The Book “Innovation Out of Crisis” by Shigetaka Komori

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Table of Contents

Introduction
Background Information
Summary
Evaluation
Core Rigidity and The Performance Engine
Conclusion
References List

The success of Fujifilm amid its business turmoil is an extraordinary story that leaves many people surprised. Innovation Out of Crisis was written by Shigetaka Komori, published in Berkley California by Stone Bridge Press on May 5, 2015 and has 216 pages. The book explains how the Fujifilm company thrived as its main business deteriorated. It is divided into two main sections where in the first part, “Fighting for Fujifilm” the author explains the challenge the corporation faced as its operations deteriorated due to the revolution in technology. In the second segment, “Managing for Victory”, the CEO highlights how leadership can change and shape the trajectory of a given company, thus, realizing success (Komori 2015). This paper explores the review of the aforementioned book by evaluating its success in narrating the revolution witnessed in Fujifilm.

Introduction

In the year 2000, Fujifilm company’s sales from photographic films constituted the main source of its revenue. After a decade, a revolution in the industry which had introduced the digital camera destroyed the industry. As a result, its main giant competitor, Kodak filed for bankruptcy in 2012 as it could not match with the turmoil in the business. On the contrary, Fujifilm corporation recorded revenues and it continued being successful, a trend it maintains currently (Komori 2015). Consequently, there are many unanswered questions by many people who wonder about what took place and as lessons that can be learned from the company by others. Therefore, Innovation Out of Crisis recounts the events that took place during the time by the CEO and chairman who revived the business, which was on the verge of collapse. He expounds on how he engineered organizational transformation through innovation and product diversification using personal management philosophy (Komori 2015). The book falls under the genre of business management.

According to the statement of the author, Fujifilm’s core market was fading at an alarming rate, and it was critical. The company had the technology, management resources, sound finances, a brand, and a vibrant workforce (Komori 2015). This formed an integral asset whose combination and utilization could realize success and protect the culture of photography, which is the mission of Fujifilm. The relevance of the book and its inherent topics come at a time when the world of business is in a continuous flux with companies such as Kodak closing. One is left to wonder if there are types of employees who can single-handedly help an enterprise thrive as Komori has done. Similarly, this bibliography work can be likened to the Target Costing and Value Engineering book which highlights the Toyota company’s use of technology to produce top-notch vehicles with low input cost (Cooper and Slagmulder 2017). This is a successful story whose strengths are boundless and it acts as an inspiration for the future business leaders

Shingetaka Komori

The Chairman and CEO of the corporation was born on 5th September 1939 in Japan and graduated from the Tokyo University with a Bachelor of Arts in economics where he joined the company in 1963. He excelled and gained experience in media recording and graphic systems as he ascended ranks. Consequently, he was appointed as the Managing Director of Fuji Photo company in 1996 and served in the same position till 2000 (Photoxels 2015). In 2003 he became the CEO and president where he was faced with the challenge of the digitalization and as a result, he succeeded in the reformation of the transformation of the company. In addition, he served as the chairman of the Japanese broadcasting corporation and the president in the Japan, Germany, and Netherlands societies (Photoxels 2015). He used his expertise by focusing on growing sectors of medical equipment and LCD materials, which resulted in a V-Shape performance (Hansen, 2020). As a result, Fujifilm is a leading corporation in various sectors such as digital imaging, healthcare, document solution, and graphic systems.

Background Information

When reviewing the book, what comes into the mind of the reader is the country of origin of the author Shigetaka Komori. Japan is one of the major contributors to the film industry. Towards the end of the nineteenth and the start of the twentieth centuries, Fujifilm was among the best brands in the world in the production of negative stock and raw print with Fuji color process. As a result, it defeated its main competitor Eastman Kodak, after a rivalry spanning over 5 decades. Furthermore, even though it is mentioned sparingly, the raw material for the film industry, especially in the movie world, forms part of the corporation’s numerous undertakings in the image-making business or sector.

Summary

In the book, Komori vividly recounts his journey as he steered the business through a crisis. As such, the industry was becoming irrelevant due to the emergency of digital technology, which posed a serious challenge to the company’s photographic industry, which was the main operation (Komori 2015). The resultant changes led to the giant Kodak filing for redundancy protection in the year 2012, showing that the business of cinema and digital photography had been passed with time, and could not be redeemed. Similarly, in 2013 the Fujifilm corporation stopped selling their motion picture stock of 35mm. However, it registered profits, making many people wonder how it succeeded in doing it amidst the challenges! It is unfathomable that it managed to survive the cut-throat competition, especially for an analog company. This is symptomatic of the power of Japan in its post-war industrialization through economic acumen and technical innovation. As such, Komori’s work and determination in Europe and against rivals in the US make the book compelling and insightful reading for business and personal fulfillment. Consequently, the review of the book expounds on the part one and two, the innovation journey, and gives a personal response or evaluation.

Fighting for Fujifilm

This is part one of the book, which highlights the history of the company and its challenges. When Fujifilm was started in 1934, its rival was already an established enterprise popular around the world by its affordable still cameras, chemicals, paper, and film. Unlike it, Fujifilm was a local company in Japan, and they received financial support from the government in the form of a subsidy during the aftermath of the war when the Allied nations sanctioned Japan. Therefore, it led to the need to look for local industries and to develop brands using local materials such as photographic equipment. During this period, Fujifilm remained a local entity with its market being solely in Japan promoted by the love for photographs by the citizens. Conversely, the company diversified its business by venturing into motion picture stock, graphic art materials, X-ray film, and pre-sensitized plates (Komori 2015). It later started producing magnetic audio tapes, video cassettes, and computer storage which involved the replacement of the photographic film’s silver halide with magnetic powder. This forms the basic foundation for the innovation journey started by the company with the stewardship of Komori.

When reliving the narration by Komori, one realizes that the defining moment for Fujifilm came when it overtook its competitor through the invention of a high-speed colored negative film, the F-11 400. While affirming the success, Komori asserts that the company’s technology surpassed that of Kodak in the early 1980s; they were firmly ahead of the American giant in all forms and varieties of film. Furthermore, the loosening of sanctions on Japan became a gift. Although Kodak had entered the Japanese market, Fujifilm was given a chance to be the official sponsor of the Olympic games held in Los Angeles was the backyard of the US digital company. Consequently, it built its production factory on American soil in 1988. “From the 1980s and 90s, we waged a persistent struggle with Kodak for the world market share” (Komori 2015 p. 17). Moreover, the increase in sales of their primary products coincided with his appointment as the company president and they overtook their rivals in profits by 2001, after 40 years of training.

However, he nonchalantly highlights that their victory did not last long because after taking the lead, film sales plunged globally. As digital cameras were unveiled in the market, the change from the colored photographic film was inevitable and by 2010 global demand had receded below ten percent of the sales in 2000. On the contrary, Komori reflects that he had anticipated changes resulting from the new digital are and his insights on where the future ought to be, provides interesting insights on Innovation Out of Crisis. For instance, the diversification of the Fujifilm company in its production to venture into medical imaging, computed radiography, and diagnostic X-ray imaging saved the company (Sirk 2020). Some of its technologies like the aforementioned FCR are still the main product used in the world.

Before his appointment to the presidential position in the company, Komori recalls an assignment he was given by his predecessor. He was instructed to investigate the impact of digitalization and how it will affect their business as well as the technology (Komori 2015 p. 27). Together with four staff, they came up with a 30-page report which he used to steer the company ahead years later when he became CEO. Also, in the pre-digital period, magazines, newspapers, and books layout used celluloid. As such, the process was manual-oriented, where a color magazine got assembled by hands; different film layers for illustrations and photos were overlaid to make a plate used for a single page. This made Komori realize that their process could not be viable in the future with the introduction of digital desktop publishing. Therefore, this acted as a foreshadowing for what was to come soon. He recounts, “In the coming digital age, the technological assets built up by the company won’t be viable” (Komori 2015 p. 25). Further, he argued that price war would intensify and as a result of the removal of technological barriers.

Evaluation

The book highlights that the digitalization of desktop publishing by Fujifilm was the beginning of a venture into new innovation. As a result, Komori was able to make unimaginable profits and overtake Kodak in the process. While recalling the good tidings brought by the innovation, he says “Fujifilm was producing annual operating profits of over ¥100 reaching ¥180 billion” (Komori 2015 p. 26). Besides, the business expansion spread to unexpected sectors as a result of its prowess in polarizing and photochemical protective films.

Personal Views on Innovation Management

There are various factors that influence innovation in a company. Parameters such as staff training, subsidies and government incentives, a viable environment, access to finances, and the company size leads to development in an organization. Fujifilm is a company that is at the forefront of new discovery with a flexible, positive attitude where they combine latest technology, expertise and reliable human resource to offer top-notch products and services across the world. The narrative by Komori on business expansion riding on the adventure of ground-breaking innovations cannot be read sparingly by taking his side of the story alone. In the midst of all this, there are external factors that can be highlighted to have contributed to the company’s global dominance and positioning. As such, the major financial crisis of 2008 in the US led to the rise of the yen against the dollar as a result of the Lehman brothers’ bankruptcy (Amadeo 2020). This enabled the company to have a financial advantage over Kodak, which was solely an American company.

Consequently, there are various lessons one can learn from the Fujifilm company on innovation management. For instance, education is the basis through which employees and leadership in an organization share experiences where less proactive members are encouraged to contribute new ideas. Also, this enables a company to compare with its competitors, thereby improving on its weaknesses. Furthermore, through collective passion, Fujifilm was able to trigger new ideas as a result of research by the CEO, and this became their challenge and a responsibility to succeed (Komori 2015). In addition, open-mindedness and diversity in a company entail external selection, project team creation, internal promotions and reconnaissance lead to an enabling environment for innovation.

Besides, the leaders’ attitude plays an integral part in the implementation of new ideas. This can allude to the CEO of Fujifilm, whose ability of not to give up and persistence led them to venture into new fronts. Also, innovation management and tolerance for mistakes is a big lesson in management. This involves taking risks with an open-mind set which improves on failures. As such, Komori highlights that early research prepared him to be sure about the future and where he wanted to take the company (Komori 2015). Furthermore, being coherent in any invention sets a strategy where sound judgment and consideration promotes and set an organizational culture where daily operations are tailored towards one goal.

Reasons for Innovation

While Kodak has gone under, Fujifilm has metamorphosized over the years to become one of the leading corporate entities in the film industry. Their innovation stems from the crisis of 2001, which plunged their revenues due to the revolution in digital technology. Komori recounts that “A market that had accounted for 60% of the sales which was equivalent to two-thirds of the profits disappeared…” (p. 27). Also, the company’s core business was stagnated with daily processing of 1000 film rolls compared to the average of five thousand before. Therefore, to avoid closing down the company, Komori shut most of their manufacturing branches and downsized the human capital. As a result, 5 thousand jobs were lost and operating costs were reduced to $500 million (Sirk 2020). This gave room for the management to look for innovative ideas and make a decision towards technology.

Venturing into Cosmetics and Pharmaceuticals

Fujifilm’s launch of Astalift as a care compound in 2007, which consisted of anti-aging skin products that are based on the film conservation technology of ant-color fading, led to the prevention of skin fading and sagging. The innovation of pharmaceuticals enabled the company to develop drugs. Also, it continues research on chronic diseases like cancer and Alzheimer’s (Fujifilm.Com n.d). Similarly, the invention of medical informatics, digital X-ray diagnosis, and mammography has made it among the pioneer companies in medicine. As a result, cosmetics and healthcare contribute 3.4 billion US dollars annually. In contrast, the company’s profits in 2017 from photography products accounted for less than one percent of its profits (Sirk 2020). One cannot fail to notice the versatility of this corporation in reinventing itself, and as a result, it stands out as a role model for other ventures to follow.

Managing for Victory

While it is difficult to imagine that such a narrator has poignant memories, the aforementioned topic forms the second part of Komori’s bibliography, where he takes us back in time and takes more about war. The book is lively and eventful as the author becomes engaging by choosing to use comparisons in a parallel and symbolic manner. However, by borrowing from the Japanese mantra and fusing it with modern literature, he comes out as a person living in the past present. He relates life to business by saying that a battle cannot be lost, showing his determination not to give up in all the undertakings. The same can be viewed from the country’s resolve to work hard after WW 2 when it had been sidelined, thus becoming a modern force in the world. However, going through the book under the “Life is a Battle…” one is left with the feeling of an individual who is gifted to motivate others. Komori (2015) writes, “Conflict produces losers or winners”, (p. 93). However, he rebukes Japan for using diplomacy in its fairs instead of confrontation.

Core Rigidity and The Performance Engine

Although many companies utilize their competencies to gain a competitive advantage in business competition, sometimes, these capabilities become the source of their challenges or core rigidity, thus, undermining their performances. As such, Fujifilm specializes in research and development, manufacturing while it enhances its sales. Also, the collapse of its main competitor, Kodak, formed the background from which they shifted their focus on films to other new areas (Sirk 2020. Rigidity is realized when competitors and new technologies emerge, resulting in the shift of the market previously enjoyed. While highlighting on the importance of Performance Engine, McCarthy (2020) asserts that the theory presupposes that innovations and daily operations of a company are always in conflict. This results to the disruptions of new ventures by an organization. This is because organizations are developed in the premise of daily continuous and predictable operations, unlike in new inventions.

Consequently, this leads to the question as to how the company managed to forge ahead with its innovation separately without interference from its internal daily operations. Conversely, ongoing operations did not interrupt its diversification into new technology simply because the CEO had beforehand research on the volatility of the industry after he was commissioned by the management early. As a result, while on the one hand, the management sold some of its subsidiaries abroad and downsized its staff, on the other hand, it formed a new team dedicated to innovations (Komori 2015). This was because the CEO had realized that to adapt to the new change, they had to venture into new frontiers while maintaining the production of photographic film.

Inability to Sense the Technology Shift by Management

Although, the company had initially failed to predict the future of technology but instead speculated on the likely effects of digitalization, the timely research by the general manager in 1995, prepared it to the eventual revolution. Komori expounds on the task he was given by the President to look into the likely impacts of the change, and he produced a report, which helped him later when he became CEO (Komori 2015). This can be attributed to his visionary leadership that believed in competition and not giving up. Therefore, this underpins the success story of a company with a futuristic CEO.

Conclusion

In summation, Innovating Out of Crisis has a detailed interwoven narration about the history of Fujifilm and the development of new technology, which has enabled it to remain steadfast not only in healthcare and pharmaceuticals but also in the new area of cosmetics. The invention of digital x-ray diagnosis and Astalift as a beauty compound has revolutionized health. In addition, using performance theory, you can evaluate the CEO and his leadership characteristics that saw the company wave through uncharted territories and become successful in the end. By carrying out research, Komori prepared himself and the organization for the digital change, thus, he was able to shift from photography production. His leadership style and management can be applied to other corporations. The book reminds us of how digital technology shifted the paradigm of overdependence on a single product. As such, it was challenging all to become dynamic to survive the ever-changing world.

References List

Amadeo, K. (2020) How the 2008 Lehman brothers collapse affects you today.Web.

Cooper, R. and Slagmulder, R. (2017) ‘Toyota Motor Corporation’, Target Costing and Value Engineering, 12(3), pp. 253-267. Web.

Fujifilm. Com. (n.d.) Innovation: advanced skincare products that only Fujifilm could create. Web.

Hansen, S. (2020) U-Shape? V-Shape? Recovery shapes explained and what they mean for America’s economy. Web.

Komori, S. (2015) Innovating out of crisis: how Fujifilm survived (and thrived) as its core business was vanishing. Berkley, CA: Stone Bridge Press.

McCarthy, M. (2020). The other side of innovation. Web.

Photoxels. (2015)Fujifilm: New book “Innovating out of crisis, how Fujifilm survived (and thrived) as its core business was vanishing” provides insights into how Fujifilm survived & thrived in the digital world.Web.

Sirk, C. (2020) Fujifilm found a way to innovate and survive digital. Why didn’t Kodak?Web.

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