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The Decline and Fall of Kodak February 9, 2012

Posted by Peter Varhol in Strategy, Technology and Culture.

Circa 1980, an old high school friend of mine had just graduated from Penn State magna cum laude with a BS in Management.  He got a job at Kodak at what was at the time a very attractive entry level salary (at least a third more than my salary as an Air Force lieutenant).  I ran into him two years later.  He told me that since he had started, the entire focus of the company was dedicated to winning a legal battle with Polaroid surrounding instant photography.

His salary had grown by several thousand dollars more, and he was pursuing an MBA at Rochester Institute of Technology that was being fully funded by Kodak.  He often skipped out by mid-afternoon, leaving an array of papers on his desk to fool others into believe he had just stepped away from his desk and would be back any minute.

Having come from a working class background, I naively believed that his experience was the essence of corporate life.  Perhaps it was, there and then, and perhaps it was that type of culture that ultimately put the company on its deathbed.  Kodak exited film manufacturing years ago, and now in bankruptcy has announced it is also exiting the digital camera business.

Kodak is yet another cautionary tale of how a once-great company simply has too much invested in its existing business to be able to dramatically change that business.  Print photography defined Kodak, and it will stand on that legacy, even today.

By all accounts most leadership at Kodak over the years were fully cognizant of the technology changes that would eventually render its flagship business obsolete, but still could not change its direction.

Kodak did do at least one thing right, innovating and applying for patents, and putting together a patent portfolio that ended up as the basis for a lot of digital imaging these days.  But patent portfolios are almost never offensive weapons for tech companies; instead, they act as an effective defense against other attacks.  There simply isn’t enough firepower in its patent portfolio to keep Kodak a going entity.  If there’s any value, someone will snap it up; if not, like Polaroid, only its name will survive.



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