The 2 Kodak Disruptions


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Back in the 19th century, Kodak disrupted photography. About 100 years later, the company became lost ground due to the same forces when digital imaging started to prosper.

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The 2 Kodak Disruptions

  1. 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  2. 2. Kodak has been through some really tough times since the rise of digital imaging.
  3. 3. In the late 1980s the company employedabout 140 000 people, today this figure has gone down to less than 20 000.
  4. 4. The rise and decline of Kodak can to a large extent be explained by using a frameworkdeveloped by Clayton Christensen at Harvard.
  5. 5. Christensen studied technological shifts, how they happen and why established firms tend to be overthrown when they occur.
  6. 6. He made a distinction between disruptive and sustaining technologies.
  7. 7. A sustaining technology is one that improves theperformance of a product according to the attributes that the established customer base appreciates.
  8. 8. It doesn’t matter if it is radical or incremental.
  9. 9. A disruptive technology on the other hand offers an initially worse performance according to what customers have appreciated.
  10. 10. At the same time it brings new performanceattributes such as simplicity or portability to the marketplace.
  11. 11. Therefore it tends to prosper in new customersegments and as it improves along the mainstream dimensions, it eventually displaces the former technology.
  12. 12. Established firms therefore miss the boat bylistening to their existing customers and by keep moving up into increasingly sophisticated segments.
  13. 13. It looks like this.
  14. 14. It attacks from below, becomes ’good enough’ and overthrows the established firms, who’ve been listening to their customers.
  15. 15. This framework can help us to explain both the rise and the fall of Kodak.
  16. 16. Kodak’sintroduction of the roll film in 1888 is an excellent example of a disruptive innovation.
  17. 17. It fundamentally changed the role of photos and the way they were used.
  18. 18. Prior to this,people went to a studio and hadtheir photo takenby a professional photographer.
  19. 19. The roll film did not compete along theimage quality dimension.
  20. 20. Instead, it brought new performanceattributes to the marketplace.
  21. 21. Portability.
  22. 22. Simplicity.
  23. 23. Affordability.
  24. 24. This value proposition was very differentfrom the one that the leadingphotography companiesoffered back then.
  25. 25. The leading photographic companies in the U.S. were Anthony and Scovill (who mergedinto Anthony & Scovill in 1901, later shortened to Ansco). Their very successful businesseswere focused on meeting the needs of portrait studios and serious amateurs.
  26. 26. Kodak prosperedby targeting non- photographers.
  27. 27. People who hadnot been takingpictures beforecould suddenly do so.
  28. 28. As the performance of roll films improved iteventually displaced dry plate photography.
  29. 29. A schoolbook example…
  30. 30. … of a disruptive innovation thattoppled the dominant firms and put Kodak in the leading position.
  31. 31. From this point and on, Kodak kept developing sustaining innovations successfully.
  32. 32. Colour film was introduced in the 1930s…
  33. 33. … profits kept rising and Kodak continued to launch products that sustained the dominant film technology and strengthened its position.
  34. 34. About a century after the disruption of dry plates by the roll film, another disruptive storm was about to change the industry.
  35. 35. Digital imagingwas on the rise.
  36. 36. If Kodak and the roll film had simplifiedphotography, digital imaging made it cheaper and simpler than ever before.
  37. 37. The image quality was significantly worse, butdigital imaging offered new performance attributes that were valued by non-photographers.
  38. 38. The image could be viewed instantly, it did not cost anything to capture a picture and they could be shared easily with the help from computers and the internet…
  39. 39. Once the digital cameras had reached thepoint of being ‘good enough’, sales exploded.3025201510 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Number of film and digital cameras sold in the United States.
  40. 40. Just like the roll film, digital imagingattacked from below and brought newperformance attributes to the market.
  41. 41. Once digital camera salesexploded, film sales imploded...
  42. 42. … And 100 years after Kodak had disruptedthe industry, it was Kodak’s turn to be put in trouble by a new technology.
  43. 43. Kodak had seen it coming:
  44. 44. 6 million pixel resolution is good enough for most applications. The perception of colour is more important than the perception of sharpness. Kodak, 1996
  45. 45. But more than a century of highprofits related to film were still going to be removed…
  46. 46. … And Kodak was now in deep trouble.
  47. 47. Over the last 150 years photography has been popularized in a way that no one could have imagined back then.
  48. 48. The roll film was the firstdisruptive waveand it catapulted Kodak into industrial leadership.
  49. 49. Digital imagingwas the second wave of popularizationand it disrupted Kodak’s profitable film business.
  50. 50. Image attributions
  51. 51. Thanks to:Terry Faulkner, former Director and VicePresident of Strategic Initiatives at Kodak.
  52. 52. Find out