With Deeon Otto, Chief Executive Officer, Australian Timbers Ltd
The story of Kodak is a very poignant one when considering the need to remain relevant in a changing market.
Kodak was a company that commenced in 1888 and was considered to be the market leader in photographic film for most of the 20th Century. It was famous for the tagline “Kodak moment” which became synonymous for an instant which was recorded for prosperity. However, by the late 1990s as a result in the decline of photographic film and the rising popularity of digital photography, the company began to struggle due to Kodak’s slow transition into the supply of digital cameras. And then in 2012 Kodak filed for Chapter 11 bankruptcy protection.
The irony of this is that a Kodak engineer actually invented and built the first digital camera in 1975, but the executives were convinced that no one would ever want to look at their photographs on a television screen and besides, they should continue to focus of photographic film which was their strength.
As the CEO of a company which has been operating for over 85 years in the timber industry the history of Kodak and the failure of their management to see the change to the relevance of their product and the advent of their “disrupter” is particularly relevant and thought provoking.
The only way a business can exist and to potentially grow is by maintaining relevance to a market segment. This may be a product, a service or a combination of both, but there has to some reason there is a market for it. What sold yesterday may not sell tomorrow!
The majority of us are not likely to be the leader, but a follower, who sees the opportunity in the product or service that already exists. They may seek to market this to a clientele as they consider they have a more attractive offer, which could be for many reasons. Over the years I have seen many participants enter the timber industry on this basis and many of those companies have succeeded while there are quite a number of others who have failed.
While a number of the failures may have been due to financial management, there are many which have failed to maintain “relevance” as the industry changes and moves to different products or services.
There have been numerous product developments in the timber industry which has significantly shifted the opportunities for historic products or indeed there has been many products which are not timber based which has taken market share from traditional timber products. In some cases this has caused a reduction to the number of participants in many manufacturing sectors utilising timber products.
Some of these products that I have seen change over forty years include:
- Laminated veneer lumber (LVL) which has substituted larger section timber and steel components;
- Medium density fibreboard (MDF) converted the use of particleboard, hardboard and plywood in many applications;
- Domestic steel framing was developed to compete with traditional timber framing;
- Timber treatments, particularly to plantation softwoods, which allowed products to be utilised in applications it would otherwise have been unsuitable;
- Flat pack furniture which has enabled products to be produced using technology and then freighted at low cost, with the client utilising their own time to assemble;
- Cross Laminated Timber (CLT) which is being the construction of multistorey buildings, with a significant benefit being the time of construction.
Anyone who has been in the industry for a reasonable time would be well aware of the examples I have used above and would have numerous more which you would have experienced. However the light in which these changes would be viewed would be dependent on if you’re involved with the innovative product or the product potentially being substituted. In other words, are you the hunter or the hunted?
If it is your products or services which are being targeted, this is where you need to review the ongoing relevance of what you are currently offering and if this will continue to have a market position in the future. The situation is that many companies fail to undertake a review and to consider this issue as they feel things are travelling along just fine. Often by the time they realise their position is at risk it’s too late.
I don’t intend to suggest what you need to do to maintain the relevance of your business as there are numerous publications and reference material on the subject readily available. Besides, this will be significantly different for each of us and our businesses. However it is my aim to highlight the need to be aware of what might be around the corner and to consider what could a “disruptor” to your business my look like.
Many of us do not have the ability or the innovative nature to be the creator of the light globe, personal computer or the smart phone, but we do need to be aware that someone is and what might they develop that could change the relevance of your business overnight. This has been even more important over the last ten or so years where the world has experienced rapid change and innovation which makes it even more challenging.
Ongoing review and vigilance is vital if all of us in the timber industry want to avoid our own “Kodak moment!”