Kodak, Blockbuster, and the Real Reason Great Companies Fail at Innovation

When we talk about disruption, we often assume the companies that failed simply didn’t see it coming.

They were asleep at the wheel.
They didn’t understand technology.
They underestimated the future.

But that explanation is comforting and wrong.

Some of the most disrupted companies in history didn’t fail because they lacked vision. They failed because acting on that vision required a level of courage most organizations couldn’t muster.

Kodak Saw the Future Before Everyone Else

Kodak is often framed as a company that “missed” digital photography.

That story isn’t true.

Kodak actually invented digital photography. They had the technology, the talent, and the foresight to see where the world was going. Internally, they understood that film was eventually going to be replaced.

The problem wasn’t awareness.

The problem was execution.

Fully embracing digital photography meant dismantling a wildly profitable film business. It meant walking away from the very model that made Kodak successful.

Knowing the future is one thing.
Choosing to abandon the present is another.

Blockbuster Didn’t Miss Netflix They Hesitated

The same pattern played out with Blockbuster.

Blockbuster had opportunities to acquire Netflix. They were aware of changing consumer behavior and emerging subscription models. They didn’t lack intelligence or data.

What they lacked was conviction.

Buying Netflix or pivoting aggressively toward streaming would have forced Blockbuster to disrupt its own business model built on physical stores, late fees, and DVDs.

Instead of acting boldly, they stayed comfortable.

And comfort is dangerous in moments of disruption.

Smart People Don’t Guarantee Adaptability

One of the biggest myths in innovation is that companies fail because they don’t have smart people.

Established organizations are filled with brilliant, forward-thinking individuals who understand exactly what’s coming next. The issue isn’t talent.

The issue is structure.

Legacy systems, rigid hierarchies, and incentive models designed to protect the status quo make meaningful change incredibly difficult. Even when individuals see the future clearly, the organization itself often isn’t built to move fast enough to meet it.

Innovation doesn’t die because of ignorance.
It dies because of resistance.

Innovation Without Courage Is Just Observation

Inventing or recognizing disruptive technology isn’t enough.

Kodak proves that.
Blockbuster proves that.

Innovation only matters when it’s fully integrated into the core of the business. That requires leaders to accept uncertainty, short-term losses and uncomfortable trade-offs.

It means asking hard questions:

• Are we willing to cannibalize our own revenue?

• Are we prepared to disrupt what currently works?

• Are we ready to risk today for tomorrow?

Those decisions don’t feel innovative.
They feel terrifying.

Incremental Change Is a Slow Death

Kodak didn’t ignore digital photography; they approached it cautiously.

But incremental change doesn’t work when disruption demands transformation. Partial adoption creates the illusion of progress while competitors who fully commit move faster and learn quicker.

Half-measures don’t stop disruption.
They delay the inevitable.

Netflix Chose Commitment Over Comfort

Netflix didn’t just predict streaming, they committed to it.

They were willing to move from DVDs to streaming even when DVDs were still profitable. They disrupted themselves before someone else could do it for them.

That willingness to walk away from what worked is what allowed Netflix to become a category-defining company while others hesitated.

The Real Lesson of Disruption

The hard truth is this:

Even the best companies can be disrupted if they’re unwilling to change.

Disruption doesn’t punish companies for being unaware.
It punishes them for being hesitant.

Seeing the future is easy.
Acting on it is rare.

And unless organizations build the courage to fully follow through structurally, culturally, and strategically history will keep repeating itself.

Kodak knew.
Blockbuster knew.

Knowing just wasn’t enough.

Frequently Asked Questions

Q1. How did Kodak fail to innovate?

Kodak failed to innovate because it did not fully embrace digital camera technology, even though it invented it. The company feared that digital photography would hurt its film business. This hesitation allowed competitors to adapt faster, take market share, and eventually overtake Kodak.

Q2. What companies failed due to lack of innovation?

Several well-known companies failed due to lack of innovation, including Kodak, Blockbuster, Polaroid, and Borders. These companies struggled to adapt to new technologies and changing customer behavior. Their rigid business models and slow decision-making led to decline and bankruptcy.

Q3. What was the real reason Blockbuster failed?

Blockbuster failed because it was slow to change its business model. The company relied on physical stores and late fees while customer behavior shifted toward online streaming. Fear of disrupting its existing profits prevented Blockbuster from acting quickly, allowing competitors to take over the market.

Q4. How can companies prepare for future disruption?

Companies can prepare by continuously learning, experimenting with new ideas, and staying close to customer needs. Building flexible systems and encouraging change helps organizations respond faster to future disruptions.

Q5. What is the difference between invention and innovation?

Invention is creating something new, while innovation is successfully applying it in the market. Innovation requires execution, strategy, and adoption, not just ideas or technology.

About the Author:

Shawn Kanungo is a globally recognized disruption strategist and keynote speaker who helps organizations adapt to change and leverage disruptive thinking. Named one of the "Best New Speakers" by the National Speakers Bureau, Shawn has spoken at some of the world's most innovative organizations, including IBM, Walmart, and 3M. His expertise in digital disruption strategies helps leaders navigate transformation and build resilience in an increasingly uncertain business environment.