Recent weeks have brought major news for two icons of the business world as Eastman Kodak filed for bankruptcy and Facebook prepared for an IPO. Some might dismiss the news as an example of what Joseph Schumpeter termed creative destruction (i.e., old organizations dying and new ones emerging).  Some might see the situation as two unrelated events. Even others will stress the positive and focus on the past value generated by Kodak and the potential of Facebook as a business and economic engine in the future. In truth, there are strong lessons that Facebook could learn from Kodak.

At the time of its birth, Kodak was the paradigm of new technology. It gave people an opportunity to memorialize their lives. Over time, the company’s ads stressed the opportunity for people to find “Kodak moments” or instances in which a photograph would record an important memory for posterity. Both the medium (film) and device (camera) it marketed had unlimited potential and a global market. The potential turned into an iconic brand, which was (and is) recognized around the world. What analysts say about Facebook today is similar to the word on Kodak a century ago. At its birth, no one anticipated Kodak’s aging, decline, and possible death. Its product was revolutionary. Its management stayed focused on its core business to the end. Its profitability from film remains even today.  The problem is that people have stopped using film as the primary vehicle for recording their lives.

While none of this reduces the potential of Facebook, and an IPO will generate much wealth (and publicity) for the founders, employees, and early investors, it raises the need for caution regarding the true value and potential of social media generally and Facebook in particular.  Facebook will be profitable until people stop using it to record their lives.

Experts anticipate many developments that could expand social networking, including the creation of networks with stronger firewalls, different access rights to different levels of friends, and enterprise as well as personal applications. The digital medium is seen as enduring as people continue to share their lives. But much is unknown about how long people will enjoy this approach to friendship and whether the growing noise and clutter across many ubiquitous media channels, rising incidence of fraud and crime related to information available on networking sites, and the growing audience using social media will lead people to want something different. 

Similarly, efforts to monetize aspects of people’s Facebook lives will cause regular adjustments in policies and ensure the continuation of social complaining about the firm. When Kodak emerged, the value of photos became obvious to many segments interested in monetizing the channel. Governments wished to take better and sharper photographs of places in which the military was interested. Entrepreneurs discovered that they could make serious money selling photos that challenged the boundaries of decency. Photos soon evolved into moving pictures and a new entertainment industry was born. The point is that the technology continually evolved and was always successful when it found a niche that people wished to support. The same will be true of Facebook. But the negative surprises Kodak brought will follow the positive benefits of social networking.

It would be wise to think about the way that trends will evolve. First, Facebook, like Google, represents a quantity of experience over a quality of experience. Sharing with many friends serves vanity and pride. It also objectifies interactions with others and creates a reality show world for each to broadcast individually. It allows everyone to be an American idol. These traits could ultimately undermine the medium if people seek ways to overcome the increasing noise on the channel, and as some desensitization occurs because of constant public exposure. It is also possible that people will decide not to share so openly with others as they seek more meaning in their lives.

Second, the clutter and ironic similarity of Facebook profiles and lives will intensify interest in being different and even extreme in order to get attention. Eventually, I believe people will tire of the extreme and turn to design and simplicity across the digital medium. Elegance will become a greater virtue and this will translate to other media. It will reshape the nature of networking, allowing the timid and shy to express their voice as clearly as the outgoing and gregarious.

Third, absent self-control, the patterns of information broadcast by millions on Facebook will allow governments (and data miners) to predict people’s predispositions and use the information in good and bad ways. The more people use the medium, the more precisely network trolls will understand their conscience. This will allow ever more effective government oversight and control of the medium. The control will not emerge from countries turning off the web or Facebook. It will come from subtle strategies aimed at influencing opinion and desired government outcomes. Through sensationalism and suggestion, views will be effectively advocated.

Finally, as people perfect the brand called me, they may lose more connection with the value of community, and in so doing discover less meaning in their lives. People may discover that as everyone focuses on broadcasting their lives digitally, they lose their individuality.

When Kodak emerged as a young powerhouse, we celebrated its contributions to preserving society. As Facebook shines across the world, we celebrate its contributions to individuality. Businesses will gain and lose in the contradiction of these celebrations. Thus, the biggest lesson of Kodak is to realize that a picture does not depict society as well as we presume. And Facebook has limitations that individually seem unimportant but in combination will change the world. Understanding when those limitations will lead people to seek privacy will indicate the true long term potential of Facebook.