In the early 1990s, the photographic film industry had been a very profitable and secure market for many decades. Fujifilm followed a razor & blade business model: ~ 70% of Fujifilm’s profit was earned through film sales and photo development while cameras were sold at a comparatively cheap price-point.
When Fujifilm realised that photographic film was doomed, it decided to actively cannibalise its main revenue stream. Fujifilm introduced its first fully digital camera in 1988. However, this article is not about Fujifilm vs. Kodak and the (foreseeable) shift from analog to digital or the disruption of the photographic film industry.
It’s about how Fujifilm managed to create growth from new business areas unrelated to photography.
In the early 2000s, Fujifilm was under enormous pressure. Fujifilm's’ revenue had dried up and digital cameras were still too expensive to appeal to the mass market. At the same time, Fujifilm had to deal with the fixed costs of its chemical laboratories and research facilities that were by then specialised in irrelevant technology. In 2004 Fujifilm put an end to its photo-film-centric business approach and applied its chemical know-how and research rigor to skincare, cosmetics, and pharmacy.
Interestingly, technological assets that helped protect the photographic film against UV-light, proved effective in protecting and nourishing human skin. Astalift, Fujifilm’s skincare product line was born in 2007 and is leading the skincare market in East and South East Asia.
Fujifilm’s ability to create new business opportunities was not the result of a technological advantage. Their laboratories and photo-chemical know-how were identical with Kodak’s.
The difference was that Fujifilm dared to radically change a core belief about the identity of their organisation.
If everyone at Fujifilm had believed to only be in the camera business, it would have been impossible to see opportunities outside the core business. In fact, branching out to cosmetics does not make any sense for a camera producer or perhaps only when it believes it does. One could argue that beliefs either facilitate or obstruct innovation.
Even if a similar idea had come up at Kodak, it would likely have been rejected not because of a lack of creativity but because of an inability or unwillingness to challenge existing conventions and consider alternative beliefs.
What are the core beliefs holding you back as an organisation from uncovering radical innovation opportunities?
Radical Innovation starts with Hacking Cultural Beliefs, not with technology. New beliefs make new opportunities possible, technology merely enables them. Through hard work and persistence, Fujifilm turned their belief into a 3.4 billion dollar business. Fujifilm still produces photographic film to keep the culture of film alive and to protect it. Film now contributes to less than 1% of their profit.
Using our experience (and frustration!) as innovation consultants, we developed an approach, “Hacking Cultural Beliefs”, that enables the systemic creation of Radical Innovation. Hacking Cultural Beliefs begins with identifying and reframing internal and external beliefs held by your organisation and the industry you are in. Questioning what everyone else accepts ‘as given’ allows you to create unique opportunities others don’t see.
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