What Kodak's Bankruptcy Teaches Us About Change

This content was previously published by Kotter International’s Executive Vice President Randy Ottinger on Forbes.com.

Kodak has emerged from bankruptcy protection slimmer, trimmer, and with a new business plan. We’re all hopeful that the bankruptcy experience has given company leaders a fresh perspective around leading advances that make doing business faster, easier, and less expensive for its customers.

As Kodak enters a more focused space – limited to packaging, graphic communications, and functional printing – they will face tough competition. But, as I recently told the Associated Press, if the company focuses on the customer and its culture, they will be able to pull ahead of the competitors in this space.

In order to do this, Kodak must Change Management Strategy – going from the behemoth in the industry to a more nimble, engaged, and innovative company. This is a cultural change, and there are overt and subtle ways the company can embed this new perspective into the culture.

1. Focus on bringing the outside in. Rather than looking within the organization for small changes, or even within the industry, Kodak needs to listen for the new ways customers wish to use its products. This is the only way they will avoid their past situation where a massive shift was happening in their industry, but they failed to see it because they still had dollars rolling in from their existing products.
2. Engage the entire organization. The new Kodak must engage every employee, not only as executors of a top-down plan but as innovators who are constantly looking for new and better ways to reach the goal. The new Kodak will must root out complacency at every level.
3. Put innovation first. In the product development cycle, Kodak must encourage and welcome the pie-in-the-sky ideas. As long as the engineers have a clear understanding of the vision, none of this is wasted effort. Recently Google GOOG +0.08% had to place rules around their ’20% time,’ the time employees dedicated to pet projects. It makes absolute sense that innovation without a clear direction can be wasted energy, but too much “in-the-box” thinking can erode a company’s competitive edge.

In part, Kodak was dragged down by the alluring comfort of being on top. When people are saying that the sky is falling, but the dollars keep rolling in the door, it’s easy to deduce that people are over-reacting. And a system based on providing resources for the biggest earning business units makes it difficult to see emerging market shifts. If Kodak follows these three rules, they can avoid the dangerous place they’ve found themselves in the past.