Or why an innovative company at the time it was created had eventually to file for bankruptcy.
Polaroid! The fascinating story of the world's most famous camera brand began in 1943, with a question a little girl asked her daddy!
Edwin H. Land, one of the founders of Polaroid was on vacation with his daughter, who asked him why she couldn't see the photo he had just taken. The question sparked an idea in his mind that became a reality three years later. A camera, film and chemical system that allowed you to see the photo as soon as you took it. We're clearly talking about a major innovation that paid off handsomely for the company. In 1968 Polaroid's sales reached $400 million, and at its peak in 1978, the company's sales reached $1.38 billion!
When the innovation of the digital camera appeared, Polaroid invested in the technology and launched several digital imaging projects, but not as much as they should have ... because they had not made a correct assessment of the risk and because they had not made a correct assessment of the opportunity.
The correct assessment of the risks and opportunities facing a company is critical to its sustainability.
In terms of risk and opportunity management, we are essentially talking about the Risk of Failure to adapt to technological developments and the opportunity of transition to new digital technologies. Digital photography has brought about significant changes in customer preferences and brought new companies to the market. It required serious changes to Polaroid's operating model, which also required a narrow implementation horizon.
However, no one made a correct assessment of the size of the opportunity and the risk the company faced.
Executives wondered why they would have to go into an operating model with a gross margin of 30-40% versus the 70% they had. The result was delays in product launches, self-destructive behavior by the company, and ultimately a filing for bankruptcy.
Today there are tools that help form precise and informed Risk and Opportunity assessments.
Companies today have all the technology and methodology tools, to make accurate and documented Risk and Opportunity assessments.
They have at their disposal specialized risk management information systems, data analysis systems to make more accurate forecasting, methodologies and standards.
Today’s Chief Risk Officer is now able to answer with financial data through ROI on Mitigation Action analysis why a company needs to temporarily reduce its gross margin in order to mitigate risks and pursue opportunities.
Ε-ΟΝ RIBIA ERM incorporates many tools for assessing and managing risks and opportunities. It includes a specific functionality to review scenarios in order to identify acceptable Risk Appetite and costs of risk mitigation actions.
It is designed for this very purpose! To give all executives the information they need to take the necessary educated steps that ensure their sustainability in such an uncertain and ever-evolving landscape.