Why Kodak Failed - Rise And Fall of Kodak

Summary

Kodak, once the world's leading photography giant, fell due to its inability to adapt to digital technology. Despite inventing the first digital camera, Kodak's overconfidence in its traditional film business led to a slow response to market changes. By the time it shifted focus to digital cameras, competitors like Fujifilm, Sony, and Canon had already captured the market. Kodak's decline teaches a valuable lesson in the importance of embracing innovation and not relying solely on past success.

Takeaways

• 📷 Kodak was once the dominant player in the photography market, with cameras and film that were synonymous with the industry in the 1970s.
• 🏆 Kodak was established in 1892 and by the 20th century, it had become the world's leading manufacturer of photographic film.
• 📊 By 1968, Kodak had captured nearly 80% of the global photography market share, thanks to its 'razor and blades' business model.
• 💡 The 'Kodak Moments' marketing campaign created an emotional connection with consumers, significantly boosting sales.
• 🔍 The first digital camera was invented by Steve Sasson at Kodak, but the company's executives advised him to keep it a secret due to its potential to disrupt their film-based profits.
• 🚫 Kodak's reluctance to embrace digital technology allowed competitors like Fujifilm, Sony, and Canon to take the lead in the digital camera market.
• 🔎 Research conducted by Kodak in the 1980s indicated that digital cameras would replace traditional film, but the company failed to act on this insight effectively.
• 💸 Kodak made poor investment decisions, such as investing in Sterling Drugs, which did not contribute to their core photography business.
• 🔄 The choice of K.R. Whitmore as CEO, who favored traditional film over digital, was a critical misstep that sealed Kodak's fate in the digital era.
• 📉 Despite realizing the need to transition to digital in the early 2000s, Kodak was too late to compete with established digital camera giants.
• 🛑 In 2004, Kodak stopped producing traditional film cameras and by 2012, the company filed for bankruptcy, exiting the camera business.
• 🔄 Post-bankruptcy, Kodak has pivoted and is now focusing on different areas, including reported efforts in manufacturing the COVID-19 vaccine.

Q & A

What was Kodak's primary business model in the 20th century?

Kodak's primary business model was the 'razor and blades' model, where they sold cameras at a low price and made profits by selling film and paper for printing photos at a higher price.

Who invented the first digital camera, and what was the initial response from Kodak's management?

The first digital camera was invented by Steve Sasson, an electrical engineer at Kodak. The high officials at Kodak advised him to keep the invention to himself and not to tell anyone about it, fearing it would disrupt their film-based business.

What was the impact of digital cameras on Kodak's traditional photography business?

Digital cameras threatened Kodak's traditional photography business as they made film and paper unnecessary, which were the main sources of Kodak's profits.

What marketing campaign did Kodak launch to create an emotional attachment with its consumers?

Kodak launched a marketing campaign called 'Kodak Moments,' which referred to unforgettable moments in a person's life, creating an emotional attachment with consumers and significantly increasing sales.

Why did Kodak initially resist the transition to digital photography?

Kodak initially resisted the transition to digital photography because they were making most of their profits from film and paper used in photography, and digital cameras would have made these products obsolete.

What was the outcome of Kodak's decision to invest in Sterling Drugs in 1988?

Kodak's investment in Sterling Drugs, amounting to 5.1 billion dollars, turned out to be a bad investment as the drugs dealt with by Sterling had little use in photography, and Kodak eventually had to sell it at half the purchase price.

What were the two main insights from the research conducted by Vince Baraba, Kodak's CEO at the time, regarding digital cameras?

The two main insights were that digital cameras were going to replace traditional film and paper photography, and that the adoption of digital cameras would take some time, roughly about 10 years.

Why did Kodak's board of directors choose K.R. Whitmore as CEO instead of Phil Samper?

Kodak's board of directors chose K.R. Whitmore over Phil Samper because Whitmore was part of a traditional mindset and promised to keep Kodak closer to its core business in film and photography chemicals.

When did Kodak officially stop producing traditional film cameras?

Kodak officially stopped producing traditional film cameras in 2004 and shifted its focus more towards digital cameras.

What is Kodak's current business focus after leaving the camera business?

After facing bankruptcy and leaving the camera business, Kodak has shifted its focus and is currently reported to be working on manufacturing the COVID-19 vaccine.

What lesson can entrepreneurs learn from Kodak's downfall in the camera market?

Entrepreneurs can learn the importance of adapting to technological changes and not becoming overly optimistic about their core business, as Kodak did, which ultimately led to its downfall.

Outlines

00:00

📷 The Rise and Fall of Kodak: A Digital Disruption

This paragraph discusses the historical dominance of Kodak in the photography market, its innovative business model of selling cameras cheaply and making profits from film and paper sales, and the emotional connection it created with consumers through the 'Kodak Moments' campaign. However, the narrative takes a turn with the invention of the digital camera by Kodak's own engineer, Steve Sasson, and the company's subsequent decision to ignore the technology due to fears it would cannibalize their film business. This decision is highlighted as the first major business blunder that set the stage for Kodak's eventual downfall.

05:06

💊 Kodak's Missteps and the Inevitable Decline

The second paragraph delves into Kodak's strategic missteps, including a failed investment in Sterling Drugs and a continued overconfidence in traditional film and paper photography. It outlines the missed opportunity to pivot to digital technology when Phil Samper, a digital photography enthusiast, was overlooked for the CEO position in favor of K.R. Whitmore, who was committed to Kodak's core film business. The summary also covers Kodak's late realization of the need to adopt digital technology and its eventual exit from the traditional film camera market, leading to bankruptcy in 2012. The paragraph concludes with Kodak's current state, having shifted focus from photography and venturing into new areas such as vaccine manufacturing.

Keywords

💡Kodak

Kodak was a pioneering company in the camera and photographic industry, known for its dominance in the market during the 20th century. The company's downfall, which is the central theme of the video, is attributed to its inability to adapt to the digital revolution in photography. The script mentions Kodak's innovative past, its market share, and its eventual bankruptcy in 2012.

💡Photography Market

The photography market refers to the industry involving the production and sale of cameras, photographic equipment, and related services. In the script, it is highlighted that Kodak once dominated this market globally, but its failure to embrace digital technology led to its decline.

💡Bankruptcy

Bankruptcy is a legal status for a person or company that is unable to repay its outstanding debts. The script discusses Kodak's bankruptcy in 2012, which symbolizes the company's failure to adapt and survive in a changing market.

💡Razor and Blade Model

The razor and blade model is a business strategy where a company sells a product at a low cost to create a dependency on consumable components, which are then sold at a higher profit margin. Kodak used this model by selling cameras cheaply and profiting from the sale of film and paper for photo development, as described in the script.

💡Digital Cameras

Digital cameras are devices that capture photographs electronically, storing them in digital format rather than on film. The script explains that the advent of digital cameras was a disruptive technology that Kodak initially ignored, leading to its downfall.

💡Steve Sasson

Steve Sasson was an engineer at Kodak who invented the first digital camera. The script mentions his invention and the company's decision to suppress it, which later contributed to Kodak's failure to lead in the digital age.

💡Fujifilm

Fujifilm is a Japanese imaging and photography company that embraced digital technology and became a competitor to Kodak. The script contrasts Kodak's reluctance to adapt with Fujifilm's proactive adoption of digital camera technology.

💡Sony

Sony is a multinational conglomerate known for its electronics and entertainment divisions. The script refers to Sony's development of the first digital camera prototype, the Mavica, as part of the industry's shift towards digital photography.

💡Vince Baraba

Vince Baraba was the CEO of Kodak who initiated research into digital camera technologies. The script describes his efforts to understand the potential of digital cameras and the slow response of Kodak to this emerging market.

💡Sterling Drugs

Sterling Drugs was a company that Kodak invested in, hoping to leverage its chemical business for photo paper manufacturing. The script mentions this as a bad investment that did not contribute to Kodak's core business and was eventually sold at a loss.

💡Phil Samper

Phil Samper was a candidate for the CEO position at Kodak who was known for his enthusiasm for digital photography. The script discusses how Kodak's board of directors chose a traditional mindset over Samper's forward-thinking, which was a critical decision that contributed to Kodak's decline.

💡Covid Vaccine

The script ends by mentioning that Kodak is currently involved in manufacturing the Covid vaccine, indicating a significant shift in the company's focus away from photography. This shows how Kodak has reinvented itself in a completely different industry after its exit from the photography market.

Highlights

Kodak was once the dominant name in the camera industry, with a global market share of nearly 80% by 1968.

Kodak's business model was based on the 'razor and blades' strategy, selling cameras cheaply and making profits on film and paper.

The 'Kodak Moments' marketing campaign created an emotional connection with consumers and significantly boosted sales.

Kodak's first digital camera was invented by an engineer within the company, Steve Sasson, but was initially suppressed by high officials.

High officials feared the digital camera would cannibalize Kodak's film and paper profits, leading to a reluctance to embrace the technology.

Other companies like Fujifilm, Sony, and Canon recognized the potential of digital cameras and invested heavily in the technology.

Kodak's research in 1981 revealed that digital cameras would replace traditional film, but the company failed to act on this insight.

Kodak's overconfidence in its traditional business and reluctance to change led to a missed opportunity to transition to digital technology.

Kodak made a bad investment in Sterling Drugs, which had little relevance to its core business and resulted in a significant loss.

The appointment of K.R. Whitmore as CEO in 1989, who favored traditional film over digital, was a critical mistake for Kodak.

By the early 2000s, Kodak realized the need to adopt digital technology but found itself far behind competitors like Fujifilm, Sony, and Nikon.

Kodak officially ceased production of traditional film cameras in 2004 and shifted focus to digital cameras.

By 2009, Kodak had lost its leading position in the global camera market, with Canon taking the lead and Kodak falling behind.

Kodak filed for bankruptcy in 2012, forcing the company to exit the camera business.

Despite its downfall, Kodak still exists in a much-reduced capacity and has shifted focus from photography to other industries.

Kodak's story serves as a cautionary tale for entrepreneurs about the dangers of over-optimism and resistance to change.

Recent reports suggest Kodak is now working on manufacturing the COVID-19 vaccine, indicating a significant shift in the company's direction.

Transcripts

[Music]

kodak was once a big name in the camera

industry

dominating the photography market all

over the world

if you ever find an old photo of the

1970s

chances are that it was clicked with a

kodak camera on a film and paper

which was manufactured by kodak also

despite being the one

and only favorite of the photographic

industry around the world

this giant company got bankrupt in 2012.

so what went so wrong with kodak why did

the world's leading imaging company

fell this is the very topic we're going

to discuss today

so let's start the tale of kodak that

doesn't have a happy ending

[Music]

kodak was established by george eastman

and henry a strong

in 1892 for most of the 20th century

kodak was the world's leading

manufacturer of the photographic film

and was considered to be the world's

undisputed leader in the photographic

industry

by 1968 kodak had almost 80 percent of

the global photography market share

in its pocket the company had a solid

strategy for making profits

called the razer run blades this story

implies

that you sell the razor at a very low

price and after that

when consumers need blades to use the

razor you sell the blades at a higher

price

and make a profit with that strategy

kodak used to sell its cameras at a very

low price

and sell the paper filled and other

materials

for printing the photo at a higher price

using this business model

kodak was able to generate tremendous

revenue and became a huge success

kodak also launched a marketing campaign

called kodak moments

which referred to an unforgettable

moment of a person's life

with this expression kodak was able to

create an emotional attachment with its

consumers

this campaign was a huge success and

significantly increased sales of the

[Music]

company

everything was going well until the

arrival of new technology

more specifically the digital cameras

you might be surprised to know

that the first digital camera was

invented by a person named steve sayson

who was an electrical engineer at kodak

what's more astonishing is the response

of the high officials

when steve approached them with his

invention

they suggested to steve that he should

keep it to himself

and not tell anyone about it and those

high officials at kodak

had their reasons to say so because of

the razor and blade

kodak was making most of its profits

from films and paper used in photography

a digital camera would ultimately make

the film and paper unnecessary

thus ignoring the digital camera

technology to keep the current

profitability intact

they went on risking the entire future

of the company

that's how you shoot yourself in the

foot and that

was the first business blunder for kodak

though kodak let the idea of the digital

camera pass through its hands

fujifilm a renowned japanese imaging

company

adopted the technology and implemented

it on a large scale

realizing the potential of what digital

cameras are capable of

other camera manufacturers like sony

canon and others also followed the same

path

and started investing in digital camera

technology

[Music]

in 1981 sony came up with its first

digital camera prototype

called mavica after that kodak became a

little concerned about the technological

disruption

caused by digital cameras vince baraba

kodak ceo at the time carried out

comprehensive research to find out the

core technologies

of digital cameras and the likelihood of

their adoption

the research concluded with two main

insights

one the digital camera is going to

replace traditional film and paper

photography

two the adoption of digital cameras

would take some time

roughly about 10 years at that moment

kodak had roughly 10 years to make a

transition from traditional photography

to digital camera business however kodak

put little effort

into digital technology rather it

invested itself more in verbals paths

and

arguments with other competitors to

establish the thought that film and

paper photography

is better than digital photography and

consumers like the feel of touching a

photograph

it also had a firm belief that at least

consumers of usa

won't favor any japanese company like

fujifilm or sony over kodak

kodak took pride in its traditional

business and its overconfidence

prevented them from seeing the future

on the other hand fujifilm and other big

companies were heavily invested in

researching more

on digital photography and establishing

themselves in the market

kodak also made some bad investments

during those years

in 1988 kodak invested about 5.1 billion

dollars in sterling drugs

in a hope that the chemical business

would help them in manufacturing photo

paper

but later on kodak realized that the

drugs that sterling was dealing with

had little use in photography ultimately

kodak had to sell it out

with half the purchase price so instead

of investing money on bringing on new

technology into the company

kodak wasted its time and money on

acquiring a necessary small companies

and establishing their blind optimism

about film and paper photography

but still kodak had a chance to get back

on the right track

in 1989. when the board of directors was

choosing the next ceo of the company

they had two options phil samper who was

a digital photography enthusiast

and k.r whitmore who was part of a

traditional mindset

and the board recruited whitmore mr

whitmore confirmed

that he would make sure kodak stayed

closer to its core business in film

and photography chemicals it was the

last nail to the coffin for kodak

after that the decline of kodak became

inevitable

but at the beginning of 2000 kodak

finally understood

that it had to stop what it was doing

and adopt new technology

but it was too late by then other big

giants like fujifilm

sony nikon were already in the market

with their exceptional popularity among

the consumers

so kodak was no longer the king of the

global photography market

in 2004 kodak officially stopped

producing a traditional film cameras

and put more focus on digital camera in

2005

the global camera market share was still

the highest for kodak

but it was so close to losing its

leading position

by 2009 the global camera market share

was led by canon and kodak was way

behind

sony nikon samsung and others

in 2012 kodak faced bankruptcy

which ultimately forced them to get out

of the camera business

but kodak didn't vanish totally the

company still exists with much smaller

capacity

and shifted its focus from photography

recently it has been reported

that kodak is working on manufacturing

the covet vaccine

so that was all about the downfall of

kodak kodak would be a name to remember

for the improvement and discoveries it

brought to the camera and imaging

industry

yet its over optimism on its core

business and reluctance to change with

time

will also be a lesson for every

entrepreneur in the camera market

hope you liked the video and if you have

learned anything new or want to share

your thoughts

regarding this video let us know in the

comments section