Kodak and the Brutal Difficulty of Transformation
2012 has not gotten off to a great start for Eastman Kodak. Three of the company’s directors quit near the end of last year, and word recently emerged that the company was on the brink of filing for Chapter 11 bankruptcy protection.
The easy narrative is that Kodak is a classic case of a company blind to the disruptive changes in its marketplace. Like many easy narratives, this one is not quite right.
In the 20th century, Kodak was truly one of the world’s powerhouses. Its rise to prominence began when it launched its affordable Brownie camera in 1900. In the decades that followed Kodak established a dominant position in the lucrative film business, with its “you push a button, we do the rest” slogan demonstrating its commitment to making photography accessible to the masses.
Of course, being a dominant film provider became increasingly irrelevant in light of recent technological shifts. Today people turn to digital cameras embedded in their mobile phones, share pictures over the Internet, and eschew prints altogether.
Kodak wasn’t blind to this shift. It created a working prototype of a digital camera in 1975. The engineer behind that project, Steve Sasson, offered a memorable one-liner to the New York Times in 2008 when he said management’s reaction to his prototype was, “That’s cute — but don’t tell anyone about it.”
But Kodak did invest heavily in digital imaging — billions of dollars — and carved out a reasonable position in the digital camera space with its line of EasyShare products.* Early in the 2000s it made a bold bet: buying photo sharing site Ofoto in May 2001. As the decade wore on and its core business continued to deteriorate, Kodak brought in a new leadership team, downsized its core operations, and began placing bets on even more radical ideas, such as a line of printers with low-cost ink.
So Kodak actually saw the world pretty clearly and did what a lot of smart companies would have done in its circumstances. Yet, today it still teeters on the brink of insolvency.
Kodak’s struggles show how brutally hard it is to get transformation right. The company took aggressive action, became a viable player in the emerging disruptive space, invested in new growth businesses, but it just doesn’t seem like it was enough.
What lessons can we take from Kodak’s struggles?
Read the rest at Scott’s Harvard Business Review blog.
Scott D. Anthony is managing director, Innosight Asia-Pacific.
