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Profile of a Struggling Company: Kodak

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Profile of a Struggling Company: Kodak
Table of Contents
  1. Introduction
  2. Profile: Current Management Planning
  3. Profile: Employees’ Perception and Culture
  4. Profile: Communication
  5. Conclusion
  6. References

Introduction

In the famous television show Mad Men, the protagonist markets the famous Kodak Carousel as “This device isn’t a spaceship, it’s a time machine!5” It was a product released in the 1960s which presented ingenious technology to consumer households and ultimately represents the Kodak company at its peak – an innovative photography powerhouse (Rawsthorn, 2013). The company was founded in 1888 by George Eastman, with the idea to offer affordable photography equipment to everyday consumers, at a time when cameras were bulky, difficult to maintain, and most expensive. Eastman reinvented the snapshot camera and changed the business model, to make photography “as convenient as a pencil.” Instead of profiting off expensive cameras, he made cameras available to a wide consumer base and sold supplies and film in bulk to profit.

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By 1981, Kodak acquired a 90% share of the U.S. market in film and cameras, reaching $10 billion in sales, and inventing many of the well-known technologies including the carousel, the portable camera, first-megapixel sensor, and a photo CD system (Lucas, 2012). However, by the early 2000s, the company was showing signs of struggle, eventually declaring bankruptcy in 2012, and emerging in modern-day as a digital imaging and printing company which is largely a shadow of its prominence. This paper will explore the management planning, internal culture, and communication that led to the downfall of Kodak and the effect on its modern-day business.

Profile: Current Management Planning

For decades, Kodak was an innovative powerhouse company, which faced virtually no competition in the United States. It had excellent marketing, technological innovation (they invented the first digital camera in 1975), and successful leadership. However, Kodak’s decline is attributed to price undercutting by a Japanese competitor Fujifilm which management largely ignored, missing out on lucrative sponsorships and consumer marketing alongside the transition of the world to digital media and photography. Some of the assumptions about this management were true, but the situation was inherently more complex. Kodak executives were well-aware of the digital transition in the 1990s, but it required major technological changes that would affect the Kodak ecosystem and organizational model.

Creating the color film was a highly complex chemical process, which only two other companies in the world could seriously challenge Kodak, one of them being Fujifilm. Ironically, Fujifilm also did not transition well into a digital film but rather used the existing chemical manufacturing infrastructure to enter the cosmetics space – surviving by diversification of their in-house businesses. The technical process required significant infrastructure and materials, which could not in any shape or form be transformed into digital imaging, a semiconductor technology platform. Furthermore, digital imaging also required the company to essentially undergo learning curves and scale – although the industry was technically the same, this transition was impossible with so many moving pieces (Shih, 2016).

Kodak management did make errors of relying on the existing business models at the time – which were highly profitable due to sales of film rolls. Transitioning to digital would have essentially resulted in cutting off its most profitable products. This is why even with being first to develop digital cameras and a megapixel sensor, Kodak’s brief attempt to enter the digital space with the Advantix Preview camera system (which was a digital camera by definition), was still connected to its film and image printing businesses. Ultimately, presented with innovative technology and accurate market forecasting, Kodak management made the wrong strategic choices continuously over a decade, until it was simply too far behind. It lacked the innovation management approach necessary during major technological breakthroughs such as that that occurred in the 1990s (Mui, 2012). Currently, management at Kodak is simply attempting to keep the business afloat through largely b2b services in digital imaging, printing, and some software, lacking the resources to expand or innovate into new industries or technologies.

Profile: Employees’ Perception and Culture

During its early and peak years, Kodak was a successful and thriving company, with a culture to support it. The well-known slogan of the “Kodak Moment” defined not only the Kodak brand position but its internal culture of nostalgic warmth and almost a family-like atmosphere. However, towards the end of the 20th century, that Kodak Moment shifted into a much different attitude. Kodak completely missed changes in consumer preferences and values, largely because of the arrogance of the management which snubbed disruptive technology and chose to focus on the core business at all costs. Corporate behavior and mindset begin to reflect on the company culture. If the company avoids risk and simply pursues revenue from an outdated source, then the company culture transforms into a rigid, risk-averse, and closed environment. The lack of response to market shifts causing evident criticism from shareholders, makes the company assume a defensive position that is highly insular and uptight. Therefore, going into the digital revolution, Kodak’s culture in the late 20th century was buried deep in the conventional, orthodox managerial perspectives which either intentionally or unintentionally promoted an internal culture of neglect, ignorance, and lack of any innovation (Solis, 2019).

From the perspective of employees, that was likely challenging. Especially for those who had been with the company for decades, transitioning from an environment of innovation and drive to a culture that not only does not empower but can be described as regressing. By the 1980s, the culture was overflowing with complacency, stemming from the top-down management hierarchy. Kodak had numerous talented managers and innovators, but they were buried in the hierarchy, and eventually left to pursue better initiatives, such as Phil Samper who was passed over as CEO precisely due to the belief that Kodak did not need to change (Kotter, 2012). Anecdotal evidence from employees at the time suggests that the company environment was becoming toxic and full of fear, many feared losing their jobs, and eventually, Kodak had to make major cuts to save costs, which further exacerbated the issue. Ultimately, barriers to change were the primary issue within the culture and there was a division among employees to those who supported innovation and those who wanted to remain in the Kodak Moment. Unfortunately, barriers to change are one of the most dangerous culture/employee perceptions that can form in any given industry because even if the company comes to a standstill, the world does not.

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Profile: Communication

Communication within Kodak was struggling significantly. The management structure of hierarchy contributed to essentially burying individuals with innovative ideas. This can be demonstrated by the first digital camera which Kodak engineer Steven Sasson invented in the 1970s. However, management was largely disappointed at this achievement, notably saying, “that’s cute, but don’t tell anyone about it” (Deutsch, 2008). It is a demonstration that there were major communication gaps between senior management and its lower management and frontline workers. Competent strategy and direction were not arriving from the top down, while the incredibly talented pool of workers and engineers at Kodak which knew the directions where the company needed to go, was not heard from the bottom up. Since management chose to remain complacent, communication broke down, failing the company (HCA, 2015). Ultimately, Kodak’s leadership did not adhere to one of the most important principles of the management process, which is to have open communication across the employment structure, regardless of hierarchy. Employees should be aware of ongoing plans in the company, which provides them with opportunities and direction on how to evolve the company and its products. Communication is and will always be vital to the management and success of any company.

Conclusion

Kodak began its journey as a highly innovative and driven company, a principle it maintained through the majority of the 20th century. George Eastman and those who followed in the next decades understood the value of risk and the needs of the consumers of the market. However, by the late 1970s, complacency and arrogance took over management at Kodak, initially with small decisions such as allowing Fujifilm to get a stronghold in the U.S. market. By the 1990s, the mismanagement, lack of clear direction, and highly incompetent strategic decision-making created a snowball effect that would lead Kodak to bankruptcy and largely irrelevance as a company in the modern age. Technology changes played a part, but Kodak had years of forewarning to adapt, and at one point, the financial capital to transition as innovators into the new sector of digital imaging and photography rather than remain embedded in the old ways. It is important to note how deeply this mismanagement contributed to the degradation of the company culture, effectively eliminating strategic communication, and drowning its numerous potential and talent who were later forced to leave. A company’s success depends just as much on its employees as it does on its management. Unfortunately, Kodak has become a case study example of multiple errors in management that should never be made and the critical value of maintaining innovation in key structures of the company.

References

Deutsch, C. H. (2008). At Kodak, some old things are new again. The New York Times. Web.

HCA. (2015). HR lessons from Kodak’s turnaround. Web.

Kotter. (2012). Barriers to change: The real reason behind the Kodak downfall. Forbes. Web.

Lucas, H. C. (2012). The search for survival: Lessons from disruptive technologies. ABC-CLIO.

Mui, C. (2012). How Kodak failed. Forbes. Web.

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Rawsthorn, A. (2013). It’s a spaceship! No, it’s a time machine. The New York Times. Web.

Shih, W. (2016). The real lessons from Kodak’s decline. Web.

Solis, B. (2019). Company culture is either your Kodak moment or your next big thing. Web.

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