Canikon another dinosaur?

Started Jun 3, 2013 | Discussions thread
Eamon Hickey
Veteran MemberPosts: 3,170
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yes, "disruptive innovation" has become a canard
In reply to ryanshoots, Jun 4, 2013

ryanshoots wrote:

Also tired of the cliche of writing an article espousing economic principles from mba programs to try to make your points seem well thought out.

The concept of "disruptive innovation" seems to have become the darling of a certain segment of business academia.

I don't doubt the power of the idea or of the phenomenon itself, but I do think that surface-level discussions of it often suffer from a very severe evidence selection problem -- i.e. they only talk about the cases where established market leaders failed to adapt to disruptive innovation, and they ignore the cases where the market leaders, in fact, adapted successfully to disruptive innovation.

Olympus and Canon, in fact, provide a perfect case study in successful adaptation to a disruptive technology that was far, far more consequential than mirrorless ILC technology -- the film-to-digital transition.

Olympus was the first traditional camera company to make a successful stab at digital cameras -- they began selling a very good digital point-and-shoot in 1996/7, and it quickly took off. Sony was equally successful with its floppy-disk based digital cameras around the same time. These were the first two real, substantial digital camera businesses -- everything before them (including a little consumer camera from the vaunted Apple) had been novelty items, sold in tiny numbers to techno junkies, or $20,000 commercial units, also sold in tiny numbers, to industry and media.

The largest camera company in the world then was Canon -- indeed, Canon was the only consistently profitable camera company through the decade of the 1990s -- but, of course, their entire business was film-based. They had a couple of desultory, very weird digital cameras that sold in tiny, tiny numbers.

Canon slept for three years, allowing Sony and Olympus to build a huge lead in digital compact cameras, and Nikon to take a big lead in digital SLRs (with the original D1). Then, in 1999, Canon realized their mistake, and launched a massive digital effort (their legendary CEO from that time, Fujio Mitarai, has acknowledged Canon's mistake in an interview he did in 2004.) By the end of 2002, Canon was the market leader in both digital compacts and digital SLRs, and they've never looked back.

Digital killed Kodak. Score one for disruptive innovation. It is a powerful phenomenon, no doubt. But digital didn't kill Canon -- they adapted. Score one for the established market leader. So, much depends on how you select the evidence you decide to look at.

There are too many variables for simple conclusions. And one thing is for certain -- quality of a company's management matters a lot. Canon's camera division managers have a much, much better track record over the recent past than either Olympus's or Panasonic's.

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