Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innov...
Before digital imaging, Eastman Kodak had      been a rising star for a century.
Kodak had   popularized photography andmade it accessible, user-friendly and    affordable.
Digital imaging was the next revolution.
In the early 1990s, Kodak tried to make predictions   regarding the diffusion of the new technology.
Back in 1985, Kodak founded the ’Technical Intelligence Group’ which primarily dealt with suchissues as the substitution o...
Digital imaging had been hyped back in the 1980sbut no major commercial breakthrough had been                accomplished ...
In 1994, the group had come up with a   technology substitution forecast.
Under the direction of Terry Faulkner, ToneKelly had made a forecast which was based       upon the logic of an S-curve.
History has shown that newtechnologies and products tend to be  diffused at an initially low pace…
As the technology becomes more widely known and the performance reaches sufficient levels the pace increases…
… And eventually the growth slowsdown as the market starts to mature.
Based upon this logic and a carefulanalysis, Faulkner and Kelly concluded in 1994 that 50 percent of the market       woul...
This forecast turned out to beremarkably accurate (it actually       happened in 2003).
For a company that made virtually all its profits on film, this wasn’t good news.
When the  forecast waspresented to top management it   wasn’t well   received by    everyone.
Some of them referred to the large installedbase of cameras   and others pointed at the     growth  opportunities    relat...
One canunderstand people who did not wantto believe in these   estimates…
The implications were huge for acompany like Kodak who made virtually          all profits on film.
The value of beingvertically integrated   would be lost.
The competence base related to film   would be rendered obsolete.
The figures basically suggested that Kodak would be burning in ten years,unless the entire company was changed.
Frightening.
While far from everyone was convinced, both theCFO Harry Kavetas (though not publicly) and the  CEO George Fisher believed...
With this information in your hands, what        would you do on Monday?
Fisher and Kavetas thought that Kodak hadalways been about film and that transforming  the entire company in less than a d...
They therefore tried to sell the company.
Having started at Kodak in 1961, Faulkner nowbecame director of Strategic Initiatives in 1995         reporting to George ...
His main job was to find potential buyers orcompanies that could merge with Kodak and toprovide Fisher and Kavetas with ta...
Some of the companies that were approached     declined after the first meeting…
… Canon…
… and Motorola.
A potential  merger with   Xerox was  discussed in January 1996,but did not lead   anywhere.
The discussionswere renewed in1997, but nothing   happened.
Faulkner thought that a merger with HP would have             been the ideal solution.
In May 1997, Fisher met with Lew Platt of HP.
The discussions resulted in a joint venture…
… but not more than that.
After having lost this opportunity it becameincreasingly difficult to find a potential partner.
Kodak became increasingly desperate and even  Gillette was approached with a proposal…
Proctor & Gamble did  not want to marry    Kodak either.
Persuading these companies to merge with Kodak must have been quite a rhetorical               challenge…
… Faulkner became increasingly frustrated and   the last two efforts had seemed very far                   fetched…
Having had virtually no vacation for two yearsand worked very hard he eventually opted for        early retirement in late...
Digital revolutions tend to put companies as well       as people in troublesome situations.
Eventually, Kodak never merged with anyone and  had to go through the revolution on its own.
It wasn’t a pleasant journey.
Image attributions
Thanks to:Terry Faulkner
Find out more about Kodak:www.christiansandstrom.org
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
When Digital Imaging displaced Kodak Film
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When Digital Imaging displaced Kodak Film

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How Kodak correctly anticipated the threat from digital imaging and tried to sell the company.

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When Digital Imaging displaced Kodak Film

  1. 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  2. 2. Before digital imaging, Eastman Kodak had been a rising star for a century.
  3. 3. Kodak had popularized photography andmade it accessible, user-friendly and affordable.
  4. 4. Digital imaging was the next revolution.
  5. 5. In the early 1990s, Kodak tried to make predictions regarding the diffusion of the new technology.
  6. 6. Back in 1985, Kodak founded the ’Technical Intelligence Group’ which primarily dealt with suchissues as the substitution of film by digital imaging.
  7. 7. Digital imaging had been hyped back in the 1980sbut no major commercial breakthrough had been accomplished yet.
  8. 8. In 1994, the group had come up with a technology substitution forecast.
  9. 9. Under the direction of Terry Faulkner, ToneKelly had made a forecast which was based upon the logic of an S-curve.
  10. 10. History has shown that newtechnologies and products tend to be diffused at an initially low pace…
  11. 11. As the technology becomes more widely known and the performance reaches sufficient levels the pace increases…
  12. 12. … And eventually the growth slowsdown as the market starts to mature.
  13. 13. Based upon this logic and a carefulanalysis, Faulkner and Kelly concluded in 1994 that 50 percent of the market would be digital in 2004.
  14. 14. This forecast turned out to beremarkably accurate (it actually happened in 2003).
  15. 15. For a company that made virtually all its profits on film, this wasn’t good news.
  16. 16. When the forecast waspresented to top management it wasn’t well received by everyone.
  17. 17. Some of them referred to the large installedbase of cameras and others pointed at the growth opportunities related to emerging markets.
  18. 18. One canunderstand people who did not wantto believe in these estimates…
  19. 19. The implications were huge for acompany like Kodak who made virtually all profits on film.
  20. 20. The value of beingvertically integrated would be lost.
  21. 21. The competence base related to film would be rendered obsolete.
  22. 22. The figures basically suggested that Kodak would be burning in ten years,unless the entire company was changed.
  23. 23. Frightening.
  24. 24. While far from everyone was convinced, both theCFO Harry Kavetas (though not publicly) and the CEO George Fisher believed in the forecast.
  25. 25. With this information in your hands, what would you do on Monday?
  26. 26. Fisher and Kavetas thought that Kodak hadalways been about film and that transforming the entire company in less than a decade would be very difficult.
  27. 27. They therefore tried to sell the company.
  28. 28. Having started at Kodak in 1961, Faulkner nowbecame director of Strategic Initiatives in 1995 reporting to George Fisher.
  29. 29. His main job was to find potential buyers orcompanies that could merge with Kodak and toprovide Fisher and Kavetas with talking points.
  30. 30. Some of the companies that were approached declined after the first meeting…
  31. 31. … Canon…
  32. 32. … and Motorola.
  33. 33. A potential merger with Xerox was discussed in January 1996,but did not lead anywhere.
  34. 34. The discussionswere renewed in1997, but nothing happened.
  35. 35. Faulkner thought that a merger with HP would have been the ideal solution.
  36. 36. In May 1997, Fisher met with Lew Platt of HP.
  37. 37. The discussions resulted in a joint venture…
  38. 38. … but not more than that.
  39. 39. After having lost this opportunity it becameincreasingly difficult to find a potential partner.
  40. 40. Kodak became increasingly desperate and even Gillette was approached with a proposal…
  41. 41. Proctor & Gamble did not want to marry Kodak either.
  42. 42. Persuading these companies to merge with Kodak must have been quite a rhetorical challenge…
  43. 43. … Faulkner became increasingly frustrated and the last two efforts had seemed very far fetched…
  44. 44. Having had virtually no vacation for two yearsand worked very hard he eventually opted for early retirement in late 1998.
  45. 45. Digital revolutions tend to put companies as well as people in troublesome situations.
  46. 46. Eventually, Kodak never merged with anyone and had to go through the revolution on its own.
  47. 47. It wasn’t a pleasant journey.
  48. 48. Image attributions
  49. 49. Thanks to:Terry Faulkner
  50. 50. Find out more about Kodak:www.christiansandstrom.org

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