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The Real Lessons From Kodak’s Decline

Eastman Kodak is often mischaracterized as a company whose managers didn’t recognize soon enough that digital technology would decimate its traditional business. However, what really happened at Kodak is much more complicated — and instructive.

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Shih Kodak

Eastman Kodak Co. is often cited as an iconic example of a company that failed to grasp the significance of a technological transition that threatened its business. After decades of being an undisputed world leader in film photography, Kodak built the first digital camera back in 1975. But then, the story goes, the company couldn’t see the fundamental shift (in its particular case, from analog to digital technology) that was happening right under its nose.

The big problem with this version of events is that it’s wrong. Moreover, it obscures some important lessons that other companies can learn from. To begin with, senior leaders at Kodak were acutely aware of the approaching storm. I know because I arrived at Kodak from Silicon Valley in mid-1997, just as digital photography was taking off. Management was constantly tracking the rate at which digital media was replacing film. But several factors made it exceedingly difficult for Kodak to shift gears and emerge with a consumer franchise that would be sustainable over the long term. Not only was a major technological change upending our competitive landscape; challenges were also affecting the ecosystem we operated in and our organizational model. Ultimately, refocusing the business with so many forces in motion proved to be impossible.

A Difficult Technology Transition

Kodak’s first challenge had to do with technology. Over the course of more than a century, Kodak and a small number of its competitors had developed and refined manufacturing processes that enabled consumers to capture and preserve images for a lifetime. Color film was an extremely complex product to manufacture. The 60-inch “wide rolls” of plastic base material had to be coated with as many as 24 layers of sophisticated chemicals: photosensitizers, dyes, couplers, and other materials deposited at precise thicknesses while traveling at 300 feet per minute. Wide rolls had to be changed over and spliced continuously in real time; the coated film had to be cut to size and packaged — all in the dark. With film, the entry barriers were high. Only two competitors — Fujifilm and Agfa-Gevaert — had enough expertise and production scale to challenge Kodak seriously.

The transition from analog to digital imaging brought several challenges. First, digital imaging was based on a general-purpose semiconductor technology platform that had nothing to do with film manufacturing — it had its own scale and learning curves. The broad applicability of the technology platform meant that it could be scaled up in numerous high-volume markets (such as microprocessors, logic circuits, and communications chips) apart from digital imaging. Suppliers selling components offered the technology to anyone who would pay, and there were few entry barriers. What’s more, digital technology is modular. A good engineer could buy all the building blocks and put together a camera. These building blocks abstracted almost all the technology required, so you no longer needed a lot of experience and specialized skills.

Semiconductor technology was well outside of Kodak’s core know-how and organizational capabilities. Even though the company invested lots of money in the basic research and manufacturing of solid-state semiconductor image sensors and developed some notable inventions (including the color filter array that is used on virtually every color image sensor), it had little hope of being a competitive volume supplier of image sensor components, and it was difficult for Kodak to offer something distinctive. Contrast this with Sony Corp., which entered the sensor business to support its electronic video recording business. As an electronics company, its organizational capabilities were far more aligned with what was needed to succeed. What’s more, it jumped in early.

But Sony and other Japanese consumer electronic companies also had to adjust to the changes brought on by digital technology. Sony’s Trinitron color television, once a category leader, was overrun by “plug-and-play” modular digital components — in this case, liquid crystal displays, flat panel displays, and TV chips that made designing a television set easier. As Yukio Shohtoku, retired executive vice president of Panasonic Corp. explained to me, modularization “makes consumer products, our consumer products, a commodity.”

Once consumer electronic products transitioned to digital, Shohtoku noted, leading brands such as Panasonic and Sony lost their competitive edge in those markets. This explains how hundreds of companies, many of them startups, could move into imaging and how a company such as GoPro Inc., based in San Mateo, California, could appear out of nowhere and take the consumer video recorder market by storm. It’s a situation that many makers of technology products are now facing or may soon face.

Scaling Down Is Hard

While the technology presented one set of problems, figuring out how to manage declining film sales while trying to extract maximum profits presented another. Growing companies learn how to invest in manufacturing efficiency and in achieving scale economies. As volumes increase, unit costs go down and capital efficiency improves. But scaling down is hard to do. It helps if your capital base is fully depreciated, but what if you have to reduce the size of your production runs? At a certain point, you just don’t have enough volume anymore to absorb your fixed costs.

In Kodak’s case, film had a finite shelf life, so as sales declined, the company had to figure out how to shrink the size of production batches without driving unit costs up too far or forcing the selling price up, which would have led to a death spiral. I remember when the yearly sales of a particular type of Kodak film went below a single wide, roll production batch. Shrinking the run length would drive up the proportion of time and materials expended in setup, and shifting to smaller production lines would incur additional capital expense, something that would have been impossible to justify. Having a product line made up of many film types worked well when sales were going up but worked against the company as volumes shrank. Discontinuing products pushed film photographers (especially professionals) to digital, and it further drove down cost absorption. For a while, Kodak was fortunate that motion picture print film manufacturing was able to absorb a huge proportion of factory overhead. But when theaters finally moved to digital projection, the company couldn’t slash costs fast enough to keep up with declining volumes.

Declining scale was also a big problem for Kodak in its retail distribution network. Once the volume of film sales at retail stores started to drop, holding onto shelf space became harder. This is not a unique problem — it happens in other markets that are being affected by low-cost imports, market fragmentation, or the cyclical decline of products as newer, more sophisticated products are introduced. But in Kodak’s case, the category was disappearing. For many years, Kodak management was careful not to talk about the problem publicly to prevent it from becoming a self-fulfilling prophecy (something critics misconstrued as management not grasping the gravity of the situation). One could argue that exiting the business and forcing consumers to transition to new solutions was the right way to go. But that would have required Kodak to give up billions of dollars in profits and abandon products like motion picture print distribution too soon, without having other products to capture the demand.

Ecosystem Troubles

The third part of Kodak’s problem had to do with its ecosystem. Much has been written about the importance of building an ecosystem when a new product or service has to leverage complementary assets. Kodak built a unique and powerful ecosystem to support film-based photography. While the majority of its profits came from manufacturing and selling film, retail partners made large profits from photo finishing. For retailers, it was a wonderful business because it brought customers into their stores multiple times: first to purchase film, then to drop off exposed film for developing and printing, and finally to pick up the prints. Each visit brought ancillary purchases, and photofinishing was one of the top two or three profit generators for many retailers and chain stores. But the end of analog imaging was bringing this golden era to an end.

In hindsight, there were two ecosystem design problems. First, as analog photography declined, there was no reason for retailers to be loyal to Kodak products; many were just as happy to use chemicals and paper from Fuji. Second, Kodak management didn’t fully recognize that the rise of digital imaging would have dire consequences for the future of photo printing.

Organizational Inertia?

Kodak management has been criticized for compromising its digital efforts because it wanted to protect film. But the criticism is overblown. Responding to recommendations from management experts, from the mid-1990s to 2003 the company set up a separate division (which I ran) charged with tackling the digital opportunity. Not constrained by any legacy assets or practices, the new division was able to build a leading market share position in digital cameras — a position that was essentially decimated soon thereafter when smartphones with built-in cameras overtook the market.

A complicated and emotional issue was how to deal with the thousands of people in the legacy businesses that were destined to shrink. Most of the individuals in question knew they didn’t have the right skills for the new businesses; their jobs were to maximize profits from the declining businesses for as long as possible. A few people could make the transition, but the truth is that commoditized digital businesses tend to have lower profit margins and can’t afford to carry a lot of costs — particularly legacy costs.

The organizational challenge was even more pronounced at a senior level. For many managers of legacy businesses, the survival instinct kicked in. Some who had worked at Kodak for decades felt they were entitled to be reassigned to the new businesses, or wished to control sales channels for digital products. But that just fueled internal strife. Kodak ended up merging the consumer digital, professional, and legacy consumer film divisions in 2003. Kodak then tried to make inroads in the inkjet printing business, spending heavily to compete with fortified incumbents such as HP, Canon, and Epson. But the effort failed, and Kodak exited the printer business after it filed for Chapter 11 bankruptcy reorganization in 2012.

What Might Kodak Have Done?

With the benefit of hindsight, it’s interesting to ask how Kodak might have been able to achieve a different outcome. One argument is that the company could have tried to compete on capabilities rather than on the markets it was in. This would have meant directing its skills in complex organic chemistry and high-speed coating toward other products involving complex materials — a path followed successfully by Fuji. However, this would have meant walking away from a great consumer franchise. That’s not the logic that managers learn at business schools, and it would have been a hard pill for Kodak leaders to swallow.

For Kodak, it might also have meant holding on to Eastman Chemical Co., a unit it spun off in 1994. After emerging from Chapter 11 bankruptcy protection in 2013, Kodak chose to stand its ground in the imaging business. Today, it is a much smaller company that sells products such as commercial printing solutions, while Eastman Chemical, based in Kingsport, Tennessee, has become a major player in industrial chemicals, fibers, and plastics. (Ironically, Eastman Chemical might end up being George Eastman’s most lasting legacy.)

Yet another potential path for Kodak might have been proactively exiting its legacy businesses in a timely way, as IBM Corp. did. From the early 1990s through the 2000s, IBM managed to do this very efficiently, exiting markets that included printer manufacturing, flat panel displays, personal computers, and disk drives. For the company that’s doing the exiting, exiting legacy businesses is an opportunity to restructure and shed a lot of costs. Kodak eventually did this with its consumer film business, which is now owned by Kodak’s U.K. pension plan. But for an organization exiting its traditional business, the real challenge is keeping an innovation pipeline full of new products and services that can replace the old ones. As Kodak has shown, that can be a formidable challenge.

Lessons for Managers

Every situation is different, but the experiences of Kodak suggest some sobering questions for managers in industries undergoing substantial technology-driven change. Among them are:

Is our core technology converging to the point of being replaced by a general-purpose technology platform? If so, the company could lose manufacturing scale and early-mover advantages — such as being far down the legacy manufacturing learning curve.

Is the technology that underpins our business likely to shift to a digital/modular platform that will lower barriers to entry? If so, commoditization pressure will be inevitable, and the company must prepare to live on much lower margins.

Do we have a capital-intensive legacy business? If so, can we develop a strategy for scaling down production volumes that is both capital efficient and keeps production costs from rising excessively? This is key to maximizing cash flow while trying to execute a transition. It will involve using older equipment or repurposing production assets to make alternate products.

How does the balance of power in our ecosystem change as technology shifts impact different parts of the value chain differently? Will the interests of partners cause our company to do things that are contrary to its long-term interests? This requires thinking about how ecosystem partners will manage the transition and adjusting strategy accordingly.

About the Author

Willy Shih is the Robert and Jane Cizik Professor of Management Practice in Business Administration at Harvard Business School. From 1997 to 2003 he was a senior vice president at Eastman Kodak Co. and served as president of the company’s consumer digital business.

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Craig mcgowan, stephen waybright, giovanbattista testolin, karl schubert, arthur weiss, julian koor, victor yodaiken, john krienke, jeffrey hardy, butch cunnings, charles h. green.

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Did Kodak Ignore the Digital Revolution?

kodak and digital revolution case study

Hopefully you don’t pick a company that I know something about – Paraphrasing Professor Shih, former Senior Vice President at Eastman Kodak Company

Kodak – A classic tale of corporate arrogance?

We all know the story. Big corporations are slow. Their old age and out of touch management only survive because inertia and economies of scale allow them to. They’re one disruptive technology away from being overthrown, not only because of their size, but because of their complacency. The classic example? The Eastman Kodak Company – a “company [that] had the nearsighted view that it was in the film business instead of the story telling business.” 1 The digital transformation that helped so many businesses and industries is often credited with Kodak’s decline. Despite inventing the “first digital camera in 1975,” Kodak apparently refused to take advantage of its market leading position to pivot to digital thanks to a combination of arrogance and “blind faith” that marketing power could persuade its customers to ignore digital photography. 1

Kodak’s operating model

But is that the real story? Was the market leader of film really so blind, or was the advent of digital film more disruptive to Kodak than it might seem? While digital technology was beginning to take over the industry, Kodak was forced to operate with its existing capital – production lines with high fixed costs that were optimized for large orders, not diminishing sales. 2

kodak-1-png

Pathways to Just Digital Future

Figure 1: Machinery used in the production of analogue film (c. 1958) 3

To combat this problem, Kodak reduced its product mix – driving customers to digital even faster. 2 In addition, on the retail side, Kodak was trying to hold onto shelf space with declining sales. 2 Even if Kodak knew that digital would be the market leader of the near future, voicing this knowledge would only incentivize retailers to pull Kodak’s products off of the shelf faster. 2 As a whole, Kodak’s operating model simply did not mesh with digital technology.

Kodak’s business model

Complex analogue film manufacturing required overhead and it required expertise – something very few companies, aside from Kodak, had. 2 In contrast, digital imaging was grounded in semiconductors, a fundamentally different technology that other industries and companies focused on. 2 This shift evaporated Kodak’s competitive edge and lowered the barriers of entry to the market. 2

In addition, Kodak had built relationships with its retailers that depended on a mutually profitable ecosystem: customers would come to retail stores to purchase film, return to drop off the film, and then return again to pick up the finished prints. 2 Of course, every return visit generated additional business for the retailer. 2 The shift to digital technology eliminated this ecosystem, and with it, the inherent loyalty that retailers had to Kodak. 2

Kodak’s business model revolved around its unique expertise and its relationships with retailers. Kodak’s success with digital technology did not hinge on a simple change from one set of products to another, it would have required the company to effectively start over with an entirely different business model.

End of the line

Even with these problems, Kodak continued to innovate in the digital space. For example, it introduced the Kodak Photo CD system in 1992, a “way of efficiently transferring high-quality photos from traditional cameras to personal computers,” which allowed individuals and businesses to use Photoshop to edit their images. 4 However, it was not long until fundamental changes in technology and ecosystems caused Kodak to become truly obsolete. People stopped using analogue film with Kodak cameras and started taking pictures on their smartphones. Even if Kodak was fully aware of the oncoming digital transformation, it would have been hard pressed to move from an analogue film business with 70% market share to a much smaller player in the digital smartphone world. 5

The bigger “picture” – next steps

Digital technology added value to the film and picture industry in many ways. Unfortunately for Kodak, its market leading position did not earn it a piece of that value. In late 1993, in an attempt to focus on film, Kodak spun off Eastman Chemical. 6 Eastman proceeded to outpace Kodak and increase in value over the next two decades.

kodak-2

Figure 2: Eastman Chemical and Kodak’s growth over time 6

In the end, Kodak shouldn’t have thought of itself as a film business and it shouldn’t have thought of itself as a story telling business; it should have thought of itself as a niche chemistry business. Of course, acting on this would have required abandoning a market leading position in the film industry that Kodak was known for – a tough sell for anyone, even with digital disruption on the horizon. Kodak still exists, it still serves some film markets, and it’s still struggling. 7 Going forward, the company needs to re-examine its core capacities and expertise to identify markets where it could still have a competitive edge. It needs to re-construct its operating model and business model around a market that values its competitive advantages. Unfortunately for Kodak, that market is no longer commoditized imaging.

(799 words)

[1] Avi, D. “Kodak Failed By Asking the Wrong Marketing Question.” Forbes. Forbes Magazine, 23 Jan.

  • Retrieved from http://www.forbes.com/sites/avidan/2012/01/23/kodak-failed-by-asking-the-wrong-marketing-question/

[2] Shih, W. (2016). The real lessons from kodak’s decline. MIT Sloan Management Review, 57(4), 11-13.

Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1802194460?accountid=11311

[3] [flickrfabio]. (2009, April 10). (#1) “How film is made” Kodak 1958 factory documentary (part 1 of 2).

[Video File]. Retrieved from https://www.youtube.com/watch?v=UJ6w1esVcoY

[4] Goldsborough, R. (2013). The changing world of photography. Tech Directions, 72(7), 12-13.

Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1283330858?accountid=11311

[5] BUSINESS: FILM FIGHT: FUJI vs. KODAK: The important issues will be settled by the market, not the

world trade organization / asiaweek. (1996, Jul 01). Asiaweek, Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/228484686?accountid=11311

[6] La Monica, P. “The anti-Kodak: Eastman Chemical.” CNN Money, 27 Jan. 2012. Retrieved from

http://money.cnn.com/2012/01/27/markets/thebuzz/

[7] Hardy, Q. (2015, March 20). At Kodak, Clinging to a Future Beyond Film. The New York Times.

Retrieved from http://www.nytimes.com/2015/03/22/business/at-kodak-clinging-to-a-future-beyond-film.html

Student comments on Did Kodak Ignore the Digital Revolution?

Very interesting article. Indeed people often think as a company as one fixed entity. But it is a sum of asset both physical, intangible and also people obviously. I tend to believe that when a company’s core business model is jeopardized as dramatically as Kodak was, the most efficient reaction is not reinvention but maybe explosion: spin-offs, employees churn, IP disposals. There is no reason to regard companies as sacred. They are just a legal structure efficient for organization purposes. The reallocation of people, assets and IP can be part of their life.

Without the disruption at Kodak, HBS students might not have benefited from Professor Shih pedagogic insights and we would not have contributed to some innovation!

Brave post 🙂

I agree with the diagnosis, but not the prognosis.

Yes, whilst the Kodak operating model did have the capability to innovate, it failed to utilise it correctly. As you mentioned, in 1975 Kodak engineer Steve Sasson created the first digital camera. (In fact, until the patent expired in the United States in 2007, the digital camera patent earned billions for Kodak, since other manufactors paid for the rights to use it!) [1] And I agree that the lesson is that when comes to technology, cannablise yourself before someone else does. Take the risk of innovation.

However, in terms of next steps, I do think they are doing the right thing! I would be incredibly interested to hear thoughts on it’s smartphone launch last month: http://www.kodak.com/consumer/products/ektra/default.htm Rather than be complacent again and think of themselves as a “a niche chemistry business” in order to survive, they have recognised: – they have significant brand awareness and power in the camera industry which they can leverage – smartphone cameras are reducing the need for digital cameras (I got several curious stares during class photo day when I brought mine in…) As a result, they are taking a risk, and trying to get ahead of Canon, Nikon and Olympus and more! Early reviews are encouraging, but only time will tell whether history is about to repeat itself. [2]

[1] http://lens.blogs.nytimes.com/2015/08/12/kodaks-first-digital-moment/ [2] http://www.mobilechoiceuk.com/phone-review/Kodak/Ektra/1154

*on its smartphone

Interesting article. One question I have is how companies can tell when they are going down the path to bankruptcy and how to mitigate that. Should Kodak have done more spin-offs and asset sales prior to bankruptcy to manage value for shareholders? Does it make sense for companies with an old business model to try and pivot into something entirely new, or should they try to manage the decline as best they can and distribute cash to their holders? Would be interesting to hear your take on how Kodak is doing today and whether you think some of their new initiatives will be successful.

Brave post Brian!

I think the Kodak case is quite interesting in that it shows how success can be fleeting in the absence of innovation. The innovation that was missing here was not simply converting to digital, rather looking at how to overhaul a very successful company’s business model. In hindsight, it’s easy to criticize Kodak’s decisions, but I’m not sure I would have done better (perhaps after we do the Kodak case I might!). Imagine telling someone in CocaCola that the future is in ice-cream? It would be a tough sell.

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The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry…

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The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution' questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case.

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Kodak Color Film.

On a shelf in his office in Cambridge Judge Business School, Dr Kamal Munir keeps a Kodak Brownie 127. Manufactured in the 1950s, the small Bakelite camera is a powerful reminder of the rise and fall of a global brand – and of lessons other businesses would do well to learn.

Whenever I ask why a certain company that has fallen on hard times is doing badly, I always start by asking why it was successful in the first place. That is where the answer lies. Kamal Munir.

Earlier this year, Kodak filed for Chapter 11 bankruptcy protection. But when Kamal's camera was made, the company bestrode the world of amateur photography – a world Kodak itself had created.

Established by George Eastman in the 1880s, by the 1950s Kodak had the lion's share of the US amateur film market. “Kodak was a company at the top of its game,” says Kamal, who has studied the Rochester-based business for more than a decade.

“Kodak controlled almost 70% of the highly lucrative US film market. Gross margins on film ran close to 70%, and its success was further underpinned by a massive distribution network and one of the strongest brands in the world. The company completely dominated its industry,” he says. “And then, in 1981, along came digital.”

Thousands of words have been written recently seeking to explain Kodak's failure. The company, all agree, was slow to adapt to digital, its executives suffered from a mentality of “perfect products”, its venture-capital arm never made big enough bets to create breakthroughs, and its leadership lacked vision and consistency.

None of this analysis, however, fully explains why digital – a technology Kodak pioneered – did for the company. Understanding that, Kamal argues, requires a deeper historical and social approach.

“Photography is very much a social activity. You can't really understand how people relate to their pictures – why people take pictures – unless you do a social analysis which is more anthropological or sociological,” he explains.

“Whenever I ask why a certain company that has fallen on hard times is doing badly, I always start by asking why it was successful in the first place. That is where the answer lies.”

For three-quarters of the twentieth century, Kodak's supreme success was not only developing a new technology – the film camera – but creating a completely new mass market.

During the nineteenth century, photography had been the exclusive preserve of a small number of professionals, with their large-format cameras and glass plates. So when Kodak invented the film camera, it needed to teach people how and what to photograph, as well as persuading them why they needed to do so.

“Kodak is the company that made photography a popular pastime around the world. It made a tremendous contribution to how we see things,” Kamal says.

The Kodak moment

Kodak's high-profile advertising campaigns established the need to preserve 'significant' occasions such as family events and holidays. These were labelled 'Kodak moments', a concept that became part of everyday life.

And it was women Kodak cast in the leading role. In its advertisements, women held the cameras, busy preserving moments of domestic bliss for posterity: “Kodak knew how to market to women. If you wanted to be seen as a caring mother and responsible housewife, then you needed to record your family's evolution and growth,” he says.

But women were only part of the story. It was they who took the photographs, but the other half of the Kodak moment required a subject – birthday parties, sporting success and, crucially, family holidays.

“Kodak also played a big role in converting travel to tourism. The idea was that if you hadn't brought back pictures from your vacation you might as well not have gone,” says Kamal. “For them, photography was all about preserving memories for posterity, photography was all about sentiment, and it was women who were doing this.”

By the 1970s, more than 60% of pictures in the US – the world's largest photography market – were being taken by women. And it was partly how men – rather than women – responded to the digital revolution that Kodak couldn't cope with.

Digital disrupted the company's equilibrium in two crucial respects. Firstly, it shifted meaning associated with cameras and secondly, digital devices allowed newcomers such as Sony to bypass one of Kodak's huge strengths – its distribution network.

The knock-on effects of this shift were enormous. Digital cameras came to be viewed as electronic gadgets, rather than pieces of purely photographic equipment. As a result, he explains: “The identification of cameras as gadgets brought about another significant change: women were no longer the main customers, men were.”

The gender shift led to the third source of disruption for the photographic industry in general, and for Kodak in particular. With digital cameras, images could be viewed on cameras, mobile phones or computers without the need for hard prints. And with women giving way to men as primary users of cameras, printing plummeted.

According to Kamal: “The people taking pictures suddenly changed, from 60% women to 70% men. Kodak didn't know how to market to men. But even if they could get them to buy, they didn't want to, because men don't print. Unlike women, they hadn't been socialised in the role of family archivist.”

Faced with such an enormous threat to its business, Kodak did what many companies do in similar circumstances – ignore the problem in the hope it goes away, and when it doesn't, deride the new-comer.

“Some things do go away – not all technology gets diffused,” he says. “When that fails, the second reaction is usually derision – it'll never take off, it's too expensive, it's too difficult, the print quality is too bad, people will never part with hard prints. When I talked to Kodak executives they would always cite the same example – if someone's house catches fire, the first thing they rescue is their photographs.”

From preserving memories to sharing experiences

Having played such a central role in creating meaning for photography, the company failed to believe that meaning had changed, from memories printed on paper to transient images shared by email or on Facebook.

“The change from preserving memories to sharing experiences, and from women to men – these were things Kodak simply couldn't handle,” says Kamal, who saw the writing on the wall when he visited the company's senior management in Rochester a decade ago. “By the end of the day I was convinced the company was not going to be around much longer.”

In 2006, Kamal sent a letter to the Financial Times , pointing out that Kodak's strategy was fundamentally flawed. “Kodak is better off taking a leaf out of Lou Gerstner’s strategy for re-inventing IBM – from a manufacturer to a service-provider,” he wrote.

“Kodak needs to disassociate itself from its traditional strengths and come to terms with the fact that this technology will be commoditised sooner or later. What they need is a new business model for an environment in which people do not ‘preserve memories’ but ‘share experiences’ ... I am afraid Mr Perez's [Kodak CEO] strategy of engulfing the consumer in the Kodak universe has a low likelihood of success."

But rather than a new business model, what Kamal had seen in Rochester was a digital imaging division under pressure from its consumer imaging counterpart, and a company unable to shake-off a corporate mindset that had developed over more than a century.

“Its focus on retail printing, investing in inkjet printing research and development, and selling sensors to mobile manufacturers – altogether, these never added up to a coherent, sustainable business model. And the digital guys were always under pressure because they were seen to be cannibalising sales of much more lucrative products,” says Kamal, who thinks Kodak should have cut the digital business loose and freed it from the Rochester mindset.

Learning from history

In his view, Kodak needed to let a new generation of users and entrepreneurs take charge – people who could embrace uncertainty and were prepared to be driven in unforeseen directions – a far cry from how the company had spent its life.

“It's important for companies to reinvent themselves. Kodak had tremendous market power – one of the things that allowed it to survive thus far. But for this kind of reinvention, where you're faced with a technological discontinuity which has little in common with what you've been doing, you need to radically alter your mindset or world-view and emerge as a completely different company. IBM is a good example of this kind of reinvention, which was a huge cultural shift and took several years. But Kodak wasn't willing to part with their legacy.”

The challenges Kodak faced are not unique, so what can other businesses learn from its failure? Clearly companies that derive a large proportion of their profit from a single product – in Kodak's case film – are more vulnerable. But having a corporate mindset open to new ideas and able to embrace uncertainty is essential.

According to Kamal: “The important things are not to tie the weight of legacy assets onto new ventures; to refrain from prolonging the life of existing product lines, while trying to create false synergies between the old and the new; and, most of all, to base strategy around users, rather than the existing business model.”

As the company approaches its 130 th birthday, what will be its legacy? Those precious family albums, perhaps, and our enduring passion for photography. But its impact could have been even greater, and longer-lasting.

“There was a time when photography was known as 'kodaking',” he concludes. “I don't think Kodak will survive. Someone might buy the brand and its assets, but Kodak is never going to be Kodak again.”

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kodak and digital revolution case study

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Case Study: Kodak’s Downfall—A Lesson in Failed Digital Transformation and Missed Opportunities

The context: an iconic brand meets digital disruption.

Eastman Kodak, commonly known as Kodak, was once the undisputed leader in the photography industry, boasting a market capitalization of $31 billion at its peak in 1997. However, by 2012, Kodak had filed for bankruptcy, a staggering descent that is often cited as a cautionary tale in the annals of business history. So, what went wrong? How did a company that held 90% of the U.S. film market and 85% of the camera market in 1976 end up in bankruptcy?

kodak and digital revolution case study

The Dilemmas

1. complacency and over-reliance on legacy business models.

Kodak was heavily invested in the film-based photography market. The company’s complacency in sticking to its legacy business model, despite the seismic changes in technology, was its first major mistake. Film processing was a cash cow, and there was a reluctance to explore or transition to emerging technologies for fear of cannibalizing the existing business.

2. Ignoring Technological Innovations

Ironically, Kodak was one of the pioneers in digital photography and invented the first digital camera in 1975. Yet, they did not capitalize on this innovation. This was largely because they perceived digital photography as a threat to their film business. Their failure to adapt to and invest in the new technology would cost them dearly.

3. Misjudging Market Trends and Customer Needs

The management wrongly assumed that the transition from film to digital would be slow. They underestimated how quickly consumers would adopt digital cameras and later, smartphones. Kodak’s inability to read the market and customer needs accurately further exacerbated their downfall.

The Aftermath: The Costs of Inaction

By the time Kodak realized the significance of digital photography, it was too late. Other companies like Canon, Sony, and later tech giants like Apple and Google, had already captured significant market share. In 2012, Kodak filed for Chapter 11 bankruptcy and later emerged as a company focusing on digital imaging for businesses, a far cry from its glorious past.

The Data and Statistics

Kodak timeline.

  • 1888: George Eastman patents the first roll-film camera and registers the trademark “Kodak.”
  • 1900: Eastman introduces the Brownie camera, making photography accessible to the masses.
  • 1935: Kodachrome film is launched, becoming the standard for color photography.
  • 1962: Kodak introduces the Instamatic camera, popularizing point-and-shoot photography.
  • 1975: Kodak engineer Steve Sasson invents the first digital camera prototype.
  • 1984: Kodak launches the Photo CD system, allowing digital storage of photos.
  • 1990: Kodak’s market share for photographic film peaks at over 80%.
  • 1994: Kodak enters the digital camera market, but faces competition from industry newcomers.
  • 1997: Kodak’s market capitalization reaches $31 billion.
  • 2003: Kodak announces a major restructuring and begins shifting focus to digital technologies.
  • 2012: Kodak files for bankruptcy, citing a failure to adapt to the digital age.
  • 2013: Kodak emerges from bankruptcy as a restructured company focused on commercial printing.
  • 2019: Kodak launches a blockchain cryptocurrency platform for photographers called KODAKCoin.
  • Present: Kodak continues to innovate in various imaging and printing technologies, aiming to regain its prominence in the industry.

This timeline captures the major milestones and challenges faced by Kodak throughout its history.

What Could Have Been Done Differently?

  • Scenario Planning : Kodak could have considered various future states of technology and the market to identify opportunities and threats better.
  • Agile Methodologies : An agile approach to strategy and product development could have made the organization more responsive to change.
  • Horizon Planning : A long-term strategy incorporating emerging technologies could have diversified their revenue streams and reduced their dependency on the film business.
  • Prioritization : Resource allocation could have been better managed to focus on digital technologies, a future growth area.
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The Missed Goldmine: Kodak’s Untapped Digital Patents

One of the most perplexing aspects of Kodak’s downfall is the vast portfolio of digital patents the company held. Kodak was a pioneer in many digital imaging technologies and had over 1,000 patents related to digital cameras, image processing, and various other digital imaging technologies. This arsenal of intellectual property could have been a significant game-changer, positioning Kodak as a dominant player in the digital era. However, Kodak failed to leverage these assets effectively. While some of these patents were eventually sold for $527 million during the bankruptcy proceedings in 2012, the revenue pales in comparison to what could have been earned through strategic application or licensing agreements (Source: Reuters). Kodak’s failure to capitalize on its rich patent portfolio demonstrates a glaring missed opportunity and adds another layer to the tragedy of its downfall. These patents could have been the stepping stones to transition smoothly from a film-based photography company to a digital imaging powerhouse, if only the right strategies and focus were in place.

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Lessons for Other Organizations: Unpacking the Kodak Tragedy for Modern-Day Strategic Insights

The collapse of Kodak wasn’t just a loss for the company and its employees; it serves as a case study loaded with lessons for other organizations. The corporate world today, more than ever, requires companies to adapt swiftly to emerging technologies and market changes. Here are some key takeaways that could guide other companies in averting a similar fate:

Avoid Complacency

Kodak dominated the film photography industry for years, which likely contributed to an organizational culture of complacency. No matter how successful a business is today, tomorrow’s landscape could be entirely different. Continuous innovation and an ever-curious mindset are vital for long-term sustainability.

Harness Your Intellectual Property

Kodak’s patent portfolio was a goldmine that was not effectively utilized. Intellectual property can provide a competitive edge and open up new avenues for revenue through licensing or forming strategic partnerships. Evaluate your IP assets and think strategically about how to leverage them for future growth.

Case Study: Starbucks’ Success Elevating Customer Experience with Customer Journey Mapping

Prioritize Adaptability

Kodak’s downfall illustrates the importance of adaptability. Employing frameworks like Agile and Horizon Planning can help a company remain flexible and responsive to market needs, ensuring that you’re not only reacting to changes but also anticipating them.

Stakeholder Involvement is Crucial

Kodak’s transition to the digital age was not a smooth one, partly because of resistance from various stakeholders who were invested in the existing film business. Ensure that all stakeholders are aligned with the company’s vision and strategy, and consider using a neutral facilitator to guide strategy meetings effectively.

Keep Your Roadmaps Dynamic

Technology and strategy roadmaps should not be static documents but should evolve with the industry landscape and internal capabilities. Regular updates and revisions keep the roadmap relevant and actionable, allowing for real-time adjustments to market changes.

Financial Prudence

In an era of rapid changes, conserving resources for future investments in innovation and strategic shifts is crucial. Kodak’s lack of financial prudence when the tides were turning led to a situation where they had fewer options when they finally decided to pivot.

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A Glimmer of Hope: Kodak’s Pivot to Blockchain and Continued Innovation

Even the most harrowing tales of downfall can have a silver lining, and in the case of Kodak, it’s their foray into blockchain technology and ongoing endeavors in imaging and printing technologies. These initiatives not only showcase the brand’s resilience but also provide valuable lessons on how to stage a comeback in the digital age.

KODAKCoin: A Step Towards Decentralization

In 2019, Kodak surprised the tech world by launching KODAKCoin, a blockchain cryptocurrency platform designed for photographers. This innovative move aimed to address issues around image rights and royalties, providing photographers with a secure and transparent platform to manage their intellectual property. With KODAKCoin, Kodak showed its willingness to explore frontier technologies, reflecting a newfound openness to adapt and innovate.

A Commitment to Imaging and Printing Technologies

Kodak has also continued its efforts to innovate in its core areas—imaging and printing technologies. Leveraging its historical strengths, the company is investing in new product lines and partnerships, aiming to re-establish itself as a leader in the industry. While the road to recovery is long, these actions signal a directional shift in Kodak’s strategy, focusing on modernization and value creation.

CDO TIMES Bottom Line Summary

The fall of Kodak serves as a cautionary tale that outlines the importance of adaptability, strategic planning, and stakeholder alignment in today’s volatile business environment. Organizations aiming to avoid a similar fate should consider adopting modern planning frameworks like Agile and Horizon Planning, stay open to revising their technology roadmaps, and leverage intellectual property assets strategically. These lessons are not just theoretical but actionable guidelines that could determine an organization’s survival in the fast-evolving corporate landscape.

Kodak’s pivot towards blockchain with KODAKCoin and its ongoing efforts in imaging and printing technologies show a company striving to reinvent itself. While it’s too early to predict if these steps will fully restore Kodak’s former glory, they do offer a glimmer of hope and a wealth of insights for other companies seeking to pivot or modernize. The lesson here is clear: innovation and adaptability remain at the core of corporate sustainability. For organizations looking to master these qualities, subscribing to CDO TIMES’ unlimited access membership offers an in-depth analysis of successful strategies, emerging technologies, and case studies, arming you with the knowledge you need to stay ahead of the curve.

Love this article? Embrace the full potential and become an esteemed full access member, experiencing the exhilaration of unlimited access to captivating articles, exclusive non-public content, empowering hands-on guides, and transformative training material. Unleash your true potential today!

In this context, the expertise of CDO TIMES becomes indispensable for organizations striving to stay ahead in the digital transformation journey. Here are some compelling reasons to engage their experts:

  • Deep Expertise : CDO TIMES has a team of experts with deep expertise in the field of Digital, Data and AI and its integration into business processes. This knowledge ensures that your organization can leverage digital and AI in the most optimal and innovative ways.
  • Strategic Insight : Not only can the CDO TIMES team help develop a Digital & AI strategy, but they can also provide insights into how this strategy fits into your overall business model and objectives. They understand that every business is unique, and so should be its Digital & AI strategy.
  • Future-Proofing : With CDO TIMES, organizations can ensure they are future-proofed against rapid technological changes. Their experts stay abreast of the latest AI advancements and can guide your organization to adapt and evolve as the technology does.
  • Risk Management : Implementing a Digital & AI strategy is not without its risks. The CDO TIMES can help identify potential pitfalls and develop mitigation strategies, helping you avoid costly mistakes and ensuring a smooth transition.
  • Competitive Advantage : Finally, by hiring CDO TIMES experts, you are investing in a competitive advantage. Their expertise can help you speed up your innovation processes, bring products to market faster, and stay ahead of your competitors.

By employing the expertise of CDO TIMES, organizations can navigate the complexities of digital innovation with greater confidence and foresight, setting themselves up for success in the rapidly evolving digital economy. The future is digital, and with CDO TIMES, you’ll be well-equipped to lead in this new frontier.

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As the CDO of The CDO TIMES I am dedicated delivering actionable insights to our readers, explore current and future trends that are relevant to leaders and organizations undertaking digital transformation efforts. Besides writing about these topics we also help organizations make sense of all of the puzzle pieces and deliver actionable roadmaps and capabilities to stay future proof leveraging technology. Contact us at: [email protected] to get in touch.

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Kodak and the digital revolution (a) description.

The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution' questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case.

Case Description Kodak and the Digital Revolution (A)

Strategic managment tools used in case study analysis of kodak and the digital revolution (a), step 1. problem identification in kodak and the digital revolution (a) case study, step 2. external environment analysis - pestel / pest / step analysis of kodak and the digital revolution (a) case study, step 3. industry specific / porter five forces analysis of kodak and the digital revolution (a) case study, step 4. evaluating alternatives / swot analysis of kodak and the digital revolution (a) case study, step 5. porter value chain analysis / vrio / vrin analysis kodak and the digital revolution (a) case study, step 6. recommendations kodak and the digital revolution (a) case study, step 7. basis of recommendations for kodak and the digital revolution (a) case study, quality & on time delivery.

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Case Analysis of Kodak and the Digital Revolution (A)

Kodak and the Digital Revolution (A) is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Kodak and the Digital Revolution (A) is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Kodak and the Digital Revolution (A) case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Kodak and the Digital Revolution (A) will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Kodak and the Digital Revolution (A) case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Kodak and the Digital Revolution (A), is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Kodak and the Digital Revolution (A) case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, Kodak and the Digital Revolution (A) case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Kodak and the Digital Revolution (A)

Step 1 – Problem Identification of Kodak and the Digital Revolution (A) - Harvard Business School Case Study

The first step to solve HBR Kodak and the Digital Revolution (A) case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Kodak's Kodak is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Kodak's Kodak, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Kodak and the Digital Revolution (A). The external environment analysis of Kodak and the Digital Revolution (A) will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Kodak and the Digital Revolution (A) case study. PESTEL analysis of " Kodak and the Digital Revolution (A)" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Kodak and the Digital Revolution (A) macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Kodak and the Digital Revolution (A)

To do comprehensive PESTEL analysis of case study – Kodak and the Digital Revolution (A) , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Kodak and the Digital Revolution (A)

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ Kodak and the Digital Revolution (A) ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Kodak's Kodak is operating, firms are required to store customer data within the premises of the country. Kodak's Kodak needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Kodak and the Digital Revolution (A) has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Kodak's Kodak in case study Kodak and the Digital Revolution (A)" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Kodak's Kodak in case study “ Kodak and the Digital Revolution (A) ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Kodak's Kodak in case study “ Kodak and the Digital Revolution (A) ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Kodak and the Digital Revolution (A) ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Kodak's Kodak can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Kodak and the Digital Revolution (A) case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Kodak's Kodak needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Kodak and the Digital Revolution (A)

Social factors that impact kodak and the digital revolution (a), technological factors that impact kodak and the digital revolution (a), environmental factors that impact kodak and the digital revolution (a), legal factors that impact kodak and the digital revolution (a), step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: kodak and the digital revolution (a) case study solution.

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Kodak and The Digital Revolution – Management of Innovation and Change

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This report analyses and evaluates why a highly successful company like Kodak ran out of money and had to file for Chapter 11 bankruptcy protection in 2012.

Clayton Christensen’s theory of ‘sustaining and disruptive innovation’ in consideration with several other frameworks has been applied to Kodak’s case to evaluate the leadership and management of innovation and change at Kodak from 1975 onwards.

This report is based on the popular Harvard Business School case study of Kodak and The Digital Revolution by Giovanni M. Gavetti, Rebecca Henderson and Simona Giorgi, published in November 2004 and revised in November 2005.

1.0 Introduction

1.1 brief profile of kodak in 1975.

1975 was an important year in the timeline of the Eastman Kodak Company. The company invented the Digital Camera, one of the greatest technological inventions of the modern world ( Castella, 2012 ) and yet the greatest irony; the same digital camera was starting point of Kodak’s slow demise.

Founded in 1880, Kodak was one of the most innovative companies in most of the 20th century. The company built on a culture of innovation and change ( Kotter, 2012 ), transformed photography from a complex activity into an everyday life activity accessible to billions of people ( Munir and Phillips, 2005 ) and thus revolutionised the entire photography industry.

By selling its camera for a low price and using the razor-blade strategy to drive profit from selling consumables such as films, Kodak achieved higher profits and continuous growth ( Gavetti et al., 2005 ).

The invention of the digital camera in 1975 by Steve Sasson, one of Kodak’s engineers was part of intensive investments in research and development and portrays how innovative the company was back then. Kodak, however, didn’t see the potential in the digital camera early and couldn’t capitalise on the invention. As films were bringing in most of the profits, investing in the digital camera would be cannibalising their own profits.

Kodak accounted for 90% of film and 85% of camera sales in the US by 1976 ( Gavetti et al., 2005 ). A company employing more than 100,000 people to sell film rolls to generate billions in revenue then, couldn’t care much for a filmless device that could potentially be a threat to their own business.

Kodak held back from developing digital cameras for the consumer market for fear of killing its profitable film business ( Usborne, 2012 ). The company brought its first digital product in the market in 1991, and although, there were few players in the market already, Kodak was initially successful in the Digital market.

Until 1999, Kodak had a share of 27% in the US digital market, but despite the market share and position, Kodak was losing $60 for every camera it sold in 2001. Kodak was used to earning really high-profit margins on its films, and in comparison, the margins in the consumer electronics hardware market were much smaller ( Gross, 2012 ).

Eventually, Kodak executives’ mindset of razor-blade strategy forced them to focus on other consumables rather than the electronic device itself.

So, how could an innovative and massively successful company like Kodak which dominated photography all of the 20th century ( Harris, 2014 ) had to give up on the modern digital revolution that it had helped start in 1975?

2.0 Sustaining and Disruptive Innovation at Kodak

Photography giant Kodak was undoubtedly an innovative company that made photography accessible and affordable to the general mass. The fact that a company dies because they do not respond to the disruptive changes in its marketplace just doesn’t apply to Kodak ( Anthony, 2012 ).

How could a company that invented the digital camera, invested heavily in digital imaging and bought websites like photo-sharing site Ofoto, be liable to succumb to a digital revolution?

Perhaps, it was a different challenge for Kodak and as cited by The Economist (2012) Clayton Christensen, believes that the problem was fundamental and Kodak faced an enormous challenge with a significant shift that couldn’t be met with existing technology.

Indeed Kodak saw a massive transformation in the industry, first with digital cameras and second with camera-enabled smartphones. To analyse what happened with Kodak with change and innovation let’s use Clayton Christensen’s theory of ‘sustaining and disruptive innovation’ as a framework for our further analysis.

2.1 Christensen’s Theory of Sustaining and Disruptive Innovation

Companies need to innovate with their products and services to be competitive in the marketplace ( PwC, 2012 ). Clayton Christensen’s theory of ‘sustaining and disruptive innovation’ is one of the most popular theories to understand how innovative new entrants beat the long-standing successful companies like Kodak.

Christensen (1997) in his popular book The Innovator’s Dilemma , distinguishes two types of innovation i.e. sustaining, and disruptive innovation. Interestingly, Kodak has been through both types of innovation and couldn’t withstand the disruptive innovation of digital imaging after 1975.

Sustaining Innovation is based on developing current technologies that overall improve the performance of established products being either of radical character or of an incremental nature. In contrast, “disruptive” innovation introduces new products or services that may not be standard as of currently available products but with other dimensions such as simpler, convenient, cheaper and accessible ( Christensen, 1997 ).

Kodak with its introduction of film rolls was “disruptive” as the company made photography much easier and affordable to the masses. Kodak kept on improving their performance of black-and-white film rolls to better films, in colour and of high quality, all of which were sustaining innovation for the company.

The emergence of Digital cameras, similar to film rolls, added a different dimension to photography. It wasn’t about competing on quality anymore. People back then adopted digital for entirely different reasons other than quality.

Thus, the innovator’s dilemma for companies like Kodak is whether to focus on current customers or to focus on a new population of consumers with lower-margin opportunities.

In hindsight, it seems Christensen’s claim of established companies face difficulties dealing with disruptive technology has come true with Kodak. But was “disruptive innovation”, the reason behind the failure of Kodak?

The detailed look at sustaining and disruptive innovation of Kodak based on Clayton’s framework under separate headings below might help us answer that.

2.2 Competition and sustaining innovation in the film business

2.2.1 sustaining innovation in digital technologies.

Successful firms like Kodak, according to Christensen, are most effective at implementing and developing incremental or sustaining innovation ( Dodgson et al., 2013 ). This can be related to the failure of Kodak to commercialise disruptive innovation like digital imaging as the company was mostly concerned about its current customers’ defined and predicted needs back then.

Christensen himself discussed how Kodak, in 1999, tried forcing its digital photography to compete on “Sustaining Innovation” basis against film and other consumer electronic players such as Sony and Canon (Christensen, 2006). Kodak offering a simple, convenient and low-priced camera called EasyShare is one example of Kodak’s sustaining innovation strategy to focus on digital imaging.

2.2.2 Sustaining Innovation in Film Era

Before digital, the continuous improvement in the quality of films for Kodak can be taken as sustaining innovation. Kodak had a huge share of the film market and literally didn’t have any competition for a long time. When Fuji emerged as a firm competitor for Kodak in its film business (See image below), Kodak’s management failed to maintain the same value proposition and continuously lost its market share to Fuji.

Kodak and Fujifilm competition

The market leader of Japan with more than 70% market share around 1984 steadily increased its market share in the US market by offering its products for lower prices than Kodak. The aggressive competition from Fuji also triggered Kodak to carry its sustaining innovation faster.

Kodak’s introduction of disposable cameras, for instance, was only after the success of Fuji in its home market. Kodak’s other significant sustaining innovation included the firm’s move into medical imaging and graphic arts exploiting its core capability in silver-halide technology.

2.3 Response to the disruptive innovation of digital imaging

Christensen’s theory, as discussed earlier argues disruptive technology is usually cheaper, easy and more accessible. Applying this to Kodak, when digital cameras were introduced, they were remarkably expensive (by 1995, only three models were priced under $1,000) but became cheaper and accessible comparatively over time.

Christensen’s theory, however, fails to address the fundamental shift in digital imaging and other factors of digital imaging that made it a disruptive innovation to replace the existing film market.

One of the limitations of the theory is that Christensen’s characteristic of disruptive innovation products fails to explain the digital imaging shift. People adopted digital imaging not because it was cheaper or smaller, but in fact, because it changed the process of photography ( Munir, 2012 ).

People were able to see the image instantly and copy/share it on the Internet, which also impacted the distribution channel Kodak had built over the years and formed an entirely new digital imaging chain ( Gavetti et al., 2005 ).

Christensen’s theory elaborates that disruptive technologies bring to a market a very different set of value proposition than had been available previously. Kodak seriously misinterpreted the value proposition digital imaging brought to the photography industry.

Kodak’s efforts of film-based digital imaging in 1990-1993 such as introducing Photo CD was an effort geared towards creating synergies between film and digital, which shows Kodak hadn’t fully grasped the digital movement until 1993.

Christensen further argues that established companies find it extremely difficult to invest adequate resources in disruptive technologies. Kodak’s comfortable investments in films continued because that’s where all the profits came in.

Christensen’s theory points out that large companies adopt a strategy of waiting until new markets are “large enough to be interesting” and this is in line with Kodak’s strategy back then.  Kodak only started investing heavily in digital imaging after the market was filled with several players.

Investment in digital imaging until Fisher’s era was scattered and it was only after Fisher in 1994 that Kodak separated the digital imaging operations that paved the way towards the dedicated digital movement for Kodak.

2.4 Resources, Processes and Values

Christensen et al. (2004) framework of resources, processes and values (RPV) can be applied to Kodak’s case to understand how the firm struggled to deal with digital technology. As for resources, Kodak certainly had enough capabilities to exploit digital technology to its advantage.

New processes were necessary for Kodak to succeed with digital technology and Kodak tried to create those processes, be that by bringing CEOs from different backgrounds or by establishing separate divisions for digital operations. The significant problem lay with values, how could Kodak prioritise digital imaging when it posed a major threat to cannibalise its profitable and attractive film business?

Such situations, according to Christensen, create innovator’s dilemma for companies. The view is also supported by the review of disruptive innovation theory by Yu and Hang (2010) and the primary solution advised in such cases is to establish an autonomous organisation.

Had Kodak established digital imaging as a stand-alone organisation, it would have definitely helped create a different set of processes and values, and this might have helped Kodak’s transition to disruptive technology.

3.0 Kodak’s Leadership and Strategy for Growth and Profits

The leadership at Kodak executed several decisions pertaining to a certain strategy and direction for growth and profits over time.

Considering such Kodak events from the case study ‘Kodak and Digital Revolution’ by Gavetti et al. (2005), strategies adopted by the leadership positions during different times can be analysed and evaluated to explore the management of innovation and change.

Kodak Logos from 1907 to 2006

3.1 Kodak’s Leadership 1975 – 2012

Looking at the leadership, achievements and transition phases of Kodak, three separate time periods based on the CEOs after 1975 can be considered for this analysis.

The period of 1975 to 1993 included CEOs Walter Fallon (1972 – 1982), Colby Chandler (1983 – 1989), and Kay Whitmore (1990 – 1993) and the interesting observation about this period is that all the CEOs came from the same manufacturing background within Kodak itself.

Another period of 1993 to 2005 included George Fisher (1993 – 2000) and Daniel Carp (2001 – 2005) as CEOs of Kodak. Fisher was the first outsider to run Kodak and while he emerged as the strong leader to push Kodak into the digital age, he considerably failed in changing the culture of Kodak.

Another CEO – Carp’s significant achievement included improving consumer digital imaging by introducing the first digital film processing software for the masses.

The recent period, after 2005 until Kodak filed for Chapter 11-bankruptcy protection in 2012 was headed by Antonio Perez as CEO of the company. Although Kodak’s profit was declining then, Carp was successful in building the digital imaging brand for Kodak being No. 1 in the U.S. market and No. 3 worldwide (Dickinson, 2012).

But as Kodak lost hope and couldn’t sustain with fewer margin profits from Digital cameras, Perez started exploring other options such as restructuring the company and focusing on other service-oriented business models (Hamm and Symonds, 2006).

3.2 Ansoff’s Matrix for Products and Markets

Ansoff (1957) presented a framework that can be used to analyse strategies used by Kodak under different time periods of leadership mentioned above.

Considering the activities of Kodak regarding products and markets (see the figure below for an overview of Kodak’s Ansoff’s Matrix framework), the general theme that can be deduced is that the company mainly focused its efforts on Diversification.

Ansoff Matrix for Products and Markets Kodak

And looking at its competitor Fuji which survived because of extreme diversification, one can argue that Kodak did the very best thing. My analysis, however, suggests there wasn’t adequate diversification and that the process was poorly managed.

Kodak, during the period of 1975 to 1993 started off with an ill-conceived process of unrelated diversification by investing in a pharmaceutical firm, the only logic behind being the industry relatedness with its core chemical business.

The company carried on with its unrelated diversification spree, which then was divested to pay off debts, immediately after Fisher came on board in 1993.

Unlike the previous leadership that believed their core business was chemical, Fisher believed the company was a film and consumer product business. Although divesting the health sciences unit helped to bring Kodak’s core focus to imaging, the previous diversification efforts were all wasted.

In hindsight, Fisher’s decision to divest the health science, just because it didn’t turn high margin profit (like the film business) immediately, cost the company in overall. Fisher initially pursued market penetration strategies by underestimating the digital adoption rate in emerging economies like China.

When the strategy failed, Fisher shifted towards a product development strategy by looking for a network and consumables-based business model.

3.3 Ansoff’s Growth Vector Components

Expanding the framework further, Ansoff’s growth vector components represent two extreme choices;

  • Continue serving present markets with existing product/service or technology
  • Serve new markets with new product/service or technology

Analysing those growth components, it’s clear that Kodak was more focused on serving present markets with its existing products and technology.

Unlike Kodak’s focus, disruptive innovation centres on creating new sets of markets and customers ( Dodgson et al., 2013 ) and thus the framework makes it distinct why Kodak failed at disruptive innovation.

3.4 Growth Strategy of Kodak – BCG Matrix

Application of another similar framework Boston Consulting Group (BCG) matrix to identify growth targets for Kodak during the emergence of digital cameras is portrayed in the image below where Digital cameras are ‘question marks’ and films are ‘cash cows’ for the company.

Growth Strategy of Kodak BCG Matrix Kodak

The application of the matrix suggests business units like the digital camera should be injected with huge cash to maintain their market share. This also explains Kodak’s management dilemma of choosing to invest in the right ones and divest the others.

4.0 Culture and Climate of Kodak

As an extension to Christensen’s theory of disruptive technologies, Lucas and Goh (2009) propose a framework that includes considerations of organisational change, and the culture of the organisation to evaluate how firms deal with disruptive technology.

The framework illustrates that Kodak had developed a robust culture over time but the previously successful culture didn’t work with the rapidly changing environment and rather became a barrier to the company’s digital innovation.

4.1 Culture Change and its Effect on Decision Making

Overall, Kodak had similar culture over time, and when leaders outside of Kodak’s background (especially Fisher) tried changing it, they faced several difficulties.

Unlike other CEOs, Fisher was brought into Kodak from outside of the company with the challenging responsibility of taking Kodak to the digital age. Fisher tried restructuring Kodak and creating a separate digital division but this didn’t help to change the culture of Kodak.

Noticeably, middle managers resisted the change and alignment with the previous culture, and they didn’t act in bringing the ideas from lower levels of the organisation.

Kodak was a bureaucratic organisation with a tall and hierarchical structure that had a different culture of information passing from top to bottom, and this didn’t help leaders like Fisher that wanted to change the dominant culture.

4.2 Lewin’s Force Field Analysis

Kodak’s inability to change can be evaluated using a framework of Lewin’s force field analysis that helps analyse forces for and against change in Kodak’s digital transition. The Figure below shows forces that were mainly dominant in Kodak’s move to digital.

Lewin’s Force Field Analysis for Kodak – For and Against Kodak’s Digital Change

Forces For Change

  • Growing Consumer Demand
  • Leadership of George Fisher
  • Research Forecast

Forces Against Change

  • Organisation Structure (Tall, Bureaucratic)
  • Existing Profitable Film Business
  • Kodak’s Culture
  • Kodak’s Middle Manager’s Attitude

The change was mainly restrained by factors including Kodak’s structure and culture/climate among others and it became very difficult for Kodak to overcome these restraining forces with its limited driving force.

5.0 Summary of Findings

While on the surface it seems Kodak is another victim of disruptive innovation, this analysis and evaluation of Kodak’s case have found several other problems behind the failure of Kodak’s digital innovation.

Kodak Current Digital Company Situation

A few of such problems realised from the above frameworks include the failure of Kodak to change its culture, the previous success of Kodak in the film industry (that kept Kodak focusing on existing markets with existing products), cognitive inertia, and the compliance built with success over time at Kodak.

5.1 What could have saved Kodak’s Moment?

Kodak’s main competitor Fuji’s growth and survival in the digital age convinces us that Kodak could have prevented the Chapter 11 bankruptcy protection disaster. But Kodak’s problem lay in long-term problems like being stiff with its culture, inconsistent leadership and unsuccessful diversification that couldn’t have been changed in a few years’ time.

One solution that Kodak could have adopted to solve its innovator’s dilemma is – early around 1975, Kodak could have established a different startup for its digital imaging away from Rochester (Probably in the tech hub – Silicon Valley) and built a separate workforce for its digital technology.

Perhaps, an important question today is what innovative companies can learn from the disaster of an immensely successful and innovative company like Kodak?

Innovation in itself isn’t enough, being able to predict and adapt to change can be the key to sustainable business among others.

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kodak and digital revolution case study

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Why Did Kodak Fail? | Kodak Bankruptcy Case Study

Yash Taneja

Yash Taneja

Kodak, as we know it today, was founded in the year 1888 by George Eastman as ‘The Eastman Kodak Company’ . It was the most famous name in the world of photography and videography in the 20th century. Kodak brought about a revolution in the photography and videography industries. At the time when only huge companies could access the cameras used for recording movies, Kodak enabled the availability of cameras to every household by producing equipment that was portable and affordable.

Kodak was the most dominant company in its field for almost the entire 20th century, but a series of wrong decisions killed its success. The company declared itself bankrupt in 2012. Why did Kodak, the king of photography and videography, go bankrupt? What was the reason behind Kodak's failure? Why did Kodak fail despite being the biggest name of its time? This case study answers the same.

Why Did Kodak Fail? Biggest Reason Of Kodak's Failure - Fights against Fuji Films Kodak's Bankruptcy Protection Ressurection of Kodak: Kodak in the mobile industry?

Why Did Kodak Fail?

Kodak Failure Case Study

Kodak, for many years, enjoyed unmatched success all over the world. By 1968, it had captured about 80% of the global market share in the field of photography.

Kodak adopted the 'razor and blades' business plan . The idea behind the razor-blade business plan is to first sell the razors with a small margin of profit. After buying the razor, the customers will have to purchase the consumables (the razor blades in this case) again and again; hence, sell the blades at a high-profit margin. Kodak's plan was to sell cameras at affordable prices with only a small margin for profit and then sell the consumables such as films, printing sheets, and other accessories at a high-profit margin .

Using this business model, Kodak was able to generate massive revenues and turned into a money-making machine.

As technology progressed, the use of films and printing sheets gradually came to a halt. This was due to the invention of digital cameras in 1975. However, Kodak dismissed the capabilities of the digital camera and refused to do something about it. Did you know that the inventor of the digital camera, Steven Sasson, was an electrical engineer at Kodak when he developed the technology? When Steven told the bosses at Kodak about his invention, their response was, “That’s cute, but don’t tell anyone about it. That's how you shoot yourself in the foot!"

Why did kodak fail- kodak bankruptcy case study

Kodak ignored digital cameras because the business of films and paper was very profitable at that time and if these items were no longer required for photography, Kodak would be subjected to huge losses and end up closing down the factories which manufactured these items.

The idea was then implemented on a large scale by a Japanese company by the name of ‘Fuji Films’. And soon enough, many other companies started the production and sales of digital cameras, leaving Kodak way behind in the race.

This was Kodak's first mistake. The ignorance of new technology and not adapting to the changing market dynamics initiated Kodak's downfall.

kodak and digital revolution case study

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Biggest Cause Of Kodak's Failure

After the digital camera became popular, Kodak spent almost 10 years arguing with Fuji Films , its biggest competitor, that the process of viewing an image captured by the digital camera was a typical process and people loved the touch and feel of a printed image. Kodak believed that the citizens of the United States of America would always choose it over Fuji Films, a foreign company.

Fuji Films and many other companies focused on gaining a foothold in the photography & videography segment rather than engaging in a verbal spat with Kodak. And once again, Kodak wasted time promoting the use of film cameras instead of emulating its competitors. It completely ignored the feedback from the media and the market . Kodak tried to convince people that film cameras were better than digital cameras and lost 10 valuable years in the process.

Kodak also lost the external funding it had during that time. People also realized that digital photography was way ahead of traditional film photography. It was cheaper than film photography and the image quality was better.

Around that time, a magazine stated that Kodak was being left behind because it was turning a blind spot to new technology. The marketing team at Kodak tried to convince the managers about the change needed in the company's core principles to achieve success. But Kodak's management committee continued to stick with its outdated idea of relying on film cameras and claimed the reporter who said the statement in the magazine did not have the knowledge to back his proposition.

Kodak failed to realize that its strategy which was effective at one point was now depriving it of success. Rapidly changing technology and market needs negated the strategy. Kodak invested its funds in acquiring many small companies, depleting the money it could have used to promote the sales of digital cameras.

When Kodak finally understood and started the sales and the production of digital cameras, it was too late. Many big companies had already established themselves in the market by then and Kodak couldn't keep pace with the big shots.

In the year 2004, Kodak finally announced it would stop the sales of traditional film cameras. This decision made around 15,000 employees (about one-fifth of the company’s workforce at that time) redundant. Before the start of the year 2011, Kodak lost its place on the S&P 500 index which lists the 500 largest companies in the United States on the basis of stock performance. In September 2011, the stock prices of Kodak hit an all-time low of $0.54 per share. The shares lost more than 50% of their value throughout that year.

Why did kodak fail? - Kodak Case Study

Kodak's Bankruptcy Protection

By January 2012, Kodak had used up all of its resources and cash reserves. On the 19th of January in 2012, Kodak filed for Chapter 11 bankruptcy protection which resulted in the reorganization of the company. Kodak was provided with $950 million on an 18-month credit facility by the CITI group.

The credit enabled Kodak to continue functioning. To generate more revenue, some sections of Kodak were sold to other companies. Along with this, Kodak decided to stop the production and sales of digital cameras and stepped out of the world of digital photography. It shifted to the sale of camera accessories and the printing of photos.

Kodak had to sell many of its patents, including its digital imaging patents, which amounted to more than $500 million in bankruptcy protection. In September 2013, Kodak announced it had emerged from Chapter 11 bankruptcy protection.

Ressurection of Kodak: Kodak in the mobile industry?

Celebrated camera accessory manufacturers of yesteryear, Kodak, is looking to join Chinese smartphone manufacturing giant Oppo for an upcoming flagship smartphone. This new smartphone is rumored to have 50MP dual cameras, where the cameras of the device will be modeled upon the old classic camera designs of the Kodak models.

The all-new flagship model of Oppo is designed to be a tribute to the classic Kodak camera design. The camera of this Oppo model will allegedly use the Sony IMX766 50MP sensor. Furthermore, the phone will also embed a large sensor in its ultrawide camera as well along with a 13MP telephoto lens and a 3MP microscope camera.

No other information on this matter is currently available as of September 13, 2021.

The collaborations between Android OEMs and camera makers are not something new. Yes, numerous other companies have already come together with other camera manufacturing companies like Nokia, which joined hands with German optics company Carl Zeiss earlier in 2007 to bring in the camera phone Nokia N95. This can be concluded as the first of such collaborations that the smartphone industry has seen. Numerous other collaborations happened eventually, which resulted in outstanding results. OnePlus' partnership with Hasselblad, Huawei pairing up with Leica and the recent news of Samsung's associating with Olympus are some of the significant collaborations to be mentioned.

Kodak had earlier made a leap into the smart TV industry and is ushering in success through this new move. Kodak TV India has already commissioned a plant in Hapur, Uttar Pradesh in August 2020, designed to manufacture affordable Android smart TVs for India. Furthermore, the renowned photography company is looking to invest more than Rs 500 crores during the next 3 years for making a fully automated TV manufacturing plant possible in Hapur. The company committed to this plan as part of its ‘Make in India’ initiative and will leverage its Android certification. Kodak's announcement, as it seemed, was further recharged with the Aatmanirbhar Bharat campaign launched by PM Narendra Modi in the wake of the coronavirus pandemic in 2020.

The TV industry of India imports most of its raw materials and exhibits a value addition of only about 10-12%. However, with the investment that Kodak has promised the company has aimed to increase the value-added to around 50-60%. The Hapur R&D facility will foster the manufacturing of technology-driven products and introduce numerous other lines of manufacturing aligned with the "Make in India" belief.

Super Plastronics Pvt Ltd, a Noida-based company has obtained the license from Kodak Smart TVs to produce and sell their products in India in partnership with the New-York based company and has already launched a range of smart TVs already, as of September 2021 including:

  • Kodak 40FHDX7XPRO 40-inch Full HD Smart LED TV
  • Kodak 43FHDX7XPRO 43-inch Full HD Smart LED TV
  • Kodak 42FHDX7XPRO 42-inch Full HD Smart LED TV
  • Kodak 32HDXSMART 32-inch HD ready Smart LED TV

and more. Besides, Kodak HD LED TVs were also up for sale at the lowest prices for 2020, in partnership with Flipkart and Amazon for The Big Billion Days Sale and the Great Indian Sale respectively. This sale, which took place between 16th and 21st October 2020, also included the all-new Android 7XPRO series, which starts at Rs 10999 only and is currently dubbed as the most affordable android tv in India.

kodak and digital revolution case study

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What happened to Kodak?

Kodak was ousted from the market of camera and photography due to numerous missteps. Here are some insights into the same:

  • The ignorance of new technology and not adapting to changing market needs initiated Kodak's downfall
  • Kodak invested its funds in acquiring many small companies, depleting the money it could have used to promote the sales of digital cameras.
  • Kodak wasted time promoting the use of film cameras instead of emulating its competitors. It completely ignored the feedback from the media and the market
  • When Kodak finally understood and started the sales and the production of digital cameras, it was too late. Many big companies had already established themselves in the market by then and Kodak couldn't keep pace with the big shots
  • In September 2011, the stock prices of Kodak hit an all-time low of $0.54 per share
  • Kodak declared bankruptcy in 2012

Why did Kodak fail and what can you learn from its demise?

Kodak failed to understand that its strategy of banking on traditional film cameras (which was effective at one point) was now depriving the company of success. Rapidly changing technology and evolving market needs made the strategy obsolete.

Is Kodak still in Business?

Kodak declared itself bankrupt in 2012. Kodak's bankruptcy resulted in the formation of the Kodak Alaris company, a British organization that part-owns the Kodak brand along with the American Eastman Kodak Company.

When did Kodak go out of business?

Kodak faced its demise in 2012.

Is Kodak a good camera?

Kodak's cameras and accessories were of premium quality and the first of the choices professional photographers and others. The company was a winner in the analogue era of photography. However, the company dived down to hit the rock-bottom level.  

What does Kodak do now?

Currently, Kodak provides packaging, functional printing, graphic communications, and professional services for businesses around the world. Better known for making cameras, Kodak moved into drug making and has secured a $765m (£592m) loan from the US government in 2020.

Why was Kodak so successful?

Kodak adopted the 'razor and blades' business plan. The idea here was to first sell the razors with a small margin of profit. After buying the razor, the customers will have to purchase the consumables (the razor blades in this case) again and again; hence, sell the blades at a high-profit margin. Kodak's plan was to sell cameras at affordable prices with only a small margin for profit and then sell the consumables such as films, printing sheets, and other accessories at a high-profit margin.

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Strategy & Execution Case Study | Authors :: Giovanni Gavetti, Rebecca Henderson, Simona Giorgi

Case study description.

The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution' questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case.

Disruptive innovation

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Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Strategy & Execution. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.

Step 2 - Reading the Kodak and the Digital Revolution (A) HBR Case Study

To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. My case study strategy involves -

  • Marking out the protagonist and key players in the case study from the very start.
  • Drawing a motivation chart of the key players and their priorities from the case study description.
  • Refine the central problem the protagonist is facing in the case and how it relates to the HBR fundamentals on the topic.
  • Evaluate each detail in the case study in light of the HBR case study analysis core ideas.

Step 3 - Kodak and the Digital Revolution (A) Case Study Analysis

Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template. You can do business case study analysis by following Fern Fort University step by step instructions -

  • Company history is provided in the first half of the case. You can use this history to draw a growth path and illustrate vision, mission and strategic objectives of the organization. Often history is provided in the case not only to provide a background to the problem but also provide the scope of the solution that you can write for the case study.
  • HBR case studies provide anecdotal instances from managers and employees in the organization to give a feel of real situation on the ground. Use these instances and opinions to mark out the organization's culture, its people priorities & inhibitions.
  • Make a time line of the events and issues in the case study. Time line can provide the clue for the next step in organization's journey. Time line also provides an insight into the progressive challenges the company is facing in the case study.

Step 4 - SWOT Analysis of Kodak and the Digital Revolution (A)

Once you finished the case analysis, time line of the events and other critical details. Focus on the following -

  • Zero down on the central problem and two to five related problems in the case study.
  • Do the SWOT analysis of the Kodak and the Digital Revolution (A) . SWOT analysis is a strategic tool to map out the strengths, weakness, opportunities and threats that a firm is facing.
  • SWOT analysis and SWOT Matrix will help you to clearly mark out - Strengths Weakness Opportunities & Threats that the organization or manager is facing in the Kodak and the Digital Revolution (A)
  • SWOT analysis will also provide a priority list of problem to be solved.
  • You can also do a weighted SWOT analysis of Kodak and the Digital Revolution (A) HBR case study.

Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis Kodak and the Digital Revolution (A)

In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in. Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.

Step 6 - PESTEL, PEST / STEP Analysis of Kodak and the Digital Revolution (A)

Another way of understanding the external environment of the firm in Kodak and the Digital Revolution (A) is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.

Step 7 - Organizing & Prioritizing the Analysis into Kodak and the Digital Revolution (A) Case Study Solution

Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.

  • Build a corporate level strategy - organizing your findings and recommendations in a way to answer the larger strategic objective of the firm. It include using the analysis to answer the company's vision, mission and key objectives , and how your suggestions will take the company to next level in achieving those goals.
  • Business Unit Level Solution - The case study may put you in a position of a marketing manager of a small brand. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. You have to recommend business unit level recommendations. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. For example you can recommend a low cost strategy but the company core competency is design differentiation.
  • Case study solutions can also provide recommendation for the business manager or leader described in the business case study.

Step 8 -Implementation Framework

The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions. If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -

  • Detailed understanding of the case,
  • Clarity of HBR case study fundamentals,
  • Analyzed case details based on those fundamentals and
  • Developed an ability to prioritize recommendations based on probability of their successful implementation.

Implementation framework helps in weeding out non actionable recommendations, resulting in awesome Kodak and the Digital Revolution (A) case study solution.

Step 9 - Take a Break

Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.

Step 10 - Critically Examine Kodak and the Digital Revolution (A) case study solution

After refreshing your mind, read your case study solution critically. When we are writing case study solution we often have details on our screen as well as in our head. This leads to either missing details or poor sentence structures. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Be very slow with this process as rushing through it leads to missing key details. Once done it is time to hit the attach button.

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Kodak and the Digital Revolution (A)

Subjects Covered Business models Corporate strategy Disruptive innovation

by Giovanni Gavetti, Rebecca Henderson, Simona Giorgi

Source: HBS Premier Case Collection

18 pages. Publication Date: Nov 16, 2004. Prod. #: 705448-PDF-ENG

Kodak and the Digital Revolution (A)Harvard Case Study Solution and HBR and HBS Case Analysis

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COMMENTS

  1. Kodak's Downfall Wasn't About Technology

    July 15, 2016 A generation ago, a "Kodak moment" meant something that was worth saving and savoring. Today, the term increasingly serves as a corporate bogeyman that warns executives of the need...

  2. Kodak and The Digital Revolution (A)

    Case HBS Case Collection Kodak and The Digital Revolution (A) By: Giovanni M. Gavetti, Rebecca Henderson and Simona Giorgi Format: Print | Pages: 18 Email Print Share Abstract The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model.

  3. The Real Lessons From Kodak's Decline

    I was at Kodak from '83 - '97, most of that time in electronic/digital imaging R&D and product development. With due respect to Dr Shih's perspective having joined in '97, it was the years leading up to that, when Kodak squandered what could have been a dominant position in digital imaging and possibly online social media, due to lack of vision of what was clear to the engineers.

  4. Did Kodak Ignore the Digital Revolution?

    To combat this problem, Kodak reduced its product mix - driving customers to digital even faster. 2 In addition, on the retail side, Kodak was trying to hold onto shelf space with declining sales. 2 Even if Kodak knew that digital would be the market leader of the near future, voicing this knowledge would only incentivize retailers to pull Kodak...

  5. Kodak and the Digital Revolution (A)

    Overview Included Materials Related The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves.

  6. The Rise and Fall of Kodak: A Case Study in Innovation ...

    Kodak's delayed response to the digital revolution proved costly. As digital cameras became increasingly affordable and user-friendly, consumers began to migrate away from film, eroding...

  7. Disruptive technology: How Kodak missed the digital photography revolution

    1. Introduction The purpose of this paper is to explore how firms respond to challenges from rare transformational technology that threatens a traditional, successful business model. We propose an extension of Christensen's theory of disruptive technologies and illustrate the extensions with a longitudinal case study of Kodak.

  8. The rise and fall of Kodak's moment

    Established by George Eastman in the 1880s, by the 1950s Kodak had the lion's share of the US amateur film market. "Kodak was a company at the top of its game," says Kamal, who has studied the Rochester-based business for more than a decade. "Kodak controlled almost 70% of the highly lucrative US film market. Gross margins on film ran ...

  9. The Reinvention of Kodak

    At its peak in 1997, Kodak had a market value of $30 billion. Despite inventing the first digital camera, Kodak stumbled to capitalize on the new technology and by 2011 the company was in Chapter 11 bankruptcy protection. In September 2013, Kodak emerged from bankruptcy as a smaller business-to-business (B2B) digital imaging company.

  10. Kodak and the Digital Revolution (A)

    Abstract. The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution ...

  11. Kodak and the Digital Revolution (A)

    Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution' questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case.

  12. How Kodak Failed

    This strategic failure was the direct cause of Kodak's decades-long decline as digital photography destroyed its film-based business model. A new book by my Devil's Advocate Group colleague ...

  13. Case Study: Kodak's Downfall—A Lesson in Failed Digital Transformation

    1. Complacency and Over-Reliance on Legacy Business Models Kodak was heavily invested in the film-based photography market. The company's complacency in sticking to its legacy business model, despite the seismic changes in technology, was its first major mistake.

  14. Why Kodak Died and Fujifilm Thrived: A Tale of Two Film Companies

    According to a Harvard case study, it lost $60 for every digital camera it sold by 2001. ... Unlike Fujifilm, Kodak couldn't achieve this vital revolution. When the founder of Kodak, George ...

  15. Case Study Solution of Kodak and the Digital Revolution (A)

    February 23, 2024 Strategy & Execution 8 Comments Kodak and the Digital Revolution (A) Description The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves.

  16. Kodak and The Digital Revolution

    1.0 Introduction 1.1 Brief Profile of Kodak in 1975 1975 was an important year in the timeline of the Eastman Kodak Company. The company invented the Digital Camera, one of the greatest technological inventions of the modern world ( Castella, 2012) and yet the greatest irony; the same digital camera was starting point of Kodak's slow demise.

  17. PDF Kodak and the Digital Revolution (A)

    Kodak and the Digital Revolution (A) In February 2003, Daniel A. Carp, Kodak's CEO and chairman, reviewed 2002 sales data with Kodak's senior executives.

  18. Kodak (A)

    Kodak (A) By: Giovanni M. Gavetti, Rebecca Henderson and Simona Giorgi Format: Print | Pages: 28 Email Print Share Abstract The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves.

  19. Reasons Why Kodak Failed?

    Yash Taneja Nov 6, 2021 — 10 min read Kodak Failure Case Study Kodak, as we know it today, was founded in the year 1888 by George Eastman as 'The Eastman Kodak Company'. It was the most famous name in the world of photography and videography in the 20th century. Kodak brought about a revolution in the photography and videography industries.

  20. Fujifilm and Kodak: Surviving the Digital Revolution (A)

    This is part of a case series. Fujifilm and Kodak: Surviving the Digital Revolution (A) and (B) cases looks into how Fujifilm had survived a virtual disappearance of its main product, i e analog film business, while its main competitor, Eastman Kodak, failed to do so and gone bankrupt in 2012.

  21. Kodak And The Digital Revolution Case Study

    Kodak and the Digital Revolution (A) is a Harvard Business (HBR) Case Study on Strategy & Execution. Fern Fort University provides HBR case study assignment help for just $11. Our...

  22. Kodak and the Digital Revolution (A) Case Study Analysis & Solution

    After discussing Kodak's history and its past strategic moves in the new landscape, the case 'Kodak and the Digital Revolution' questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case. Disruptive innovation Order a Strategy & Execution case study solution now

  23. Kodak and the Digital Revolution (A)

    Subjects Covered Business models Corporate strategy Disruptive innovation. by Giovanni Gavetti, Rebecca Henderson, Simona Giorgi. Source: HBS Premier Case Collection. 18 pages. Publication Date: Nov 16, 2004. Prod. #: 705448-PDF-ENG. Kodak and the Digital Revolution (A)Harvard Case Study Solution and HBR and HBS Case Analysis