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Eastman Kodak
- 1. Analyzing Leadership Decisions (A look at what went wrong with Eastman Kodak) Helen Balmer ORG 525- Professor Mark Ellis
- 2. How does the company that invented digital photography end up being ruined by its own innovation? • History of the company • Timeline of events • When did the “Kodak Moment” go wrong? • What were the decision making processes and missed opportunities that led them to failure? • Hindsight is 20/20 • What we can learn from this?
- 3. Origins of a Cultural Icon • Who was George Eastman? • Eastman Dry Plate and Film Company • What is a Kodak? (Kodak,2018)
- 4. Business Principles: focus on the customer mass production at a low cost worldwide distribution Extensive advertising (Kodak,2018)
- 5. A Dream Realized The Original Kodak Camera, Serial No.540
- 6. Milestones in Photography 1888-1950 (Kodak,2018)
- 7. Colorama Display (Kodak, 2018)
- 8. Digital Photography Steve Sasson, inventor of the digital camera (Kodak,2018)
- 10. What went wrong (in a nutshell) • Kodak ignored their own market assessment • Kodak saw digital photography as an enemy • There was no trust by management in their own systems Problem definition Identifying the root cause Listing solutions Identifying the best solution Implementation within time frame Analyzing the results
- 12. References • Utterback, James M. (1995). Developing technologies: The Eastman Kodak story. The McKinsey Quarterly, (1), 130. • Anthony, S. (2017, April 24). Kodak's Downfall Wasn't About Technology. Retrieved January 06, 2018, from https://hbr.org/2016/07/kodaks-downfall-wasnt-about-technology • Kodak. (n.d.). Retrieved January 06, 2018, from https://www.kodak.com/ • Original Kodak Camera, Serial No. 540. (n.d.). Retrieved January 07, 2018, from http://americanhistory.si.edu/collections/search/object/nmah_76011 8
- 13. References • Mui, C. (2016, June 20). How Kodak Failed. Retrieved January 07, 2018, from https://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak- failed/#29ca7b1d6f27 • Bazerman, M. H., & Moore, D. A. (2015). Judgment in managerial decision making. Hoboken, NJ: Wiley. • America, F. 0. (n.d.). What's Wrong with This Picture: Kodak's 30-year Slide into Bankruptcy. Retrieved January 07, 2018, from http://knowledge.wharton.upenn.edu/article/whats-wrong-with-this- picture-kodaks-30-year-slide-into-bankruptcy/
Editor's Notes
- How did the decisions made by Eastman Kodak’s executive leadership lead the pioneering photography and film company to near extinction? What can we learn from their mistakes about the importance of decision making processes in organizations? Let’s consider Kodak’s multi-billion dollar mistakes our billion-dollar lesson in what not to do when making organizational decisions. In this presentation, we will first examine the innovative history of Eastman Kodak. From there we will examine the timeline and key events that contributed to the company’s fall from glory. We will then explore how their decisions could have been handled differently for a more lucrative result. (HBR, 2016)
- George Eastman grew up poor and was raised by his widowed mother in Rochester, NY. In order to help support his struggling family he dropped out of school and went to work as an office boy at the age of fourteen. The ambitious fourteen-year old’s first salary was three dollars a week and within a year it had increased to five dollars a week. He still needed to make more money, he began taking evening accounting classes to further his career. In five years’ time (1874), he found himself working for Rochester Savings Bank as a junior clerk for triple his previous salary, fifteen dollars an hour. (Kodak,2018) When Eastman was 24, a friend suggested he document a trip he was planning to take to the Dominican Republic. Eastman took his friend up on the idea and purchased a photographic kit to bring on his trip. Photography was still in its infancy so the camera Eastman purchased was huge and had to rest on a heavy tripod. There was a tent he would have to carry so he could prepare the glass plates (wet plates were used before film photography) before they were exposed. George would have had to lug chemicals, water jugs, tanks and glass plates. Just learning how to use the equipment cost five dollars. That was a week’s salary for some people at the time! Eastman didn’t end up taking the vacation. He did develop a passion for photography. He would experiment all night in his mother’s kitchen and in three years time (1880) Eastman had established a patent for both a dry plate formula and a machine that produced large numbers of the newly created plates. (Kodak,2018) The creation of a company- In 1880 Eastman began manufacturing his plates with power from a small one horse-power engine in his space on the third floor of a Rochester building. Eastman had an investor named Henry A. Strong who became his partner in 1881. Together they formed the Eastman Dry Plate Company. Eastman quit his day job that year to devote all his energy and time to the new venture. Eastman’s vision was to simplify photography. In 1884 the firm was known as the Eastman Dry Plate and Film Company. The firm had 14 shareholders and was known to the public as the Eastman Kodak Company. (Kodak, 2018) What or who is a Kodak? Eastman registered the word Kodak as a trademark in 1888 and Kodak was just a word Eastman made up! Eastman was quite fond of the letter ’K’. Kodak cameras made photography accessible to more and more people. The advertising slogan “you press the button, we do the rest” was well-known and Kodak advertisements were highly visible across the United States and even on Trafalgar Square in London. The distinctive shade of yellow selected by Eastman and the “Kodak Girl” were well known symbols of the innovative company. (Kodak,18)
- Kodak was built on four basic principles that the founder saw as being closely related and interdependent: Focus on the customer Mass production at a low cost Worldwide distribution Extensive advertising Eastman knew the top priority had to be the customer in order for the company to be successful. His dream was to make photography convenient and accessible to everyday people. As he described it, he wanted “to make the camera as convenient as the pencil”(Kodak,2018). It’s important to recognize that Eastman’s vision and the foundation for Kodak from the very beginning was making photography convenient and accessible for the everyday consumer. This meant innovation was necessary.
- The original Kodak camera was released and sold for $25 in 1888. It placed the power of photography in the consumers hand with just the press of a button. Gone were the bulky glass plates used by earlier cameras for each exposure. The camera came with 100 exposures of film that were preloaded. When the exposures had all been used the consumer mailed the camera back to Kodak where the film was developed and the prints were made for $10. The camera, prints and negatives were then returned to the customer with a fresh roll of film. The images from the first Kodak were small, just 2 5/8”. (NMAH,2018)
- Eastman Kodak was synonymous with cameras and film for the better part of the twentieth century. After introducing the first roll film in 1889 in 1900 the company brought the Kodak Brownie Camera to the masses. The Brownie was more economical and made photography more accessible to everyday consumers. The camera was $1 and it’s film was 15 cents a roll. (Kodak,2018) In 1935 Kodak brought the first commercially successful amateur color film to the world. Kodachrome offered a 16mm format for motion pictures and 8mm home movies followed in 1936. 1942 brought Kodacolor, the world’s first true color negative film. Kodak introduced Kodak Colorama Display Transparencies in 1950. These displays were viewed by an estimated 650,000 commuters passing through New York Cities Grand Central Station every day. In 1961 Carousel Projectors were introduced making way for many “vacation slide” parties in suburban America. (Kodak, 2018) The easy-to-use cartridge camera called the Instamatic was introduced in 1963. (Kodak,2018)
- The Colorama Displays were famous world-wide and were often seen in film and magazines of the time.
- Up until 1975 Kodak has been leading the pack as far as innovations in photography. True to form, Kodak brought us the first digital camera in 1975. This is where things begin to go south for Kodak. When Steve Sasson, the Kodak engineer who invented the camera unveiled it to management, they were not excited. Steve later recounted the initial reaction from management , “‘that’s cute—but don’t tell anyone about it” (Mui,2016). From the very beginning Kodak management seemed to be biased against digital photography. In fact, Kodak’s own researchers predicted in 1981 that digital photography would be a threat to film in time. “The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had the potential capability to replace Kodak’s established film based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition.(Mui,2016)” This is an example of a confirmation bias. Management only heard the information that confirmed their already established opinions. (Bazerman & Moore, 2015) Instead of thinking towards the future as Eastman had when film was a new and a lesser technology in comparison to dry plates, Kodak’s upper management seemed to want to stick with the product they knew. Eastman had also embraced innovation when he led the company into color film. Kodak’s upper management seemed to have forgotten this. (Mui,2016) Upper management at Kodak was facing a complex non-programmed decision. (Bazerman & Moore, 2015)
- Kodak used their digital research labs to create the first mega-pixel camera and also introduced Advantix Preview film and camera system. The Advantix system cost over $500 million dollars to develop. The Advantix system used digital technology to allow the customer to preview their prints but still used film. Advantix was not competitive in the marketplace because the customer was still paying for developing prints. It was a flop. In 1988 Eastman Kodak unveiled the Create-a Print 35mm retail kiosk In 1991 Kodak launched the Nikon F-3 Digital Camera for photojournalists Kodak finally moved into a consumer grade point-and-shoot digital camera system in 1995 with the Kodak DC40 (Kodak,2018)
- Management at Kodak refused to acknowledge that a potential problem existed even when their own research teams gave them a 10-year time-line. The first step in the problem-solving process is acknowledging a problem exists. Because they dropped the ball at the very beginning they were unable to successfully complete the rest of the steps in the problem-solving process. (Bazerman & Moore, 2015) Kodak was not able to adapt to the changing market. Most importantly, Kodak was unwilling to make the decision interactively. Although they had a system in place they didn’t utilize their expert resources effectively. (Mui,2016)
- “Adapting to technological change can be especially challenging for established companies like Kodak, Wharton experts say, because entrenched leadership often finds it difficult to break old patterns that once spelled success. Kodak’s history shows that innovation alone isn’t enough; companies must also have a clear business strategy that can adapt to changing times. Without one, disruptive innovations can sink a company’s fortunes — even when the innovations are its own”(Wharton,2018). The lesson here is simple, Kodak changed its focus from innovation to business objectives. This was a short-sighted goal and kept Kodak from seeing digital photography as it’s own entity separate from film. They were fearful it would take away from their established business that had brought them so much success. If Kodak had considered more outsider insights the company may have navigated the marketplace more successfully. (Wharton,2018)