And so after weeks of speculation, Kodak has finally filed for bankruptcy protection. The company that built the first digital camera in 1975 has been battered to death by digital technology, and more particularly smart phones that double as cameras. It's a particularly significant event because Kodak, founded in 1880, was the Google of its day with its ground-breaking technology and marketing.
Back in September last year, Kodak released a lengthy statement hosing down the rumors that it was about to go bust. "Kodak is committed to meeting all of its obligations and has no intention of filing for bankruptcy. The company also continues to actively pursue its previously announced strategy to monetize its digital imaging patent portfolio. Kodak remains focused on meeting its commitments to customers and suppliers, and on delivering on its strategy to become a profitable, sustainable digital company."
But then The Economist says Kodak was destroyed by its culture. It compares Kodak to its rival Fujifilm which, like Kodak, saw the digital revolution coming and, unlike Kodak, did something about it. While Kodak is now finished, Fujifilm has turned itself into a company worth a whopping $12.6 billion. "Fujifilm, too, saw omens of digital doom as early as the 1980s. It developed a three-pronged strategy: to squeeze as much money out of the film business as possible, to prepare for the switch to digital and to develop new business lines. Both firms realised that digital photography itself would not be very profitable. "Wise businesspeople concluded that it was best not to hurry to switch from making 70 cents on the dollar on film to maybe five cents at most in digital," says Mr Matteson. But both firms had to adapt; Kodak was slower. A culture of complacency. Its culture did not help. Despite its strengths-hefty investment in research, a rigorous approach to manufacturing and good relations with its local community-Kodak had become a complacent monopolist. Fujifilm exposed this weakness by bagging the sponsorship of the 1984 Olympics in Los Angeles while Kodak dithered. The publicity helped Fujifilm's far cheaper film invade Kodak's home market. Another reason why Kodak was slow to change was that its executives "suffered from a mentality of perfect products, rather than the high-tech mindset of make it, launch it, fix it," says Rosabeth Moss Kanter of Harvard Business School, who has advised the firm. Working in a one-company town did not help, either. Kodak's bosses in Rochester seldom heard much criticism of the firm, she says. Even when Kodak decided to diversify, it took years to make its first acquisition. It created a widely admired venture-capital arm, but never made big enough bets to create breakthroughs, says Ms Kanter."
In other words, Fujifilm made the transition because it was able to diversify. Kodak however couldn't move and was stuck, frozen like a rabbit in the middle of the road awaiting the headlights.
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