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Fujifilm and Kodak, once global leaders in the production of photographic film, took a major hit when the digital camera disrupted the industry. While Kodak is just another victim of disruption, Fujifilm is a case study in corporate innovation and survival.

The life cycles of products are shorter than ever and the mean time between surprises seems to be constantly decreasing. Surviving digital disruption today requires bold strategies and one of them is the radical diversification strategy adopted by Fujifilm.

When the digital photo technology emerged, Fujifilm re-evaluated its operations and scouted for sectors that could replace its core business and cash cow, the photographic film. Fujifilm analyzed their existing knowledge assets and realized they could use their extensive know-how in fields such as highly functional materials, chemical processing and large-scale production for other attractive business areas. A look into Fujifilm’s new product portfolio reveals a wide range of products, from solar cell components and ion exchange membranes to skin care products. These products utilize knowledge acquired during the development of photographic films and some of them are even produced with the same production technologies.

Fujifilm also expanded in an area they had been active in for a long time, the healthcare business. As Fujifilm had produced photographic film for x-ray machines since the 1930’s and developed the world’s first digital x-ray diagnostics system in 1981, they already knew the industry even if it was not their main business. Today, Fujifilm has expanded their core healthcare business as well as extended in other areas of the same field by acquiring or investing in roughly 40 companies since 2000. Today Fujifilm is active not only in the areas of diagnosis, but also prevention and treatment, and is on its way to becoming a comprehensive healthcare company.

Fujifilm has flexibly and successfully responded to rapid shifts in the market and has been able to see the tipping point of their core business as a possibility to expand to new areas by using their main assets and make radical changes to their strategy.

Today, when the product life cycle has transformed from a bell curve into a shark fin, disruptive innovations emerge even faster. Products are often built upon already existing platforms enabling new products to be released fast and to big crowds. This is exactly what happened when Google released its navigation app for smartphones and wrecked the market of handheld GPS-devices, slashing Garmin’s market cap with 70 percent and TomTom’s with 85 percent. As in this case disruption often comes from a completely different industry and is therefore even harder to predict.

Some products, such as the car, are hard to replace with a smartphone app. But chances are that even in the automotive industry, new areas of expertise will become the most important assets in the future. Being able to develop efficient combustion engines, active safety systems and cars that are fun to drive are valuable assets for car manufacturers today. If we were to have autonomous, electrical cars that unlike humans never make mistakes in traffic, the value of these skills would fall dramatically leaving room for companies possessing skills in e.g. advanced software development and battery technology to reap a large portion of the market.

As in the case of Fujifilm, a common move by survivors of disruption is a shift in focus from the product to their most valuable intangible assets in form of expertise in certain fields. When focusing on what can be achieved by their main competencies, the companies are not as dependent on the core products or services and can adapt faster. However, even this strategy might not be enough to cope with the speed of disruption that is a reality today. The development speed of software-based products together with instant global distribution can disrupt an industry overnight leaving reactive actions useless. There is simply no time to react. What the future holds for the automotive industry, banks and telcos is hard to predict but there is reason to believe these industries will look a lot different in the next decades.

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