The Irony of Innovation: When Pioneers Fall Behind

It’s a fascinating phenomenon when industry leaders invent groundbreaking technologies but ultimately fail to capitalize on them.

A classic example is Kodak, which invented the first digital camera in 1975. Despite this groundbreaking innovation, Kodak chose to focus on its traditional film business. It wasn’t until the early 2000s that digital cameras began to outsell film cameras, signaling the end of an era for Kodak. Companies like Sony, Canon, and Nikon led the digital camera revolution, investing heavily in R&D and shifting their strategies early to embrace digital photography. Their willingness to adapt allowed them to dominate the market that Kodak helped invent but failed to lead.

Today, we might be witnessing a similar scenario with Google. In 2017, Google engineers introduced the Transformer model, which became the foundation for many advanced language models. However, companies like OpenAI have since utilized this technology to develop models that rival and sometimes surpass Google’s own. Ironically, some Google engineers had proposed using the Transformer model—first introduced in the landmark 2017 paper “Attention Is All You Need”—to enhance or potentially replace the company’s keyword-based search algorithm. The idea of applying this architecture to search was explored internally at Google, but management ultimately rejected the proposal, likely due to concerns over disrupting their highly profitable core business and an inability to envision how advertising—Google’s primary revenue stream—could be integrated into a chatbot interface. As reliance on these models grows, Google’s traditional search engine faces potential disruption.

Kodak’s — and potentially Google’s — struggles highlight a key challenge: well-established companies often find it hard to ride new waves of technology because of their existing profit centers and employee skill sets. When revenue and expertise are tied to the current model, there’s a natural resistance to change — even when the future is knocking at the door.

That’s why a vibrant startup culture is crucial. Startups aren’t burdened by legacy systems or business models. They bring fresh perspectives, move faster, and have the flexibility to embrace disruptive ideas — and that’s often where true innovation takes root.