TANLAWAN, LOTHERS A.

BSTM-4A

The rise and fall of kodak’s moment

Kodak's supreme success was creating a new technology – the film camera. It also
created a completely new mass market for photography. Understanding what digital meant for
the company requires a deeper historical and social approach. The answer lies in understanding
why Kodak was successful in the first place. Kodak's advertising campaigns established the need
to preserve 'significant' occasions such as family events and holidays. By the 1970s, more than
60% of pictures in the US were being taken by women. And it was partly how men responded to
the digital revolution that Kodak couldn't cope with. Digital fundamentally altered the company's
equilibrium in two ways. Aside from changing the meaning associated to cameras, digital
devices also made it possible for newcomers like Sony to bypass one of Kodak's greatest
advantages: its distribution network. With digital cameras, images could be viewed on cameras,
mobile phones or computers without the need for hard prints. With women giving way to men as
primary users of cameras, printing plummeted. Kamal: "The people taking pictures suddenly
changed, from 60% women to 70% men".

Kodak's focus on retail printing, investing in inkjet printing research and development,
and selling sensors to mobile manufacturers – altogether, these never added up to a sustainable
business model. What they need is a new business model for an environment in which people do
not 'preserve memories' but 'share experiences'. The lesson from it is, Kodak needed to hand
control over to a new generation of customers and business owners who could welcome
unpredictability and were ready to be led in unexpected ways, a vast cry from how the company
had operated throughout its history.

"It's critical that businesses reinvent themselves. One of the things that allowed Kodak to
thrive this far was its enormous market strength. For this type of reinvention, however, you must
drastically modify your perspective or worldview and emerge as a completely different
organization since you are faced with a technical discontinuity that has little in common with
what you have been doing. This type of reinvention, which required a significant culture
transformation and took several years, is well exemplified by IBM. However, Kodak was
unwilling to give up their legacy.

What can other companies learn from Kodak's downfall given that the difficulties it faced
are not particularly unusual? It is obvious that businesses that generate a significant percentage
 TANLAWAN, LOTHERS A. BSTM-4A

of their revenue from a single product—in Kodak's case, film—are more susceptible. But it's
crucial to have a business attitude that is open to innovative approaches and capable of accepting
unpredictability. Moreover, avoid trying to tie the weight of legacy assets to new endeavors, to
avoid extending the life of current product lines while attempting to establish fictitious
connections between the old and the new, and, most importantly, to base strategy on users rather
than the current business model.