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In its heyday, the Eastman Kodak Company was an icon of innovation in photography; a juggernaut in its field. The film giant gave us the "Kodak Moment," which persists as the quintessential photographic experience even though in today's digital camera age "selfies" on smartphones are a major factor.

Supremely confident, making decisions that presumed the past was an appropriate guide to the future, Kodak executives didn't understand that the world was changing dramatically. Creative changes in customers' taste, technologies and global economic circumstance continue to destroy the Kodaks of this world.

Kodak leadership missed a number of innovative opportunities in the past. That is why it has been so difficult to change Kodak's corporate culture from film-based imaging to digital imaging.

In the late 1950s, Kodak owned the paper copy business using a photo sensitive paper and mono-bath solution to create an extra copy of a document. So, when Chester Carlson, a physicist and patent attorney, came calling with the xerography technology, Kodak leadership turned him down....primarily because to build such a copier would be very expensive, require continuous service support and Kodak management had seldom heard of a customer who needed more than one copy at a time!

Carlson then went over to the Haloid Company, also in Rochester NY, with his new technology where he was welcomed. Haloid then formed a joint venture with Battelle Development Corporation (BDC) in Columbus, OH, for 55% of the patient rights, to invest and develop the xerography technology resulting in three technical improvements.

In 1962, the Xerox Corporation (the new name for the Haloid Company with Battelle owning $350 million of Xerox stock) introduced the Xerox 914, a revolutionary new copier that cost $15,000 each. Prior to the product introduction, Joe Wilson, Haloid Company president, had come up with an innovative marketing approach for this new expensive copier that led to the success of xerography: Lease the 914 copier for only $100 per month and charge the customer an additional $.01 for each copy made on the machine. The result for Kodak was its paper copier business quickly vanished.

Eastman Kodak was a leader, until it wasn't. It was rock-solid and the dominant company in the photography industry until creative destruction turned granite to sand. With little or no competition, during which nearly every snapshot that mattered was "a Kodak moment," the introduction of the Instamatic Camera increased film consumption by four-times. Kodak was totally focused on its film business.

When Polaroid came onto the scene, Kodak improved the technology of its cameras, projectors, film and processing equipment. And it priced aggressively to turn Polaroid into a luxury item, leaving Kodak as the supplier of film to Polaroid while continuing to be the primary source for photographs. After all, cameras were like razors, and Kodak was selling all the blades (the film and the film processing).

When focus causes you to wear blinders, you are far more likely to be blindsided, and that's exactly what happened to Kodak -over and over again.

Given Kodak's reliance on film, the company's fall as a result of the turn to filmless photography was predictable. If that were the whole picture, the analysis would lead to a company failing to reinvent itself when it should have.

In 1975, Steve Sasson, a Kodak engineer, created a digital camera. In such devices, images are stored on a silicon chip. Film is unnecessary. Sasson not only created the digital camera, he also applied for and later received a patent for the underlying technology. That was the genesis of creative destruction of film and the cameras that used it.

That patent could have been the basis for a Kodak reinvention! Is it possible that none of Kodak's executives understood that they had entered the doorway to a new industry with his invention? Were they blind to its potential or fearful that digital photography would adversely affect their precious film business? After all, film did contribute most of Kodak's revenue and profit.

That Kodak patented and then hid the digital camera is fascinating and extraordinary.

It's difficult to recall where such an approach has succeeded. It would be better to move profit from one pocket to another before someone picks your pocket. The result has been devastating, leaving Kodak as a non-player in a new industry it could have owned.

Source: Lloyd Shefsky: “Invent, Reinvent, Thrive: The Keys to Success for Any Start-Up, Entrepreneur, or Family Business”

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