I do not know of anywhere except China that gets away with a 500% price increase through the Global Financial Crisis and beyond. In our case, air freight adds an additional USD$0.70 per unit. So the argument for local production gets stronger. I would like nothing more than to manufacture locally, but we won’t help anyone by going broke because we cannot compete. Maybe in 5-10 years.

Thank you for your comments, which are very perceptive and are spot on in terms of understanding why Kodak failed. You indicate that the quest for quarterly earnings was one of the factors accounting for Kodak’s downfall. I think that it is useful to learn from Steve Jobs, who said that Apple was never in business to make profits; rather, its purpose was to make beautiful products that customers love, and to create a company that would endure after he died.

It appears that Fisher made a valiant effort to separate the Digital and Applied Imaging division from corporate headquarters, but it clearly was still within the reach of
headquarter’s corporate tentacles. Given your description of the corporate culture, it reinforces the notion that Kodak’s only chance for survival would have been for it to set up a truly separate, independent subsidiary that developed digital technologies and markets.

I have never been to Rochester in the summer. Based on your description, I am adding to my bucket list a trip to Rochester in the summer.

Once again, thank you for taking the time to comment.

Tim

In my humble opinion, the downfall of the company was caused by one thing: fear. This was supported by another problem shared by all public companies: the quest for positive quarterly earnings. Upper management was scared to death of killing the cash cow. The 35mm film “system” was one of THE MOST profitable product lines of all time. The margins were outlandish. The barriers to entry were enormous. Kodak’s technological lead was vast. Yet, with digital technology banging on the doors, they continued pumping billions into marketing old (but still profitable) technologies and doing half-assed “alliances” with HP for inkjet printing. Very few companies (Apple and GE are the only two big ones that come to mind) have been able to successfully transition into entirely new areas of growth. They do this because they are unafraid to “eat their children”. They know that if they don’t do it, the competition will.

Here is another casual observation: the other way this culture of fear manifested itself was in a fear of failure. Risk taking was NOT encouraged; it went against the very fiber of the company. When you combine this with the location of the headquarters, a funny thing happens – nobody wants to rock the boat. Rochester is a beautiful city; for two months of the year (we got 24 inches of snow on Mother’s Day one year). Employees who were transferred in from the field didn’t want to rock the boat, lest the piss off the powers that be and end up getting stuck. People who were from Rochester didn’t want to leave because it was home. They had no great incentive to be innovative or risk takers.

Carl Gustin, Chief Marketing Officer under George Fisher, tried mightily to change this, going so far as to moving Digital and Applied Imaging’s HQ to Atlanta, Georgia. This was met with scorn and derision by most old-timers.

The whole story is very sad. At one time, Kodak was an absolutely wonderful company for which to work. Cradle to grave, they took care of their employees. I am grateful for the knowledge and experience I gained working for them.

Great comment. It is the first time that I have substantially revised a post that I have written, after reading a comment.

I hope that you come back!

This term, one of my students showed me her textbook on her iPad. I couldn’t believe how beautiful the content looked. She told me that it was “was 50% of the cost of printed textbook.” Only a year ago, my advice to students was to buy the printed book as opposed to the e-book, because at the time it was very difficult to navigate the e-book. But the publishers have improved their software, and now the e-textbook is user friendly.

Steve Jobs predicted that the $5 billion publishing industry was ripe for radical transformation, and that eventually content would move from print to the iPad (or tablet). I agree with him. My students are clearly going in that direction. In the future, if I read technical e-books that contain graphs and charts, I will have to follow my students by purchasing the new Ipad.