The Fall of Kodak Reminds Every Company of the Absolute Necessity to Constantly Evolve to Survive
During the summer of 2020, the Kodak company’s stock will have experienced a rather incredible movement between Monday, July 27th, and Wednesday, July 29th. In just forty-eight hours, the share price went from just over $2, a price that had been his for several years, to over $33.
A sudden rise that can be explained by the bubble that was created in the stock market in the last few months due to the $3,500 billion printed by the Fed out of thin air.
Don’t worry, I’m not going to give you an analysis of the Kodak stock in this story. This rise simply reminded us of the very existence of the Kodak company.
Kodak was a forerunner in the world of photography
For younger people, Kodak doesn’t mean much. For the older generation, Kodak represents the golden age of the camera. At a time when digital photography has become the queen of the market, Kodak represents virtually nothing.
Yet the story of Kodak could have been completely different. Mistakes by large companies are legion in history, but the one that led to the fall of Kodak is not trivial.
It all begins in 1884. George Eastman patented the first film in roll form to prove practicable; he had been tinkering at home to develop it. In the same year, George Eastman created Kodak. In 1888, he developed the Kodak camera which was the first camera designed to use roll film.
With his company, George Eastman will go from technological prowess to commercial advances:
- $1 camera in 1900
- Consumer video camera in 1923
- Launch of the legendary Kodachrome films in 1935
- Instamatic camera in 1963
In 1963, Kodak was at its peak. Kodak sells no less than 50 million of its Instamatic and is unanimously considered the undisputed giant of photography in the world. A few years later, in 1975, Kodak will make a mistake that will bring the company to its knees in the following decades.
Kodak was the first to create digital photography…
Kodak develops digital photography in its own research and development laboratories. In 1978, Kodak filed the first patent for a digital camera with a CCD sensor.
The big device developed by Kodak, because it is necessary to speak about the big device at the time, then resembles a black and white case the size of a toaster:
Kodak has in its hands the technology of tomorrow in the world of photography. The problem is that Kodak does not believe in the success of his revolutionary invention.
For fear of shooting themselves in the foot by sabotaging their master technology, or fear of change, Kodak executives refuse to adapt to the demands of the digital age.
… But Kodak made the mistake of not believing in its disruptive invention
Kodak CEO George Fisher at the time simply confirms this now:
“There was a fear of what digital was all about”.
I have already read several stories of companies that were hegemonic leaders in their sector and ended up falling because they chose not to evolve while the competition did. This is notably the case of Nokia, which did not meet the formidable challenge offered to it following the launch of the iPhone by Apple.
On the other hand, the Kodak story is even more dramatic. Kodak was indeed at the origin of the revolution that was to take place in the world of photography. The company had everything in hand to be the leader of this revolution.
Everything, except perhaps the confidence to fully engage in it.
When digital technology exploded in the 2000s, Kodak had already been overtaken by ambitious outsiders who were not afraid to seize this major evolution that would revolutionize the world of photography forever.
Competitors from Japan, Korea, China, or Germany will only get a bite of Kodak.
At a time when digital technology is exploding, Kodak only markets a few compact models, which are now much less buoyant than reflexes or bridges.
To survive in the early 2010s, Kodak even ended up having to sell its 1100 patents related to digital imaging. Today, Kodak is a small company that missed a major technological shift that it had initiated in 1975.
More than bad luck, Kodak has suffered from a lack of vision
Such a failure obviously raises questions. Some will attribute it to the lack of vision of Kodak’s leaders at the time. Others will point to a lack of luck.
In my opinion, more than a lack of luck, it was a lack of vision that actually penalized Kodak. To convince you of this, I will remind you of two other major innovations that Kodak left behind in the middle of the 20th century.
The first was in 1945. At that time, Kodak’s management at the time sent a certain Chester Carlson home. Carlson had just unveiled plans for a photocopier with a revolutionary process. Three years later, the rejected inventor created Xerox, which would be the origin of the first photocopiers.
Five years later, in 1950, Kodak made the same mistake by rejecting another engineer who had come to present the instantaneous photography process, the Polaroid. Twenty-six years later, Kodak will finally launch out in instantaneous photography which will be worth years of lawsuits, and especially, nearly a billion dollars of fine in 1991!
Kodak’s story is therefore symptomatic of a fundamental truth that we must always keep in mind: Adapt or Die.
Whatever your position, you must always remain open to innovation. You must be ready to embrace a new revolution when it appears, or you will find yourself completely outdated a few years later.
The choice that presented itself to Kodak at the time was the one that would sooner or later present itself to any company sooner or later. Regardless of the size of the company, the CEO will one day have to make a decision that will allow his or her company to survive in an ever-changing world.
Some CEOs have the long-term vision to do so, and others do not. This is where the distinction is made between average and great CEO.