How Kodak killed itself

[kbg32]

Kodak’s Problem Child: How the Blue-chip Company Was Bankrupted by One of Its Own Innovations

Read more at http://petapixel.com/2013/06/10/kod...e-of-its-own-innovations/#vMcGigleDmpYSy33.99

 

[MikeAUS]

Thanks. Great article.

"a roll of film that cost one dollar to produce was marked up 800 percent, which allowed the company to generate its enormous profits"

 

[Keith]

Great article .... should be compulsory reading for all RFFers. 😀

 

[daveleo]

There doesn't seem to be much new information here, but it is interesting to
get it all summed up in one place, more or less.

In my mind, Kodak is filed with Xerox PARC (windows, screen icons, the mouse) in
having created a new technology / conceptual product and failed to hold
onto the tiger's tail.

The book, Accidental Empires, is a good read. So is The Soul of a New Machine.

 

[pvdhaar]

Kodak’s Problem Child: How the Blue-chip Company Was Bankrupted by One of Its Own Innovations

Reading the article shows that Kodak wasn't killed by its own innovations, but rather by the chism between the inventors who correctly read the sign of the times, and the companies' ignorant upper management who stuck their heads in the sand..

 

[Sejanus.Aelianus]

and the companies' ignorant upper management who stuck their heads in the sand.

Alas, a failing to which established companies are prone.

 

[panerai]

Sad thing is. In early 2000 when there were very few digital manufactures. I offered Kodak information on a growing target group for their cameras for a small fee.

Computers, scanners etc. were getting lower in price and figured the digital camera would be the right fit.

No manufactures were advertising in the trade magazines, so they could have had an entire market to themselves

At the time. The target group was still using film and even with 1 hour printing. It was wasted time that could have been used working when an employee had to stand around for an hour waiting for the prints

Kodak Canada said no and US had their lawyer call me trying to weasel the information out of me. They sent me a contract, but main point was no guarantee of payment, so told them no.

Now all are using digital cameras and Kodak got nothing

DON

 

[Bill Clark]

One of the primary problems Kodak had/has is the investment made over a long time into producing film and products that go with film. I'm guessing, that years/decades ago they decided that producing a consumable product line made more sense than producing equipment that can last a long time. Over time a culture was established that producing film and the stuff that goes with it was a pretty good decision as lots of folks were able to make a decent living over generations.

It can be awfully hard to break that mold. Sometimes it needs to be done though. Folks didn't want to give up their way of living and sacrifice for the next generation who would be able to embrace digital. They had some transition time but didn't use it. With technology changing rapidly who knows if Kodak would have been the innovator as it should have been, staying on the cutting edge and leading the pack.

Happens in many industries. Take a peek into automobile manufacturing. Henry Ford was an innovator however, that seems to have been pushed aside until they were on the brink. It seems like they caught religion again as many products they are producing now have innovations and are of world class.

That's what I see. But this memo is brief and doesn't give justice to either Kodak or Ford as the challenges they have been through and working through today are complex.

 

[Out to Lunch]

I like this Jan 2012 article in The Economist better: How Fujifilm survived: Sharper Focus.

http://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived

 

[mwoenv]

If Kodak had shifted the emphasis to digital imaging 25-30 years ago it is very likely they would simply have ended up in their current state 25-30 years ago. They were the premier film manufacturer but with little expertise in electronics manufacturing, even if they had planned and invested in the people and manufacturing technology they would have quickly faced the same competitors currently in the digital business. Kodak did jump into digital, having over a hundred thousand digital patents, but it didn't matter.

It's easy to criticise but there's not much you can do when the demand for your core expertise/product declines by 98 percent over a decade, especially if you insist on maintaining your size as a multinational corporation for the investors.

Film is now a very small niche, no longer suited to manufacture by multinational corporations. It will be interesting to see how it all shakes out as a few small-medium size manufacturing plants can produce all of the world's film needs (about 20 million rolls a year).

 

[Clint Troy]

Sad thing is. In early 2000 when there were very few digital manufactures. I offered Kodak information on a growing target group for their cameras for a small fee.

Computers, scanners etc. were getting lower in price and figured the digital camera would be the right fit.

No manufactures were advertising in the trade magazines, so they could have had an entire market to themselves

At the time. The target group was still using film and even with 1 hour printing. It was wasted time that could have been used working when an employee had to stand around for an hour waiting for the prints

Kodak Canada said no and US had their lawyer call me trying to weasel the information out of me. They sent me a contract, but main point was no guarantee of payment, so told them no.

Now all are using digital cameras and Kodak got nothing

DON

Hmm, that real'ly doesn't sound serious and I understand Kodak saying no to you and your poor pitch.
It wasn't about employees waiting in line for 1hour nor about puting ads in magazines. What a funny thought!
It was about being the main supplier to all other companies. In other words it was about becoming what Sony is today by way of strategic alliances. I really doubt you could have helped.

 

[Aristophanes]

I like this Jan 2012 article in The Economist better: How Fujifilm survived: Sharper Focus.

http://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived

Exactly. Fujifilm took the longer view and cannibalized its film sales to grow its digital because they correctly saw that revenues and profits would end for film in any meaningful way.

Kodak had the financial resources and brand to do the same same, but it tried to keep film revenues far too high and refused to cannibalize itself in order to survive as a permiere photographic entity. While many people rightly go after senior management for this cause and effect, right down the shop floor there was resistance to a massive shift. It's hard for management to turn the ship when they get conflicting information from their boots on the ground, and when their oars stop rowing in the same direction.

So the easy way out was to emphasize quarterly profits over transition costs. They did not look into the mirror and admit that film might completely die off due to digital. Their customers, creditors, and shareholders certainly did. One has to admire Fujifilm for pragmatic introspection leading to continued survival.

 

[Monochrom]

Hi, companies make a lot of mistakes but when times are changing for a company like kodak, these mistakes are worst.

 

[daveleo]

I don't know if (at the time of these developments) Fuji had the same level of
pressure on it for quarterly profit numbers that Kodak had on it. American
businesses were incredibly incredibly short sighted after about 1980 (in my little world).

Anyway, upper management's job at the time (everywhere) was to manage cash flow in quarterly
increments - "long term" meant 3 months from today.

Well . . . I promised myself not to make a speech, but I did I guess.

 

[Clint Troy]

I don't know if (at the time of these developments) Fuji had the same level of
pressure on it for quarterly profit numbers that Kodak had on it. American
businesses were incredibly incredibly short sighted after about 1980 (in my little world).

Anyway, upper management's job at the time (everywhere) was to manage cash flow in quarterly
increments - "long term" meant 3 months from today.

Well . . . I promised myself not to make a speech, but I did I guess.

Exact.
And if there wasn't steady growth of 10% per year it was catastrophic and it meant stoping peoduction of many viable products.

Lousy dmerican business model indeed.

 

[MrFujicaman]

I always felt Kodak had an ego problem. "We're Kodak...so OUR products must be better!"

By 1977 or so, Kodak's B & W print papers were in decline. I can still remember gettting a shipment of 1000 + sheets for the college darkroom/yearbook and the school having to call Kodak because all of it was defective. That same year Ilford brought out HP-5 and took a big chuck of Kodak's B & W film market. Three years later, Ilford came out with XP-1 and got another chunk of the B & W film market. Then Ilford's Multigrade got improved and Kodak lost more market share in B& W. And In all these cases Kodak didn't improve their product or cut prices. Uh, guys...folks don't want to pay top dollar for a lower grade product.

In color, it was much the same.....Kodak was never willing to cut prices and Fuji gained more and more market share. If you have a good product and your rival has a product that's as good or better for 20% less,you need to change how you do things.

Plus we had all the stupid missteps...most of which go back to the 1970's !

The long dragged out lawsuit over the instant cameras..hell, even I could see where Kodak infringed on Polaroid's patents !

Then missteps like the Ektaflex color printing system...that never sold worth a damn. Then, the Disc camera and then APS. Both of them were Kodak trying to sell us more film at a higher price per square inch. I will never figure out how Kodak thought the APS system was going to push all the 35mm P & S camera out of the market place.

Then some genius got the idea in get into the copier market...15 years after everybody else did. And then with copiers that were higher priced and breakdown prone. Wonder how much they lost on that one!

And let's add bad management to the mix.

 

[cosmonaut]

Kodak cameras have always been so so. Never any real pro grade cameras. If they failed it was due to the fact they didn't deliver any high end cameras. They certainly started good with some nice sensors. They were to busy trying to make money on consumer grade products. They were well equipped with more than enough R&D money but threw their eggs in the wrong basket.

 

[MaxElmar]

My Kodak Medalist II is more of a pro camera than most, even today. It was about $3100 new (corrected for inflation) and built last and perform under the most demanding conditions. Mine still does.

 

[DominikDUK]

The Kodak DCS series of cameras certainly were pro cameras more pro than many other so called pro cameras. Unfortunately pro cameras are not really money makers prosumer and consumer cameras are and that's where Kodak failed although their consumer digicams often offered more bang for the buck than any other manufactures but canon, nikon and the other camera manufacturer had the advantage that they were well know camera producers whereas the public has pretty much forgotten the Kodak cameras of the past

 

[sevo]

I always felt Kodak had an ego problem. "We're Kodak...so OUR products must be better!"
(...)

Then missteps like the Ektaflex color printing system...that never sold worth a damn. Then, the Disc camera and then APS. Both of them were Kodak trying to sell us more film at a higher price per square inch.

No, both were applications of the Kodak motto "you push the button and (only) we (can) do the rest", alias "tie them into a patent protected system and charge the heck out of them for consumables". I don't think that Kodak (at least from the salesmen/management side) ever were that keen on quality, all new formats they introduced after the 50s, whether Instamatic, Pocket, Disc or APS, were a significant step below the quality of whatever they were intended to replace.