Mistakes Made On The Road To Innovation
BusinessWeek has a fairly comprehensive article out on Kodak’s attempt to convert itself from a sleepy old film company to a digital media powerhouse. As many industries have been challenged by emerging digital technology (newspaper business, music industry, TV industry, etc.), Kodak has faced some of the largest challenges of all.
Unfortunately for Kodak, even as they have excelled in consumer grade point and shoot cameras, they have found that the profit margins for digital cameras are slim and certainly no replacement for their film business of yesterday.
From the article:
“Kodak’s Perez dreams of replicating Apple’s success. ‘In two to three years, this will be seen as one of the most successful transformations in the history of our country,’ he predicts. Maybe. Wall Street doesn’t share his optimism. Kodak’s stock is trading at about 26 per share, down from a high of 95 in 1997. Kodak has been in the red for eight consecutive quarters, losing a total of $2 billion. It hopes its new strategy will get it into the black by yearend 2007.
Many of Kodak’s problems can be traced to the successes of its past. Wherever Perez turns in Rochester, N.Y., he is haunted by the specter of George Eastman, one of America’s greatest innovators. In spite of the fact that Eastman died in 1932, his mark is still huge on the company he founded in 1880. Decades after his death, it remains difficult to change Kodak’s long-established ways. One of them is a hierarchical culture that believes in the omnipotence of leadership. It’s so powerful a habit that when Perez came to Kodak from HP in 2003 as chief operating officer, he couldn’t get people to openly disagree with him. ‘If I said it was raining, nobody would argue with me, even if it was sunny outside,’ he laments.”