufacturing to China.
It stopped making Polaroid cameras in 2007
and will stop selling Polaroid film after 2009,
2009, to
the consternation of some users. The renamed
"old" Polaroid now exists solely as an

?
administrative shell.
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Before we begin the story let’s look

at the video of Polaroid’s SX-70 The Story of Polaroid: Scene 1

Before innovation radically

This video is an altered things,
things, Polaroid are
only:
advertisement of the  A small component
late SX-
SX-70 model of manufacturer.
Polaroid.
Polaroid. It was hailed  Manufacture positive part of
as the greatest the instant film, the Pod.
industrial inventions of  Focus more towards
product design only .
the time similar to the
The technology behind the SX- SX-
way Apple was seen in 70 was so new that Polaroid's
the 80s or even now. previous production network Positive & Negative part of
the instant film
would have to be shaken-
shaken-up.
up.
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The Story of Polaroid: Scene 2
The rest was outsourced.
outsourced.
The manufacturing of the
camera was contracted out
to a number of companies
such as Bell & Howell,
Howell, and
Kodak produced the colour
negatives for which it
received $1 for every film
sold and reportedly made a
pre-
pre-tax profit of 80%.
80%.
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The Story of Polaroid: Scene 4
Polaroid decided to do it by
themselves even tough there are so
many uncertainties. Their
seemingly calm and successful
relationship with Kodak was soon
to be rocked by the new invention.
Rather than re-
re-negotiating their
existing contract,
contract, Kodak broke off
all relations with Polaroid,
Polaroid,
essentially saying: "How dare you
take us out of your production
network.“
network.“ Later Kodak decided to
compete with Polaroid.
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The Story of Polaroid: Scene 6
Later they decided to fit battery to
every film rather than to the
camera! A decision out of its time.
Try to outsource and negotiate with
a battery manfacturer,
manfacturer, ESB.
ESB. ESB
tried to take the challenge but later
failed. Dispute with ESB.
Later Polaroid decided to take
battery manufacturing in-in-house as
well and became the biggest
manufacturer of batteries in
America that they never wanted to
be.
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The Story of Polaroid: Scene 3
No doubt, the innovation was ground-
ground-
breaking. The technology was
considered "technologically
impossible" at that time.
Polaroid were pushing the boundaries
of not only technology but of science
itself.
They needed a chemical compound
they called the 'opacifier
'opacifier',
', which would
cover the picture when the picture had
developed. So they had to experiment,
they didn't know if it was possible. But
they decided to do it.
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The Story of Polaroid: Scene 5
With the declaration of war, Polaroid
decided to develop the new film in-in-
house to outplay Kodak
In addition to taking on all other
negative production, saddling it with
new and unwanted manufacturing
expenses.
Plus with the new pressure to
compete with Kodak they decided to
make the SX-
SX-70 more complex to
beat Kodak and convince investor.
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The Story of Polaroid: Scene 7
By the end of this innovation,
Polaroid had become a fully-
fully-fledged
vertically-
vertically-integrated manufacturing
company, which in the beginning
they never intended to be.
The advancement of digital
photography made bad situation
worse even tough they are among
the early manufacturers of digital
cameras.
This is the point when Polaroid
decline had started.
Its highly revered, charismatic and
brilliant President, Edwin Land
became the first casualty of this
affair.
Polaroid never recovered,
recovered, ultimately
filing for Chapter 11 in October 2001.
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 Lesson Learnt Reference
It is imperative for companies to foresee/predict disruptive
technologies that will effect the survival of the organization in
in the Garud,
Garud, R, and K Munir.
Munir. "From transaction to transformation
future. costs: The case of Polaroid's SX-
SX-70 camera." Research Policy 37,
no. 4 (2008): 690-
690-705.
Seemingly small, technical decisions can have disproportionately Carr, Kathleen. Polaroid Manipulations: A Complete Visual Guide
large effects that "ripple" across the overall production system and to Creating SX-
SX-70, Transfer, and Digital Prints (Photography for
supply chain network and beyond to vendor networks and the All Levels: Intermediate).
Intermediate). london:
london: Amphoto Books, 2002.
financial markets.
Coupland,
Coupland, Douglas. Polaroids from the Dead.
Dead. New York: Harper
Companies should have also curbed its creativity and Perennial, 1997.
innovativeness, not to “over-
over-innovate”
innovate” Iizuka,
Iizuka, Naomi. Polaroid Stories.
Stories. Woodstock: Dramatic Pub Co,
Managers should make an effort to learn about the technologies 1999.
embodied in their product.
product. Tinkering with product architecture Nicholson, Brian. "Transaction Costs and Control of Outsourced
without realising how the production network works, competencies Accounting: Case Evidence from Britain and India." Social
are arranged and modules are configured, can wreak havoc and lead lead Science Research Network Working Paper Series 37 (2006): 16.
to unexpected and undesirable consequences.
Technical innovations have social analogues,
analogues, implications for the Other online references used: http://www.wikipedia.com
http://www.wikipedia.com,,
network in which the firm is embedded. In Polaroid's case, technical
technical http://www.jbs.cam.ac.uk/interactive/expert_comment
http://www.jbs.cam.ac.uk/interactive/expert_comment/,/,
decisions taken in the course of innovation ended up alienating http://www.polaroid.com
http://www.polaroid.com
important stakeholders, eventually leading to the fall of this highly
highly
creative company.

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