When an organisation looks at its assets, what does it see?

Buildings, equipment, intellectual property, cash, contracts and brand value are relatively easy to identify. Yet some of the most valuable assets within an organisation may never appear on a balance sheet. They exist in the knowledge of employees, technologies developed over many years, relationships, discoveries, processes and capabilities that have become so normal that nobody thinks of them as particularly valuable anymore.

The story of Kodak and Fujifilm provides an interesting example because both companies faced essentially the same threat. Both were giants of photographic film, both had enormous technical knowledge and both could see that digital photography was changing their market. What happened next shows that understanding what an organisation sells is not necessarily the same as understanding what it possesses.

Kodak’s story is often presented as a company that failed to see digital photography coming, but this is not entirely true. Kodak engineer Steve Sasson developed the first digital camera prototype in 1975, decades before digital photography became mainstream. Kodak therefore understood the technology that would eventually disrupt its market.

The bigger problem was its business model. Kodak had built an extremely successful organisation around photographic film, processing and printing. Digital photography did not simply threaten one product, it threatened the economic system surrounding much of the company. Kodak invested in digital technology, but struggled to replace the value being lost from film and eventually entered Chapter 11 bankruptcy protection in 2012.

Fujifilm faced almost exactly the same problem. The company says demand for photographic film fell to around one tenth of its previous level between 2000 and 2010. Instead of concentrating only on protecting film, Fujifilm began looking more closely at the capabilities it had developed while producing it.

This changed the conversation.

Photographic film is far more technologically complex than most consumers would imagine. Producing it required knowledge of chemistry, coatings, colour science, precision manufacturing, oxidation control and nanotechnology. Fujifilm also had significant knowledge of collagen and had spent years developing technologies that prevented photographic materials from deteriorating through oxidation.

The company realised that some of this knowledge had applications far beyond photography. Collagen and oxidation, for example, are also important in human skin and ageing. Fujifilm eventually applied its knowledge of collagen, antioxidants and nanotechnology to skincare through ASTALIFT.

The knowledge was already there. What changed was how the organisation looked at it.

Fujifilm went much further than cosmetics. Healthcare became one of the major parts of a diversified technology group that now operates across healthcare, electronics, business innovation and imaging. The company did not simply find another product to replace photographic film. It began finding new uses for capabilities it had spent decades developing.

This raises an important question for every organisation.

Do you actually know what your organisation knows?

An employee who has worked in a business for twenty years may hold knowledge that has never been properly documented. An engineering team may have solved technical problems that could have applications elsewhere. A discontinued product may contain technology that could solve a completely different problem. An unsuccessful project may have produced knowledge that becomes valuable years later.

The problem is that most organisations are better at measuring performance than understanding potential. Management can normally tell you revenue, costs, employee numbers, sales and operational performance. It may be much harder to identify all the specialist skills within the workforce, technologies developed over the years, abandoned ideas that could now be useful or knowledge held by employees outside their formal job descriptions.

Organisational structure can make this worse. Human resources understands the workforce, technology teams understand systems, research teams understand emerging technologies, finance understands capital, sales understands customers and operations understands processes. Senior management receives information from all of them, but valuable connections between these resources can easily be missed.

An organisation may therefore possess significant human, technological, commercial, intellectual and social capital without fully understanding how these resources could be combined to create something new.

That is lost organisational value.

Transformation should begin before the crisis

There is another important lesson from Fujifilm. Transformation should not begin when the existing business is already failing.

By then, management is under pressure. Revenue may be falling, investors want answers, good employees may begin leaving and competitors may already have established positions in new markets. Decisions that could have been explored over several years suddenly have to be made within months.

Organisations should therefore spend a meaningful amount of time thinking about their future transformation while the current business is still performing well. This should go beyond next year’s budget or even the next three year strategy. Leadership should continuously consider how customer behaviour, technology, regulation and new competitors could change the organisation over the next decade, while also understanding which existing capabilities could support its next stage.

Proactive transformation gives an organisation time to experiment, learn and build new capabilities. Reactive transformation leaves fewer choices.

The AI paradox

This is particularly relevant as organisations respond to artificial intelligence.

Businesses are understandably looking at how they can do more with less. AI can automate repetitive work, improve analysis and increase productivity. The danger is when immediate cost reduction becomes the main measure of successful AI adoption.

Organisations spend years recruiting people, training them and allowing them to build specialist knowledge, customer relationships and operational experience. They can then suddenly begin looking at those same people mainly as costs that technology could remove.

When an experienced employee leaves, the organisation does not simply remove a salary. It may also lose relationships, historical understanding, technical judgement, customer knowledge and lessons from previous failures. Some of this can be captured by technology and some tasks can certainly be automated, but the organisation first needs to understand the value it is removing.

Otherwise we could end up with organisations spending heavily on artificial intelligence while removing some of the human intelligence needed to use it effectively.

Instead of simply asking how many roles AI can remove, organisations should also ask how AI can help them understand and multiply the knowledge they already possess.

Know what you are giving away

The same problem applies when organisations sell businesses, technologies, intellectual property, property or other assets.

Something can look unnecessary when judged against today’s strategy but become extremely valuable when circumstances change. Sometimes selling an asset is absolutely the right decision, but management should understand the capability being surrendered before making that decision.

The cost of getting this wrong can be significant. An organisation may later discover that rebuilding the capability costs far more than retaining it would have done, assuming it can be rebuilt at all.

The same principle applies to people. Redundancies are sometimes necessary, businesses sometimes need to be sold and product lines sometimes need to close. Transformation involves difficult decisions. But an organisation should understand what it is removing before it removes it.

From organisational resources to organisational intelligence

Perhaps part of the problem is that organisations still manage their resources separately.

People are managed as workforce. Technology is managed as infrastructure. Customers are managed as accounts. Suppliers sit within procurement. Intellectual property may sit somewhere else again, while knowledge is spread across documents, systems, emails and people’s memories.

Yet some of the greatest opportunities may exist in the connections between these resources.

Artificial intelligence could become particularly valuable here. It could help organisations map employee capabilities, technologies, previous projects, intellectual property, customer problems and emerging opportunities, then identify connections that management teams may otherwise miss.

AI’s greatest contribution to organisations may therefore not simply be replacing work. It could help organisations understand themselves better.

But technology alone cannot achieve this. Organisations need cultures that value knowledge, structures that allow information to move between departments and leaders who are interested in potential as much as current performance.

What is hiding inside your organisation?

Fujifilm did not acquire all the knowledge needed for its transformation in a single go when photographic film started disappearing. Most of that knowledge was already inside the organisation, embedded within systems, files and adopted into daily operational routines.

The change that facilitated the transformation was Fujifilm’s understanding of its assets and finding new uses for them. There may be employees inside businesses today whose capabilities extend far beyond their job descriptions. Technologies developed for old products may have completely new applications. Research from unsuccessful projects may become valuable as markets change. Customer knowledge sitting with frontline teams may reveal opportunities that senior management has never considered.

The foundations of an organisation’s next business model may already exist somewhere inside its current one. This is why future transformation should not be treated simply as a response to disruption. It should be a permanent part of organisational development. Businesses need to continuously understand what they know, what they possess, what is changing around them and what their existing resources could become.

Kodak and Fujifilm both faced the decline of the market that had defined them. Their experiences remind us that when an industry changes, the most important question may not be how to protect the product that made the organisation successful.

It may simply be: What have we learnt from building what we have today, and what else could that knowledge allow us to become?

Every organisation should understand the answer long before it desperately needs one.

Do you know what potential already exists within your organisation?

Nimble Legacy’s Organisational Transformation Mapping service helps organisations look beyond current performance to understand the knowledge, skills, technologies, processes and other capabilities they already possess. We work with leadership and teams to identify overlooked strengths, connect resources across the organisation and explore how existing capabilities could support future growth and transformation.

If your organisation is preparing for change, considering AI, reviewing its future direction or simply wants to understand what opportunities may already exist within the business, transformation mapping can provide a clearer place to start.

Discover what your organisation already has, before deciding what it needs next.