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In the late 1980s the company employed about 140 000 people, today this figure has gone down to less than 20 000.
The rise and decline of Kodak can to a large extent be explained by using a framework developed by Clayton Christensen at Harvard.
Christensen studied technological shifts, how they happen and why established firms tend to be overthrown when they occur.
A sustaining technology is one that improves the performance of a product according to the attributes that the established customer base appreciates.
A disruptive technology on the other hand offers an initially worse performance according to what customers have appreciated.
At the same time it brings new performance attributes such as simplicity or portability to the marketplace.
Therefore it tends to prosper in new customer segments and as it improves along the mainstream dimensions, it eventually displaces the former technology.
Established firms therefore miss the boat by listening to their existing customers and by keep moving up into increasingly sophisticated segments.
It attacks from below, becomes good enough and overthrows the established firms, whove been listening to their customers.
This framework can help us to explain both the rise and the fall of Kodak.
Kodaks introduction of the roll film in 1888 is an excellent example of a disruptive innovation.
It fundamentally changed the role of photos and the way they were used.
Prior to this, people went to a studio and had their photo taken by a professional photographer.
The roll film did not compete along the image quality dimension.
Portability.
Simplicity.
Affordability.
This value proposition was very different from the one that the leading photography companies offered back then.
The leading photographic companies in the U.S. were Anthony and Scovill (who merged into Anthony & Scovill in 1901, later shortened to Ansco). Their very successful businesses were focused on meeting the needs of portrait studios and serious amateurs.
People who had not been taking pictures before could suddenly do so.
As the performance of roll films improved it eventually displaced dry plate photography.
A schoolbook example
of a disruptive innovation that toppled the dominant firms and put Kodak in the leading position.
From this point and on, Kodak kept developing sustaining innovations successfully.
profits kept rising and Kodak continued to launch products that sustained the dominant film technology and strengthened its position.
About a century after the disruption of dry plates by the roll film, another disruptive storm was about to change the industry.
If Kodak and the roll film had simplified photography, digital imaging made it cheaper and simpler than ever before.
The image quality was significantly worse, but digital imaging offered new performance attributes that were valued by non-photographers.
The image could be viewed instantly, it did not cost anything to capture a picture and they could be shared easily with the help from computers and the internet
Once the digital cameras had reached the point of being good enough, sales exploded.
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Just like the roll film, digital imaging attacked from below and brought new performance attributes to the market.
And 100 years after Kodak had disrupted the industry, it was Kodaks turn to be put in trouble by a new technology.
6 million pixel resolution is good enough for most applications. The perception of colour is more important than the perception of sharpness. Kodak, 1996
But more than a century of high profits related to film were still going to be removed
Over the last 150 years photography has been popularized in a way that no one could have imagined back then.
The roll film was the first disruptive wave and it catapulted Kodak into industrial leadership.
Digital imaging was the second wave of popularization and it disrupted Kodaks profitable film business.
Image attributions
Thanks to:
Terry Faulkner, former Director and Vice President of Strategic Initiatives at Kodak.
Christian Sandstrm is a PhD student at Chalmers University of Technology in Gothenburg, Sweden. He writes and speaks about disruptive innovation and technological change.