KODAK'S FALL: WHERE IT FAILED TO TAKE THE DIGITAL CHALLENGE
Reasons behind the fall of Kodak
Kodak had a magical rise but an even disastrous fall . It was the leader in photography business, but even the giants fall to the blow of time and while significant changes occurred around, Kodak remained stuck. The company was unwilling to change and there were many reasons behind it. A series of wrong decisions and Kodak’s fateful days were over. The digital challenge was not too big but Kodak failed to adjust its approach. The main problem was that Kodak could not see the change as an opportunity and neither took it as a challenge. The result was that Kodak was stuck on the wrong side of the picture. Challenges are not big or small. It is how you see them and whether you decide to take them. Kodak decided not to and the challenge grew so big that the photography giant fell short before it.
Arrival of the digital
Kodak had left its mark in people’s lives before it failed. There are several important reasons behind the fall of Kodak including a set of unnecessary acquisitions. Before even Kodak could know its moment was over, it had lost its game in photography. Kodak had enough time but a traditional mind-set did not allow it to use the digital opportunity. Kodak failed; Fuzifilm won and before even Kodak could take any serious action, it had surrendered its position to the others. With the arrival of the disruptive digital technology, Kodak’s technology and the instruments it sold had become obsolete. Kodak had time to move on from the old and embrace the new. Its fate would have been much different had it not been so neglectful of the emerging challenge and the competition it brought. Instead it kept believing that it had grown mighty enough to be infallible. It lacked the will to change and so before it could take any action to re-establish its challenged leadership, the market and customers had escaped from its hands. Its attempts to regain its position through diversification also failed miserably. Kodak firmly believed that its position was never going to be challenged and it resulted in a delay in both action and decision. Whatever actions it took were in the wrong direction and by the time it filed for bankruptcy in 2012, it had become one of the most interesting tragedies in Business History. Fuzifilm did its calculations right and its fate was different from that of Kodak.
A traditional mindset that missed reading the challenge
The main problem lay in the mindset. Kodak had started believing that it had grown into a brand larger than competition and its position could not be challenged. When a brand starts believing that it has grown larger than the market, it digs its own grave. The same happened with Kodak as it miserably failed to estimate the extent of the challenge posed by digital technology. Digital technology proved to be a disruptive force. So, instead of understanding and accepting the challenge, Kodak tried to beat the challenge with its brand name and with its core business. Its core business had flourished before digital technology disrupted the market. By the time it could understand the potential of Digital technology, it had lost a significant market share. The brand had gotten so involved with its core product, photo film that its inflexibility cost it perilously. Kodak was unable to understand how deeply its position was challenged and what could be the right move. By the time, it attempted to enter the digital business, it was somewhere far back in the line behind most other brands. So, in a market where it held the leaders’ position for a considerable period, Kodak was forced to the back seat.
Important reasons behind Kodak's fall
- Management decisions played an important role in this tragic end.
Its miscalculations had brought Kodak quicker to the end of the road. The management made poor decisions trying to jump into new lines of business. Their obsolete assumptions kept them from understanding the power of digital. Digital technology had brought a tectonic shift in how photography was viewed and photo films had started losing their relevance. People could view the photos in their camera or on a computer before getting a print. The loading and unloading of photographic film into the camera was no more required. It was now far easier to click and print and even check the image and its quality.
- Kodak tried to keep fighting a lost battle.
It tried to revive its failing photo film business using various means and different combinations. Instead of trying to move further with the new technology, it kept trying to expand the life of its core business. It failed to estimate that the convenience and quality digital cameras could provide was something very attractive for the customers. In-fact it was a kind of challenge that had left Kodak confused. Before Kodak could know, land around it eroded and the company's position was that of 'marooned'. A frustrated Kodak tried to jump onto every boat it could lay its eyes upon. Its attempts to venture into new fields like pharmaceuticals and battery business (Sterling pharma & Ultra technologies) proved it costlier. Kodak failed to regain its footing that it had lost in photography business.
The challenge before Kodak was not unique. It has happened with others too whenever technology has challenged a business’ hegemony. Poor strategy, lack of foresight and inflexibility all led Kodak towards a slow and painful death till it filed for bankruptcy. Kodak had been a household name earlier and especially appealed the women through its marketing techniques. But, things changed with the digital technology as cameras rather than being photographic equipment gained the status of electronic gadgets. The writing was all over the wall, but Kodak failed to read it. As great was Kodak’s addiction to its core business of photographic films that it was thrown out of the business it pioneered. All of this happened because of its addiction and over confidence. It is just a lesson that technology can be a disruptor and you should make your move before the competitors do.