Nobody in Healthcare Wants a Kodak Moment!

| Health Care

I gave a speech this week at a Healthcare Information and Management Systems Society (HIMSS) conference, the largest healthcare event in America. My topic was “Disruptive Innovation and the Consumerization of Healthcare.” As I think about it, the healthcare industry could learn a really good lesson from Kodak.

Moore’s Law is a predictable law that has accurately forecast the performance and cost improvements of microprocessors for more than 40 years. Evolutionary improvement is a totally linear concept.

Yet innovation never occurs in such a predictable linear way.

After I left Apple in 1993, I was asked by the new CEO at Kodak to advise on the future of digital imaging marketing. My advice at the time was pretty simple: Kodak should focus on picture making – not just picture taking. As a $20 billion market cap company, I said, why not try to acquire Adobe, the creator of Photoshop, which was then trading at about $1.2 billion?

The executives at Kodak were top-of-their-class chemical engineers. They saw the growing importance of digital imaging, but in their linear analysis of the digital threat, they concluded it was decades away from becoming mainstream. So they doubled down on vertical integration into film processing while setting up a small ancillary digital imaging group to develop and sell digital cameras.

By the early 2000s, digital camera picture quality was getting good, broadband Internet was coming on strong, and inexpensive photo quality printers meant there was now a high quality end-to-end system for digital photography. Kodak, however, was still focused on marketing its single use film camera, which continued to sell well.

In 2007, everything changed almost overnight . . . and Kodak was caught completely unprepared.

Apple and Google introduced smart phones that could take high quality photos and send them wirelessly over the now widely available 3G network. Meanwhile, Facebook almost overnight became a social media sensation, with most of its content made up of personal photos sent from smart phones. Many people abandoned their single use film cameras and stopped printing photos as publishing photos to Facebook took off. A perfect storm decimated Kodak in less than 2 years. Last year, Kodak filed for bankruptcy.

Disruption is non-linear. I believe the consumerization of healthcare holds really big opportunities for breathtaking innovation. It also holds perils for healthcare incumbents who fail to adapt and prepare their companies for non-linear disruption.

Nobody in healthcare wants another “Kodak Moment.”