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So what mistakes did they make? It's obvious they are some sort of textbook case of failing to adjust to change in technology. There was a time when Kodak was s

So what mistakes did they make? It's obvious they are some sort of textbook case of failing to adjust to change in technology. There was a time when Kodak was synonymous with photography. Sad.

w1ntermute 14y ago
Their entire business model was based on selling film canisters at outrageous prices, so they didn't want to pursue digital cameras, since it would cannibalize their primary revenue source. The execs probably comforted themselves by saying that digital cameras would never become as cheap, as good, or as easy to use as film, yada yada yada. And while they were sitting on their hands, Sony, Nikon, and Canon ate their lunch.
michaelt 14y ago
Many people attribute this to "the innovator's dilemma" [1] - Kodak had a lead in digital camera technology, but they weren't as enthusiastic as they should have been to push digital as it would have made their chemical photography business obsolete. When you've got a big, profitable film business, lots of film business employees and factories and machines, people right up to the boardroom who have dedicated their lives to building up the film business, and lots of customers like photo development firms who are saying they think film is just great - it's difficult to decide to consign all that to the scrap heap. And by the time you don't have a profitable film business any more, you've lost the headstart you once had. [1] https://www.google.co.uk/search?q=innovators+dilemma+kodak https://www.google.co.uk/search?q=innovators+dilemma+kodak
- bane 14y ago
  The idea of cannibalizing your existing business is always one that seems to drive business leaders crazy. But I've always looked at it this way, if you aren't going to cannibalize your own business, a competitor will. Only when it happens, you'll be out of business instead of still up and running. In the startup world I think we'd say that Kodak failed to pivot. I've seen a great many mature company lose their way when it comes to pivoting into a new and obvious line of business that will probably one day kill off their old business. But some manage to do it pretty well. I'd probably give the obvious example of Apple effectively killing a lot of their iPod business with the iPhone, but they weren't scared and proceeded to grow their business into entire new territories that way (while also getting their old customers to give them more money to upgrade to an iPhone). But another example might be IBM. IBM sold typewriters and other mechanical office machines, and even though the advent of computers would eventually kill off that entire industry, they managed to turn into a computer company and then into a services company and are doing quite well. There's others, but I think the main lesson to be learned from this is that you shouldn't be afraid to cannibalize yourself if you do it right. Kodak should own the digital imaging business by now. Everything from their own consumer cameras to the optics and sensors used in every mobile phone sold should have been theres. But they proceeded out of fear and this is where they've ended up.
  - michaelt 14y ago
    Yes, I've heard a (possibly fictional) quote attributed to Sony president Akio Morita: "My job is to make our products obsolete before our competitors do" Of course, I'm sure an ipod factory/engineering team/customer base could switch to the iphone more easily than a chemical film factory/engineering team/customer base could switch to digital sensors - so I'd be hard pressed to claim I could have done a better job of managing Kodak!
    - reinhardt 14y ago
      I've heard a (possibly fictional) quote attributed to Sony president Akio Morita: "My job is to make our products obsolete before our competitors do" Fictional or not, that's a great quote; bookmarked.
arscan 14y ago
They actually invented digital cameras. But fundamentally, they were a chemical company. They simply couldn't adjust to the new business model that digital cameras introduced. In fact, they didn't want to, until it was too late.
potatolicious 14y ago
> "It's obvious they are some sort of textbook case of failing to adjust to change in technology." I don't think that's obvious at all. Kodak I think is more of a story of distracted noncommittal execution combined with the standard woes of dramatically changing the primary competency of a large company to something entirely different. Contrary to popular belief, Kodak didn't stick its head in the sand while digital ate the world - they were there right at the beginning. Kodak literally invented the digital camera in 1975, though obviously it was wildly impractical at the time. More importantly, they were first to market with a DSLR all the way back in 1993: http://en.wikipedia.org/wiki/Kodak_DCS_100 http://en.wikipedia.org/wiki/Kodak_DCS_100 Yeah, get a load of that backpack you needed to carry ;) They continued releasing DSLRs until 2004, when they were obviously hopelessly outgunned by Canon and Nikon. Beyond cameras, they were, for a long time, the only people working on digital sensors at all (besides Canon), and they supplied many of Canon's competitors. The sensors themselves were no slouches technically either - they were highly competitive for their time. Perhaps most famously, Kodak supplied the sensors in the Leica M8 and M9, both of which were known at the time for their incredible image quality, and optical achievement (i.e. microlensing to reduce the flange-focal distance). In fact, for a short time Kodak supplied Canon themselves. OEMs abandoned Kodak in droves only in the last few years, when their financial troubles made the prospect of building an entire product around their sensors questionable. This, obviously, did no favors for Kodak. The rise of other medium format sensor companies also ate their top end market for lunch - Phase One and Leaf (now Mamiya-Leaf) being most notable. So all of this sounds pretty rosy, so why did Kodak die? It's really hard to say. I suspect a large part of the problem was that becoming the world's digital imaging sensor vendor would not have financially supported a company the size of Kodak, even if they had committed to that path, and the company was loathe to downsize and reorganize the workforce to something that they would barely recognize. So they branched into many other lines of business that were, even at the time, poor bets. They targeted low-margin markets (HP style!) and went hardcore into digital photo frames and various cheapo consumer knick-knacks that you might find at Sharper Image. IMO this was a large distraction that never should have been pursued in the first place. They even tried to copy HP by going in on the printer-ink business. That failed too. Their stance in the digital imaging aspect of their business was always a bit noncommittal. IMO Kodak would have survived if they trimmed their business down and became the image sensor R&D company of the world. Their work force was too large and committed to the wrong lines of business all the way to the end. Interesting note: Kodak's film business is actually profitable.
jdechko 14y ago
It's also where traditional print media is failing. Rather than embrace the digital age of publishing, they've used digital as a crutch to prop up print. Love or hate Apple, they aren't afraid to cannibalize themselves in order to progress. The iPod-killer everyone was waiting for came in the form of the iPhone, and iPads have overtaken Mac sales. Not sure who said it exactly, maybe Marco, Gruber, John Siracusa or someone else, but one of them made a comment that disruption rarely comes from big players (entrenched players), but from the small-time players/ newcomers. Even though Apple was a big company, they were new to the cell phone market. Like it or not, the iPhone disrupted the entire smartphone/ cellphone industry. We're all better off because of it.
lostlogin 14y ago
I use their medical imaging software daily, and its so awful. It requires IE6 and is a bug ridden usability nightmare. I hope no one has bought this part of the company, although I suspect Carestream Health or some such crown have.
cmbaus 14y ago
It was non-trivial for Kodak to replace the $16B in revenue they had from film. Having been a student in Rochester during Kodak's peak revenue, I have no doubt they saw digital coming, but what to do about it was less than obvious. If Kodak could have been Adobe, Flikr, and Instagram all rolled into one, they still wouldn't have same revenue they had in the 90s. I wrote about this before here: http://baus.net/will-there-be-a-third http://baus.net/will-there-be-a-third

So what mistakes did they make? It's obvious they are some sort of textbook case of failing to adjust to change in technology. There was a time when Kodak was synonymous with photography. Sad.

w1ntermute 14y ago

Their entire business model was based on selling film canisters at outrageous prices, so they didn't want to pursue digital cameras, since it would cannibalize their primary revenue source. The execs probably comforted themselves by saying that digital cameras would never become as cheap, as good, or as easy to use as film, yada yada yada. And while they were sitting on their hands, Sony, Nikon, and Canon ate their lunch.

michaelt 14y ago

Many people attribute this to "the innovator's dilemma" [1] - Kodak had a lead in digital camera technology, but they weren't as enthusiastic as they should have been to push digital as it would have made their chemical photography business obsolete. When you've got a big, profitable film business, lots of film business employees and factories and machines, people right up to the boardroom who have dedicated their lives to building up the film business, and lots of customers like photo development firms who are saying they think film is just great - it's difficult to decide to consign all that to the scrap heap. And by the time you don't have a profitable film business any more, you've lost the headstart you once had. [1] https://www.google.co.uk/search?q=innovators+dilemma+kodak https://www.google.co.uk/search?q=innovators+dilemma+kodak

bane 14y ago
The idea of cannibalizing your existing business is always one that seems to drive business leaders crazy. But I've always looked at it this way, if you aren't going to cannibalize your own business, a competitor will. Only when it happens, you'll be out of business instead of still up and running. In the startup world I think we'd say that Kodak failed to pivot. I've seen a great many mature company lose their way when it comes to pivoting into a new and obvious line of business that will probably one day kill off their old business. But some manage to do it pretty well. I'd probably give the obvious example of Apple effectively killing a lot of their iPod business with the iPhone, but they weren't scared and proceeded to grow their business into entire new territories that way (while also getting their old customers to give them more money to upgrade to an iPhone). But another example might be IBM. IBM sold typewriters and other mechanical office machines, and even though the advent of computers would eventually kill off that entire industry, they managed to turn into a computer company and then into a services company and are doing quite well. There's others, but I think the main lesson to be learned from this is that you shouldn't be afraid to cannibalize yourself if you do it right. Kodak should own the digital imaging business by now. Everything from their own consumer cameras to the optics and sensors used in every mobile phone sold should have been theres. But they proceeded out of fear and this is where they've ended up.
- michaelt 14y ago
  Yes, I've heard a (possibly fictional) quote attributed to Sony president Akio Morita: "My job is to make our products obsolete before our competitors do" Of course, I'm sure an ipod factory/engineering team/customer base could switch to the iphone more easily than a chemical film factory/engineering team/customer base could switch to digital sensors - so I'd be hard pressed to claim I could have done a better job of managing Kodak!
  - reinhardt 14y ago
    I've heard a (possibly fictional) quote attributed to Sony president Akio Morita: "My job is to make our products obsolete before our competitors do" Fictional or not, that's a great quote; bookmarked.

arscan 14y ago

They actually invented digital cameras. But fundamentally, they were a chemical company. They simply couldn't adjust to the new business model that digital cameras introduced. In fact, they didn't want to, until it was too late.

potatolicious 14y ago

> "It's obvious they are some sort of textbook case of failing to adjust to change in technology." I don't think that's obvious at all. Kodak I think is more of a story of distracted noncommittal execution combined with the standard woes of dramatically changing the primary competency of a large company to something entirely different. Contrary to popular belief, Kodak didn't stick its head in the sand while digital ate the world - they were there right at the beginning. Kodak literally invented the digital camera in 1975, though obviously it was wildly impractical at the time. More importantly, they were first to market with a DSLR all the way back in 1993: http://en.wikipedia.org/wiki/Kodak_DCS_100 http://en.wikipedia.org/wiki/Kodak_DCS_100 Yeah, get a load of that backpack you needed to carry ;) They continued releasing DSLRs until 2004, when they were obviously hopelessly outgunned by Canon and Nikon. Beyond cameras, they were, for a long time, the only people working on digital sensors at all (besides Canon), and they supplied many of Canon's competitors. The sensors themselves were no slouches technically either - they were highly competitive for their time. Perhaps most famously, Kodak supplied the sensors in the Leica M8 and M9, both of which were known at the time for their incredible image quality, and optical achievement (i.e. microlensing to reduce the flange-focal distance). In fact, for a short time Kodak supplied Canon themselves. OEMs abandoned Kodak in droves only in the last few years, when their financial troubles made the prospect of building an entire product around their sensors questionable. This, obviously, did no favors for Kodak. The rise of other medium format sensor companies also ate their top end market for lunch - Phase One and Leaf (now Mamiya-Leaf) being most notable. So all of this sounds pretty rosy, so why did Kodak die? It's really hard to say. I suspect a large part of the problem was that becoming the world's digital imaging sensor vendor would not have financially supported a company the size of Kodak, even if they had committed to that path, and the company was loathe to downsize and reorganize the workforce to something that they would barely recognize. So they branched into many other lines of business that were, even at the time, poor bets. They targeted low-margin markets (HP style!) and went hardcore into digital photo frames and various cheapo consumer knick-knacks that you might find at Sharper Image. IMO this was a large distraction that never should have been pursued in the first place. They even tried to copy HP by going in on the printer-ink business. That failed too. Their stance in the digital imaging aspect of their business was always a bit noncommittal. IMO Kodak would have survived if they trimmed their business down and became the image sensor R&D company of the world. Their work force was too large and committed to the wrong lines of business all the way to the end. Interesting note: Kodak's film business is actually profitable.

jdechko 14y ago

It's also where traditional print media is failing. Rather than embrace the digital age of publishing, they've used digital as a crutch to prop up print. Love or hate Apple, they aren't afraid to cannibalize themselves in order to progress. The iPod-killer everyone was waiting for came in the form of the iPhone, and iPads have overtaken Mac sales. Not sure who said it exactly, maybe Marco, Gruber, John Siracusa or someone else, but one of them made a comment that disruption rarely comes from big players (entrenched players), but from the small-time players/ newcomers. Even though Apple was a big company, they were new to the cell phone market. Like it or not, the iPhone disrupted the entire smartphone/ cellphone industry. We're all better off because of it.

lostlogin 14y ago

I use their medical imaging software daily, and its so awful. It requires IE6 and is a bug ridden usability nightmare. I hope no one has bought this part of the company, although I suspect Carestream Health or some such crown have.

cmbaus 14y ago

It was non-trivial for Kodak to replace the $16B in revenue they had from film. Having been a student in Rochester during Kodak's peak revenue, I have no doubt they saw digital coming, but what to do about it was less than obvious. If Kodak could have been Adobe, Flikr, and Instagram all rolled into one, they still wouldn't have same revenue they had in the 90s. I wrote about this before here: http://baus.net/will-there-be-a-third http://baus.net/will-there-be-a-third