January 20, 2012 6:02 pm

Kodak’s inability to evolve led to its demise

Eastman Kodak’s decision to declare bankruptcy earlier this week is destined to launch a thousand management case studies.

The company that brought photography to a mass market hardly looked like a laggard in the early days of the digital revolution. It invented the digital camera and first distributed pictures on CD-ROM disks two decades ago. If bits and bytes were destined to replace film and photofinishing, the cash cows of its business, then Kodak seemed to know what was needed.

That it ultimately failed to make the transition is testament to the difficulties that industry leaders face in launching into new markets, however aware they may be of the mortal dangers they face.

Kodak has built a handful of inkjet printing and other digital operations that it hoped would provide the core of a viable business – but that has not been enough to make up for the remorseless erosion of its overall revenues, which have fallen from an annual $16bn to some $6bn in the past 20 years.

The cause of its failure, according to the parade of management experts who lined up this week to deliver their verdict: recent generations of Kodak manager were too wedded to the profits from their existing businesses to take the radical steps that would have been needed to reposition their company – and its world-leading brand – as a digital leader.

With the breathing-room provided by a Chapter 11 bankruptcy filing, Kodak hopes it will get the chance to restructure and sell off assets to reinvest in its more promising businesses. Whether its creditors will allow it to plough more cash back into its pursuit of a digital future, however, is another matter.

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