With the news that Eastman Kodak Co. is preparing for a likely bankruptcy filing in the coming weeks, we should consider how such an iconic brand could fall the way that it has. Since its founding in 1892, Kodak has been a trailblazer in innovation, introducing personal photography, color photography, disposable cameras and many consumer marketing platforms that defined their time. They were also incredibly innovative from a process perspective, with a vertical integration strategy that allowed them to own the entire value chain and make photography available, usable and affordable for all consumers – all while driving huge profits and growth for Kodak.
Most cite Kodak being slow to adapt to the dawn of digital photography as the reason for their demise. However, that is too simplistic of an assessment, especially considering that Kodak was in fact an early pioneer in digital photography. They were quick to recognize the changing landscape and worked hard to adapt.
Shifting to Digital Photography
In shifting to digital photography, Kodak would lose much of what differentiated them in the market:
- People stopped buying film, so many of their key resources and capabilities became obsolete.
- Their global distribution network, a huge driver of their growth over the years, lost its value.
- Their supplier network they used to produce film, and their business model to support that, were not compatible with digital and became obsolete.
- Their intellectual capital around chemistry and film manufacturing was now a diminishing asset, with electronic companies having a resource base that was more compatible with the competencies required for digital photography.
This said, it is an oversimplification to say that Kodak was slow to migrate to digital photography, when in fact they were early adopters. However, through this transition, they no longer had the ability to capitalize on the many areas of differentiation that made them great.