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Kodak and its inability to change: a tale for many

The Jan 14th issue of The Economist published a truly excellent article on disruptive innovation and change management. We’ve long known of Kodak´s troubles. But few mainstream newspapers or magazines have written such an insightful piece as this.

Kodak was, as the Economist writes, the Google of its days. Highly inventive, highly innovative and successfully rolling out new, sustaining innovations. This lead to a 90% market share in film (can you spell market leader) and 85% of camera sales in the US. Well into the 1990’s, Kodak was rated as one of the world’s most valuable brands.

“By 1976 Kodak accounted for 90% of film and 85% of camera sales in America. Until the 1990s it was regularly rated one of the world’s five most valuable brands”. In fact, In 1996, Kodak was ranked the world’s fourth most-valuable brand behind Disney, Coca-Cola and McDonald’s….

Then digital hit. At least, that’s what most people seem to believe.
But in reality, Kodak had been sitting on the Digital Camera and digital technology since 1973. Only they were afraid of the consequences…

Kodak engineer, Steven Sasson is credited with inventing the first digital camera in 1975 (first prototypes in 1973). Only to put it away for years…..when the company started developing its digital strategies, it was too little, too half-hearted and eventually too late. Starting 2000, the speed and size of the digital shift increased to the point of driving Kodak into a death spiral. Yet, Kodak was attemting to innovate. Using the framework of the Innovation Pyramid , Kodak did innovate on level one (Design and marketing) and level two (Products). The company failed, however, in level eight (business model innovation). So despite its launch of digital products, the lack of transformation on the business model level led to the eventual death of Kodak.

On January 19th 2012, Kodak officially announced the results of some 15 years of failed transformation. The company filed for “Voluntary Chapter 11 Business Reorganization” or Bankruptcy. For special interest, you can read the filing here.

The company´s success and downturn makes for a world class case study in the failures of leading change.
This 2006 Businessweek article “Mistakes Made On The Road To Innovation..
.” paints some of the inner life challenges Kodak had. Analyzing Kodak against the likes of Apple, DELL, IBM and Cisco, reveals what could have been if the company had been able to change.

At it´s peak Kodak employed 144.000 people. Today it has less than 14.000. Soon, only a handful. Analyzing this article reveals layers of layers of innovation challenges. The last Kodak moment? is an article students and executives should study and learn from. It holds a series of truths valid for all companies across all industries: successful innovation requires successful change management.

For a truly amazing 368 slide journey in the history of Kodak, we urge everyone to view this incredible presentation by Christian Sandstrom.

Trying to understand the decline of Kodak from a stock market analyst perspective is also very revealing. For an analysis of how stock analysts look at the paradigm shifts in disruptive innovation, lean back and enjoy this slideshow.

All images from The Economist.

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