OT: news: Did Kodak Try To Cut Costs At Customers' Expense?

[bmattock]

FYI - This is NOT a FID thread, nor a Digital versus Film thread. Just an FYI because some of us may use or plan to use this service, and it is good to know about.

Best Regards,

Bill Mattocks

http://www.forbes.com/infoimaging/2006/03/30/kodak-easyshare-lawsuit_cx_dal_0331kodak.html

Whistle-Blowers
Did Kodak Try To Cut Costs At Customers' Expense?
Danit Lidor, 03.30.06, 2:15 PM ET

New York -

A former Eastman Kodak employee is bringing a lawsuit against the photography giant for wrongful termination, alleging the company fired her for blowing the whistle on a cost-cutting plan that would mislead customers and damage their photos.

Maya Raber, a director of engineering since 2002 at Kodak's popular EasyShare Gallery, an online photo-sharing site, says the plan called for compressing uploaded photographs and would lead "customers to believe their photos were being optimized, when in fact they were being irreversibly damaged," according to the legal complaint filed in Alameda County, Calif., yesterday. More than 1 billion photos are stored on the EasyShare site.

All digital cameras use some form of compression to store photos, but excessive compression can affect the quality of the image, making it grainy and lacking in detail. Compression saves money because such images are much smaller and thus much cheaper to store. A compressed photo cannot be restored.

"Instead of making sure you delight your customers, I sensed a very arrogant approach saying, 'We're going to save the money, and we're going to take advantage of the fact that customers aren't going to understand,' " Raber says. "I thought that it was morally deceiving, morally wrong."

Kodak flatly denies the allegations. "We can assure you that Ms. Raber's accusations are completely false," says Kodak spokeswoman Liz Scanlon.

"We have not compressed images that are stored in the Gallery without our customers' knowledge," Scanlon adds. "Kodak has acted in a manner that is consistent with our corporate policies and ethics. We will vigorously defend ourselves against all claims to the contrary."

Raber claims that after having been an exemplary employee at the company for more than three years, she was abruptly fired in August 2005 following her continued opposition to the compression plan.

Raber says her team of engineers protested after being told to create a compression algorithm that would have affected all the images stored online at the EasyShare Web site. She further states that at least one employee resigned after being told by one Kodak executive that "objection to the project will be noted" and another stated that "this is not a democracy, the project goes on."

After composing a whistle-blower report to give to Kodak’s vice president and other executives in mid-July, Raber was told in August her job had been eliminated due to restructuring, she says. No one else was laid off or dismissed.

Ultimately, Raber says the compression project did not go forward, although she claims the EasyShare Gallery "Easy Upload" option (currently on the site) does in fact compress photos without directly informing users.

Raber's attorneys are suing for wrongful termination/retaliation in violation of public policy, intentional infliction of emotional distress, and breach of implied covenant of good faith and fair dealing.

 

[Fedzilla_Bob]

No need to preface or justify your post. IMHO, the FID and "D v. F" threads were thought provoking.

It's interesting to see the quote "this is not a democracy, the projectgoes on." I've been guilty of saying this to coworkers and reportees.And, to a great extent, it's true. Corporations are not democracies. Atleast not for those of us who aren't on the board of directors. I caneasily see middle management promoting this concept to a group ofengineers. My circumstances certainly didn't involve a requirement todeliver subpar product. So I certainly would have been very unhappywith such a response.

If Raber's allegations are true it means a huge number of consumers, who believe in the Kodak brand, have endured some material loss. In this case, it would be data that was entrusted to Kodak.

To me, the case will come down to how brands can and do become apromise of quality. This is a problem that Kodak should be very "hip"to. They are one of the original and great "brands."

I can't imagine that Raber thought, "I'm going to be a hero." Employeesalso "buy into" a company's brand. She may have exerienced genuinedismay or even outrage over what appears to be a corporate decision toprovide diminished quality.

Democracy or not, a broken promise (even implied promises) to loyal buyers deserves consumer mistrust.

One one hand (assuming the allegations are true) I am dissapointed inKodak. On the other, I'm not surprised. Corporations, like people, tendto forget the promises they make.

Thanks for sharing this Bill.

Bob H

 

[sf]

This is just a reminder of what kind of world I'm getting myself into.

Nice that someone blows whistles, though.

 

[pvdhaar]

Democracy or not, a broken promise (even implied promises) to loyal buyers deserves consumer mistrust.

Too bad the average person doesn't appear to have a decent memory for broken promises.. Or perhaps they have, but the deceit may be so omnipresent that we just can't fight it all..

This is just a reminder of what kind of world I'm getting myself into.

Don't we all dream about selling the house and migrating to a remote part of the world and focus on something really worthwile, like watching sunsets or so? But somehow we never do, and things will stay the same..

Hmmm, must be friday, I'm having an attack of fatalism..

 

[sf]

Don't buy their stuff. I used Portra once . . . not going to use it again. NPH is better. Not the same, and better.

And Fuji makes a better product anyway - across the board.

And those little hooks and punches on the film just make things so much easier!

Fu-get Kodak

 

[markinlondon]

In my book "new and improved" generally means "cheaper to manufacture".

In Milton Friedman's book (roughly) "the only responsibilty of a corporation is to increase stockholder value".

Still we're surprised by things like this?

Mark

 

[BrianShaw]

And Fuji makes a better product anyway - across the board.

And those little hooks and punches on the film just make things so much easier!

So as long as we're OT...

What is the story on the "hooks and punches" anyway? I noticed them on my negs one day... but hadn't noticed them before. They were there, I just didn't notice them. What do they do, or signify?

 

[John Camp]

I worked for large newspapers for 20 years or so, for all but a couple of years as a reporter with no ambition to be a manager. From that distance, it was interesting to watch management fashions come and go. In one trend, "cost containment" would be the big deal, and in another, it was "customer value." There were other fashions, too, like "creative tension" which tried to push people into conflict. These fashions changed, I'd say, every three to four years. The problem was that managers (who often specialize in 'management' rather than in knowledge of the product) working under one fashion regime would make decisions that were inherently irreversible, even if the same decision would not have been made under a previous or subsequent management fashion. In this Kodak case, a fashion for "cost containment" could lead some relatively product-ignorant MBA to say, "Hey, if we cut an average image from 5mp to 2mp, we only need 2/5 as much storage, cutting storage costs in half with almost no cost to us." So they do it. Then customers find out they've been robbed, and start screaming about it, and here in the U.S., the lawsuits start. Then Kodak, seriously burned, starts running around talking about 'customer value,' and a new management fashion starts...but you can't put the photos back the way they were. Analogous things happen in almost every industry - I believe that management fashion (and the belief in management as a profession, separate from the engineering aspects of product development) is one reason that GM and Ford are on their backs, while the Japanese companies and BMW have been happily moving plants *to* the U.S. to take advantage of lower costs and a well-educated work force.

The willingness to make really bad and thoughtless decisons also derives partly from the mobility of American managers -- it's managing high tech this year and shoe production next year and food products six years from now. Your bad decisions never catch up with you, are never hung around your neck. I've been amazed at the people I've watched going from newspaper to newspaper, moving up at each step, leave a path of stupidity and destruction behind them.

By the way, I've seen the Milton Friedman position cited above, about stockholder value. The thing is, he's absolutely right -- but unfortunately, nobody know exactly what that means. If you severely cut costs to enhance stockholder value, the product becomes shoddy because of your cost-cutting, the customers abandon you, and you go bankrupt -- the process that a lot of newspapers have gone through -- have you enhanced stockholder value? I don't think so. So enhancing stockholder value is not exactly as brutal as that argument may seem.

JC