30 January, 2012

Kodak and the Death of Dinosaurs

Melbourne Herald Sun, Thursday January 26, 2012

I hate repeating myself, but some stories keep happening again and again. Anyone with any doubts on the science of evolution only has to follow the events catalogued in the endless flow of this Business Daily.

Here we see the survival of the fittest, the extinction of some of the greatest dinosaurs to ever walk the planet, replaced by the nimbler, more resourceful mammals.

What I'm talking about is the death of that great brontosaurus Kodak. Yes, along with many of its species, it is now under US bankruptcy protection - the palliative care ward for American businesses.

Of course we were warned well in advance, when the Australian operation closed in 2004. Already the writing was on the wall. The US operation was so much bigger, it took longer to die. But did it have to?

As always it is never just one event that causes the demise. Did they cling to their legacy business - film, paper and cheap cameras - too long? Yes. But it was, and is, still big business. What will yet rise up from the grave is still to be seen, but it surely will be a ghost of the proud 131 year old company that passed on.

Kodak were undermined on price by competitors like Fuji. Digital cameras came on with a rush - it's like everyone acquired one overnight. And the explosion of smart phones means that everyone now has a camera in pocket or purse.

How can such a giant falter? Last year we saw Borders collapse in a stack of books and in the States, American Airlines is doing its own Chapter 11 taxying right now.

The irony is that Kodak could have made it, they had all the ingredients and there's no doubting their muscle. Did you know that a Kodak engineer created the first digital camera? They invested lots of time and money into developing the technology and intellectual property still earns them huge royalties today - from other camera makers who have leapfrogged them.

But they never really believed that digital was going to overrun film so completely, so quickly.

They were like Xerox, who were developers of the key ingredients of today's computers - the graphical user interface, the mouse, the laser printer. Yet while Apple and many of the upcoming computer companies made fortunes, by 2000 Xerox were staring at bankruptcy.

Fortunately a new company president, Anne Mulcahy, who started in sales, suggested they talk to the customers - and saved the company.

This is what Kodak didn't do. Or maybe they were talking to the wrong customers. They didn't have the Apple design flair or the insight to extend their products out through web communications or social media - which is what all their competitors are doing now.

They developed the first wi-fi enabled camera, but when it didn't reach the sales targets they killed it off. Can you see the pattern here? When the going gets tough, the big run off.

Like IBM, who gave us the most successful personal computer system, but abandoned it to the clones. I always felt that the carpet bazaar haggling and trading that is the PC market never sat comfortably on those grey-suited shoulders.

When I look at the torment of these dinosaurs I see the big corporation curse: inflexibility and bureaucracy. So many of the key ingredients of today's technological revolution were not invented by Bill Gates or Steve Jobs but by Xerox and Kodak and IBM.

Where were these corporates , I wonder, when the young turks were plundering their basements? Probably in committees discussing the distribution of paperclips.


Blog: themarketeer-raybeatty.blogspot.com

1 comment:

Anonymous said...

Ray, Some of what you wrote about Kodak is on the mark, but quite a bit is not. As an ex Kodak Australia employee I can firstly correct your statement that the local entity closed in 2004 - it did not. In fact, Kodak Australia is still in business TODAY!
Secondly, the demise of the company can be traced to a series of poor management decisions made a raft of senior people in the health, photographic (consumer) and board positions more interested in minding their own bonuses than in listening to both their staff and their customers.