Distressed companies often receive seemingly conflicting advice from restructuring professionals. They are told: “stick to your knitting” and “stay inside your wheelhouse” and “hit your sweet spot.”
They are also told to “think outside the box” and “color outside the lines” and “reconfigure” - or else face zombification.
There is an inherent contradiction between these two sets of principles, and no clear evidence as to which one is right. History is written by the victors. To stay in or to go out of the wheelhouse, box, or lines: which is the right move? Ultimately, the answer depends on how the story ends.
Take the case of Eastman Kodak, which first made cameras that everyone could own and use. This was the basis of their success.
Staying inside their wheelhouse (traditional film) did not work so well for Kodak. But going outside their wheelhouse (venturing into digital cameras) did not work so well either. Kodak was always behind its Japanese competition.
Kodak had the right idea initially – creating a camera that everyone could use. But they got caught up in the form (film) instead of function (accessibility). Business, like art, requires perfection of both form and function.
A nautical wheelhouse
In or out of its wheelhouse, Kodak did not stick to its knitting. It did not stay close to the needs of their customers.
Next week: Part 2: Sticking to knitting