Have you seen a large ship going down? I have, from close.

Polaroid Corp was a great company. Its instant photography technology ruled the world for 70 years. It served presidents, leaders, businessmen and even common people – it was the only way to take an instant picture (a position taken over by the mobile phone post 2007). It had some of the best talent, great chemical engineering skills, manufacturing plants, distribution and experience in selling photographic products.

When I joined Polaroid, it had a problem. Its revenues had been flat at $2.1 billion for nearly 3 years. A new technology – digital camera – was making inroads into photography and a upstart called Adobe was riding a popular wave, on the back of an editing software called Photoshop. Within a week of joining as head of the software team at the India office, I was at its HQ – it was a grand office, old-world teak panelled, lined with glorious Renaissance Art, reeking of tradition and quite intimidating for a newbie!

8:00 am sharp we were in its massive board room, 10-12 senior managers with the CTO chairing the meeting, huddled over the Question – what should Polaroid do to compete with the digital camera threat ? The options on the table were a kiosk, an instant, digital camera, a digital camera with an instant printer, the instance camera with a digital storage, AND consumer friendly software to target hobbyists. SWAT teams had been assigned the task of researching each option and present their research, insights, analysis and recommendations. Then we would have a brainstorming session and short-list two candidates that could be presented to the management team.

As each team presented its report, I was impressed with their in-depth study of the problem, the technology landscape, the challenges, risks – it was very professional and I was happy to have joined such a team. They talked all the right talk – customer engagement, service, innovation, simplicity, fun, lower costs, ecosystem, partnership, leverage the brand – every management jargon you can think of (in the context of ideation) was perhaps mentioned.

Yet – there was a big problem. After clearly establishing that digital technologies were a disruptive force, with a significant growth potential, all the teams tried to answer the question – “How can this help Polaroid sell more film?” All their ideas, at this point, moved from the exciting to the complexities of trying to marry film with digital. How can we add an instant printer to the kiosk? Can a digital instant camera process film and store digital at the same time? Can a digital film be created? Each team came up with innovative, but complex ways to address this.

Since I was a new hire, with some fancy education and smart ideas (at least the CTO thought so when he hired me), I was asked to give my comments as we got started into the brainstorming. So, I started by asking the obvious question bubbling in my mind – “Can I ask why it is important for a digital product to sell film?” – it was as if I had dropped a bomb! The silence in the room was prophetic. It was as if a naxalite had been dropped into Lehman Brothers board-room. VPs looked at each other and the CTO, as if asking – “is this the bright guy you’ve hired?”

The CTO, a 60+ senior veteran, having seen many young bulls off, told me politely – “film is our unique strength. Film is where we are leaders. Film is how we make money. Film is what Polaroid is all about”. That should have shut me up, but as some of you know, I can be argumentative when I want to. So I told the board-room why digital, in my view, was a complete new technology – easier, cheaper, more fungible than film and in fact it would disrupt the film completely. Why we should build a digital only business and make money in completely new ways – software, storage and sharing.

In the discussions that followed, many people complimented me for my insights and said they were happy to see that “we have a good leader in India”. But the discussions for nearly half a day were around, you got it – “film”. When you put 10 engineers on a problem with a hard constraint, they will find 10 new ways to solve the problem, and they will love each one of their solutions, its given! Not one person in the room, with many years of experience, challenged the notion that film was not needed for a digital economy and that force fitting film was just going to make it hard for the consumer, which would likely get rejected in the market.

Later, at dinner that day, the CTO shared another piece of insight – ‘We are Polaroid”, he said. We cant do things that small companies like Adobe are doing. We will do it the Polaroid way. I accepted his wisdom as he was more experienced, celebrated, richer and he was my boss! In 6 months, I heard that Adobe was setting up its campus in India and I jumped across to the young upstart. The CTO tried his best to retain me back and asked me what would help change my mind – “you have to become a digital company, sir. I don’t see that happening if all of the company is chasing film”.

In the next 5 years, Polaroid invested significant profits to build these instant, digital products. Not once did they think of digital-only as an option. They continued to dismiss internal voices and the traditional, high-margin film business continued to be the black hole for ideas. The revenue stayed flat at $2.1 billion. In another 2 years, the profits from the film business fell off the cliff, digital had taken over the world.

In 2008, Polaroid filed for bankruptcy.

Moral of the story – Large ships go down when they are obsessed about their past and ignore the present and the future.