Did Success Kill Kodak?
Can we say that an intoxication borne of success eventually killed Kodak?
During its 131-year history, Kodak was renowned for its innovation, flexibility and responsiveness. In the early years, founder George Eastman pioneered a cellulose film technology to replace the bulky glass plates previously used by photographers and this innovation put Eastman Kodak on the map. At the turn of the 20th century, Kodak demonstrated further agility when it released high quality colour film in response to new products introduced by German competitors, thus solidifying its leadership. Kodak subsequently grew in strength. By the 1960s, it was the ‘Apple’ or ‘Google’ of its day and investing in Kodak stock was “a sure bet”.
Former Kodak employee Robert Shanebrook, now 64 years old, recalls Kodak’s heyday in the 1960s. “We had this self-imposed opinion of ourselves that we could do anything, that we were undefeatable.” In almost every arena of life, Kodak enjoyed prominence and influence. Any occasion worth capturing on film, including Queen Elizabeth II’s coronation in 1953 and the moon landing in 1969, became known as “a Kodak moment.” The company’s most famous product, Kodachrome, was used to shoot over 80 Oscar-winning Films.
Somewhere between the mid-1960s and late 1980s, however, Kodak went from being an industry pioneer to a prisoner of its success.
Kodak’s leadership first became aware of the threat that digital technology posed to its business in the early 1980s. After extensive analysis, however, the company’s management concluded that digital photography lacked the quality, compatibility, affordability and appeal necessary to supersede traditional film. Justifiable or not, Kodak believed it was bullet-proof and used the analysis of digital technology to justify its inaction. When Kodak did finally explore the possibilities of a digital product range, it did so without a great deal of enthusiasm.
Former Kodak CEO, George Fisher, described that the company regarded digital photography as ‘the enemy, an evil juggernaut that would kill the chemical-based film and paper business that had fuelled Kodak’s sales and profits for decades.’ Kodak’s management proved unwilling to consider any alternative to the exceptionally high manufacturing margin the company enjoyed on its cash cow film and equipment businesses.
Kodak’s resistance to digital photography saw the company make the very mistake its founder, George Eastman, had avoided seven decades prior when he embraced the emergence of color film. As authors Carroll and Mui describe it, Kodak “kept its plane on autopilot until it flew into the side of the mountain.” By the turn of the 21st century, Kodak’s profits plummeted 95% from $1.41 billion to $76 million in the space of a single year, forcing the company to close dozens of its factories and processing labs. By 2005, Kodak had shed two-thirds of its workforce and the company eventually filed for bankruptcy in January 2012.