Leica Cameras are in deep trouble. While once a legendary camera maker that pioneered the 35mm film format, Leica has struggled financially in recent decades. As digital photography replaced film, Leica was slow to transition and lost market share. Attempts to enter the digital market, such as the Leica S1 camera, were unsuccessful. Hiring an American CEO, Steven Lee, led to cultural clashes and Lee was eventually fired. Leica continues to work on reviving its brand through new digital cameras, but faces fierce competition from larger camera companies in a rapidly changing industry.
2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.
3.
4. It’s not an exaggeration
to say that Leica is a
camera legend.
5. The German camera
manufacturer
pioneered the 35-
millimeter film format.
6. This is what took
photography out of
the studios and into
our everyday life.
49. Der Spiegel summarized it powerfully:
"Leica overslept and suffers the trend
to the digital photography from
losses. Besides the weak dollar
impairs the business abroad, because
the cameras become more expensive
larva in Germany thereby."
50. So, the question is:
WHY do so many
companies like Leica
‘oversleep’
technological shifts?
51. One reason is the furious
pace at which digital
technology is developed.
(For more info, click here)
52. In only ten years, digital
imaging went from zero to
90 percent of the market.
87. The S1 was aimed for studio
photography. It was
connected to a computer,
stood on a tripod and had an
amazing image resolution.
88. At first sight, the
S1 appears to be
very expensive
and strange.
89. But the business utility was in
fact very large. It could produce
printable photos instantly and an
infinite number of photos could
be taken at no cost. The
alternative would have been film,
going to the lab, then scan it. All
this would take days, with the S1
it would take minutes!
97. Life must have been
very tough for a digital
engineer at Leica.
98. Sales
Manufacturing
The Mechanical engineers
Purchasing
- Everyone must have been
against you.
99. All their routines and
competences would have to
change in order to succeed
with digital imaging.
100. Forgive me for speculating,
but I suppose most of these
actors cheered silently
when the S1 was killed.
101. At an old, traditional
company with a strong brand
and history in mechanical
engineering, electronics
must have been regarded as
an odd, foreign element.
102. Organizations are
very good at
eliminating foreign
elements. And Leica
was no exception.
113. Re-branding a
non-premium
product and
charging a
premium price,
while Canon
and Nikon
came up with
smaller and
better cameras
all the time.
114. The success
of this
strategy was
very modest.
115.
116. As the financial situation
worsened, Leica eventually
realized that something
new had to be done.
117. Since the ‘low-end’
segment of the market
had become a
warzone of
competition, Leica
instead focused on
making their R8 and
R9 cameras digital.
118. It was announced in 2003 that a
Kodak digital back would be made
compatible with these cameras, in
collaboration with Imacon, a Danish
manufacturer of digital backs (who
later merged with Hasselblad).
122. After severe delays, the Leica
Digital-Modul-R was finally
launched two years later, in 2005.
123. An official letter was sent to
Leica users over the
weekend apologizing the
last delay. The date was put
forth due to 'software
problems’ (once again a skill
beyond Leica’s soul).
124. Mario Thurnherr, manager
of Leica Camera's Photo
Division, said:
"Our customers had to wait
longer than planned for the
unique digital solution
from Leica, but are now
rewarded with an
outstanding product."
125. With this bigger and heavier
camera, Leica was positioned in
the same segment as
Hasselblad, Mamiya, Pentax,
Contax and the others. Some of
those actors had already
captured this small, small part of
the camera market.
141. The sensor was below
standards, and the camera did
not have those filters which
were needed for a digital
camera to work. Without these
functions, black colour looks
purple and strange colour
patterns show up.
142. Thus, the M8 was a
bad camera, at a bad
price, but with a
good brand.
144. One photographer described
the camera as “unusable,”
and said he sometimes felt
like throwing it against a wall.
For a company which is used
to that customers are in love
with their products, these are
indeed hard words.
145. One of the first things
Steven Lee had to do at his
new job was to sign 4000
letters, apologizing for this.
Pretty tough start.
146. The M8 had to be
redrawn from the
market, retroactively
putting in the
required filters.
148. So, why did Kaufmann
hire a strategy and
business development
guy from an American
retailer?
149. Lee in an interview:
“Now we need to reach people who
could and might use a Leica. I use
the example of the American ‘soccer
mums’ who would love to take better
pictures, who are the keepers and
recorders of their families’ history.
It’s not the men. These are well-to-
do families interested in excellent
photography. They are our new
potential customers.”
150. Who had ever associated
Leica with terms such as
’American soccer-mum’?
Pretty different, and ODD.
151. In addition to this, Lee
wanted to do a couple of
pretty odd things:
152. Build Cameras on demand (like
Dell with computers)
Replace Leica’s network of
specialty dealers with kiosks and
internet sales
Increase the pace of digital
development
New forms of collaboration
Move into consumer electronics
153. How all this was going to be
accomplished is not clear (and
certainly wasn’t to people at Leica)
154. In 15 months, Steven
Lee had succeeded at
Best Buy in producing
formidable high-end
PCs, which generated a
20 percent profit
(normal profits were
around 10 percent).
155. A retailer making 20 percent
profit in the fiercely competitive
PC industry, building this from
scratch in 15 months???
156. It had been accomplished
through outsourcing of
production and clever
business modeling.
157. Probably Lee wanted to do
something similar with
Leica, and obviously he
knew what he was doing.
158. Lee was known for being
very stubborn and
aggressive, not afraid of
conflicts and bullying
people if necessary.
159. Imagine the cultural and
intellectual clash between
Steven Lee and a traditional,
old firm like Leica!
160. Lee about the first meeting:
“I arrived at 10 o’clock and we
went head-to-head for nine hours
straight. No meal breaks.”
161. The founder’s son, Ernst Leitz
had treated his employees like
his own family.
162. And now an American
thunders in, firing and
bullying people about
some strange soccer-
mum segment!
163. Lee went into Leica playing
hardball, personally approving
all expenses over 100 Euros.
164. He travelled to Asia, re-
negotiating prices with
suppliers of electronic
components.
166. The distributor network
which was going to be
replaced by internet sales
and kiosks, started to get
really angry with Lee since
they were threatened.
167. Lee was not exactly the guy
to mess around with. It is
claimed that he started to be
rude to people at Leica,
calling them ’dumb farmers’.
168. The situation got worse
when Lee fired three
employees (wrongfully
according to the courts)
and many highly skilled
technicians threatened to
leave in sympathy.
169. At a small company like Leica, this
kind of events can get pretty big.
170. Managers started to
complain to Kaufmann
who decided to fire
Steven Lee in early 2008.
171.
172. Here are some
rumours and
comments on the
internet about the
event:
173. "Über diese Entlassung können wir uns auf
jeden Fall freuen."
=
"On that dismissal we can anyway be
delighted about"
174. Leica is one German Company and
should be comand by German people.
I have one friend mine who works at
Leica here in Portugal and many
people not like the style and work
method from Mr.Lee.
So many people are happy whit this
end of Mr.Lee at Leica
Best,
__________________
Rui Espanhol
175. Rumours say that Champagne
bottles were opened at Leica
when Lee left the company.
179. Lee claimed that accusations
against him was a smear campaign
from people who underperformed
and refused to change.
180. And, believe it or not, he had some
supporters who thought that Lee
was exactly what Leica needed. "He
had to hear, 'That's not possible,'
over and over again.'' , one said.
181. Kaufmann took over as CEO
and Leica has now
successfully launched a new
(working) version of the M8.
182.
183. In September 2008, Leica
also launched the S2, a
fantastic camera with
37,5 Megapixels and
many great functions.
215. Sources
The British Journal of Photography
The Leica website
Amateur Photographer
Times
Wikipedia
Digital Photography Review
Several internet forums
Thanks!