Founded in 1892, Kodak was registered as a trademark for a camera that could be used by the mass market. Kodak grew to be a leading and large enterprise, and at its peak in the early 1980s, it employed 130,000 people worldwide. According to the bankruptcy filing, these days the company employees approximately 17,000 people, of which 8,000 of them are in the US. The filing also listed assets of $5.1 billion and debts of $6.75 billion.
So what went wrong for Kodak and was it inevitable? There are many factors and events that led Kodak down the roads it chose en route to its current outcome. A few important and interesting factors jump out, however.
One of Kodak’s cash cows was its film products. Kodak was a leading manufacturer of various film products to all types of non-digital cameras and video recorders. When the digital products came to market and replaced the old style cameras, the demand for film products declined. One of the high impact risks for Kodak back then in the pre-digital era was that a disruptive technology would diminish the demand for its one of the core products: film-based products. This trend presented itself with varying degrees of impact in virtually every market segment it operated in, from consumer film cameras to digital x-rays to digital movie-making.
Kodak, of course, did move into digital cameras, printers, and related technologies. But clearly not with either enough determination or success. Today the market for digital cameras, colour printers, is of course huge. In 2010 it is estimated that over 138 million digital cameras were shipped. Then there are printers, ink, and paper, memory cards and other segments like high developing machines, and and so on. Hewlett-Packard (HP) sells about $25B in its Imaging and Printing Group (most recent annual report); Canon sold about $45B in total, a significant portion related to the digital imaging markets. Clearly there was a large enough market to sustain a Kodak with its brand and stature. The photography component of the mobile phone / smartphone market provides other risks and opportunities.
It is easy to say they were undone by their corporate DNA, which included film and chemistry, not digital computer technology, but that’s trite. They had a long time to see it coming, got on the train, but in the end, not with enough conviction or success.
Consider and evaluate the risks of disruptive technologies, and the need to manage transformation when it can be evolution well in advance of looming crises. The bigger the ship, the more time you need to turn it. Some high impact risks, such as the traditional film market dying in the case of Kodak, require broad strategic shifts. This is a case study that will be pored over for a long time.
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