From dominant market leader to bankruptcy – The story of Kodak
Founded by George Eastman in 1888, Kodak shaped the narrative of photography for almost a century. Kodak was a pioneer in the photography and imaging industry with numerous innovations and a commitment to making photography accessible to the masses, Kodak dominated the film and camera markets for much of the 20th century, boasting near-monopoly status. However, as the late 20th century ushered in the digital revolution, Kodak found itself at a crossroads.
The digital revolution of the late 20th century brought about significant changes in the way people captured and shared images. Despite having invented the digital camera in the 1970s, Kodak was slow to recognise the potential of digital photography and the shift away from film.
Digital Disruption and Kodak’s Reluctance
Despite Kodak’s early invention of the digital camera in 1975, the company hesitated to embrace the potential of digital photography. The late 20th century brought about a seismic shift away from film, and Kodak’s reluctance to adapt resulted in a profound disruption to its traditional business model. The consequence was a staggering decline in revenue, with the company losing nearly two-thirds of its turnover by the time it filed for bankruptcy in 2012.
Let’s look at some important timeline events of this change:
Timeline of Kodak’s Missteps
1889 — George Eastman founded the Eastman Kodak Company and introduced the first Kodak
1975 — Engineer Steve Sasson invented the digital camera within Kodak.
1976 — Kodak’s market dominance reached 85% in cameras and 90% in film.
1981 — Sony kickstarted the filmless age with the Sony Mavica.
1984 — Customers switched to Fuji due to a 20% lower price.
1988 — The first true digital camera was the Fuji DS-1P, only it never sold. However, it was a testament and hence proved the concept of how recorded images could be saved onto computerised files.
1990 — Dycam Model 1 became the first digital camera available for purchase by competing company Logitech.
1991 — Kodak’s launch of its first digital camera. 16 years after the invention by employee Steve Sasson.
1991-2011 — Despite various digital releases, Kodak struggled as sales continued to plummet. Probably because Kodak’s management at the same time developed a new business direction, printers! It seems the leaders of Kodak had developed antibodies against anything that might compete with their best-selling business of film, they had 90% market share of film in 1976, remember.
2012 — Kodak filed for bankruptcy, reporting a net loss of approximately $1.3 billion USD in 2011.
What can we learn from Kodak?
The major learning points from Kodak is:
- Have a clear purpose
A very important learning from Kodak is the lack of purpose beyond making money. I believe that if the leaders would have had a strong sense of purpose, they would have made better decisions. If Kodak’s leaders would have communicated a purpose of helping people catch their memories, they wouldn’t have been so attached to the film. With this purpose they would have kept asking themself: How can we improve how people catch memories and when Steve Sasson invented the digital camera, they would have been able to see how this could improve how people could catch their memories. I believe they lacked a purpose besides making money and that this blindsided them. This goes to show how important clarity of purpose is.
Is your purpose clearly communicated to everyone in your organisation?
- Drive innovation
One of my favourite quotes is: The best way to predict the future is to create it, as President Abraham Lincoln presumably said. The story of Kodak illustrates how important innovation is. You need to be innovative or you risk losing your business. Learn from Kodak and understand that as new innovations come, your biggest selling product can simply be irrelevant for customers.
Despite having invented the digital camera in 1975, Kodak hesitated to embrace the potential of digital photography. The shift away from film caught the company off guard, and its traditional business model faced disruption. While Kodak’s revenues had peaked at around $16 billion in the late 1990s, the company struggled to adapt, losing nearly two-thirds of its turnover by 2012 when it filed for bankruptcy. The year before filing for bankruptcy, Kodak reported a huge net loss of approximately $1.3 billion USD. Do you have any Steve Sassons (the inventor of the first digital camera at Kodak) in your organisation? Imagine how it would feel for someone to invent something new that could change the world and not get the necessary understanding, support and interest from the leadership. Frustrating, right? Take care of all your people’s ideas and derive innovation.
Do you have a system to catch and test innovative ideas your employees have?
- Don’t rest on past success!
Remember that it doesn’t matter that Kodak dominated the global market, when no one wanted to buy films any longer! Don’t make the mistake of resting on past success! Rather than letting leaders base all decisions on past performance you need to base decisions on customer behaviours, on customer data. This is why validating your ideas quickly to see how customers react is key in the disruptive world.
Do you have the same risks as Kodak in your existing product portfolio?
- Pay attention to the customer journey and make it easy for the customer
This story also shows how important it is to pay attention to the customer journey. For example: Compare how fast and easy you can take a photo and share a photo today with how it used to be. Back in the days when we used analog cameras with Kodak film we needed to develop the film. We needed to get out of our houses and drive to a Photo-place to get our photos developed. Don’t forget the part where we had to let a stranger see all our private photos. Grinch! As today we can see the photos directly, choose to take a new and improved one if the first was not good, We do not need to travel to get our photos developed and we do not need to pay for printing, we can simply use Instagram for free and we can also choose to share only the photos we like with strangers and save some photos just for ourselves. Kodak’s leadership did not consider the customer journey and user friendliness at all. If they would have, they probably would have realised they needed to invest more in what makes it easy for the customer. Kodak did the opposite when they invested in printers as a way to save their film business. The downfall of Kodak serves as a stark reminder of the importance of innovation, adaptability, and strategic foresight in the business world. Even industry leaders can fall from grace if they fail to recognise and respond to disruptive changes in a timely and proactive manner. Consider the customer journey and make it easy for the customers. I love this quote by Sam Walton, founder of Walmart:
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
- Learn and change fast and become a disruptor
If businesses are unwilling to disrupt themselves, there will always be someone else willing to disrupt them. Looking at companies that now dominate the world this is exactly what they do. Kodak did not, in fact they did the opposite.
Do you disrupt yourself or are you waiting for someone else to disrupt you?
Critical aspects of the company’s failure
Despite being a pioneer in capturing memories. The company completely forgot about this mission and about serving the customer. Compare how fast and easy you can take a photo and share a photo today with how it used to be. Back in the days when we used analog cameras with Kodak film we needed to develop the film. We needed to get out of our houses and drive to a Photo-place to get our photos developed. Don’t forget the part where we had to let a stranger see all our private photos. As today we can see the photos directly, choose to take a new and improved one if the first was not good. We do not need to travel to get our photos developed and we do not need to pay for printing, we can simply use Instagram for free and we can also choose to share only the photos we like with strangers. And save some photos just for ourselves. Kodak’s leadership did not consider the customer perspective and the customer journey. They totally missed thinking about user friendliness for the customer. If they would have they probably would have realised they needed to invest more in what makes it easy for the customer. They did the opposite when they invested in printers as a way to save their film business. The downfall of Kodak serves as a stark reminder of the importance of innovation, adaptability, and strategic foresight in the business world. Even industry leaders can fall from grace if they fail to recognise and respond to disruptive changes in a timely and proactive manner. Kodak failed to consider the customer journey and make it easy for the customers. Be purpose-driven and consider the customer and the customer journey in all you do.
Kodak’s downfall underscores the perils of clinging to outdated paradigms. Despite having pioneered digital photography, the company failed to pivot swiftly, and its refusal to relinquish its film-centric mindset led to catastrophic consequences. The key takeaway for organisations lies in the imperative to anticipate technological shifts, innovate proactively, and cultivate an adaptive culture. Kodak’s tale serves as a stark reminder that no entity, regardless of its historical stature, is immune to obsolescence in the face of rapid technological evolution. To thrive in the modern business landscape, you must not merely endure change but actively seek it out and harness its potential for sustained growth.
As you navigate the complex terrain of technological evolution, the story of Kodak serves as an urgent call to action. Embracing change is not merely an operational necessity; it is a strategic imperative. By weaving behavioural change principles into the fabric of organisational culture, companies can not only weather disruptive forces but also emerge stronger and more resilient in an ever-changing landscape.
Disruption is everywhere and affects everyone. The key to be successful is being able to adapt and change when circumstances do, are you?
