How did kodak end up where it is?

[wblynch]

...Since you don't like what the words really mean, but you have a "feeling", then you want us to change the the whole damned English language to fit your "feeling". It's exactly this kind of mutton headed thinking that got us into this predicament....

Hey Dude, I said at the beginning it was my opinion.

It's not thinking that got us here. It's an orchestrated destruction, based on lies and manipulation that's been occurring since 1981.

I should add that personally my career and finances have been great. I have survived the turmoil based on skill, talent and awareness of my field and the ability to adapt.

I find myself in the top 4% of earners in America.

That does not mean I can't understand or care about the struggles of others.

 

[BrianShaw]

I wonder how much business Kodak has lost to people blabbering on the Internet instead of taking pictures......I bet it is a ton.

That is a business loss that is certainly not unique to Kodak!

 

[pgtips]

I'd just like to say thanks to everyone who's responded to my questions about the decline of Kodak, obviously this site isn't the only source I've used for my research (I've spent a lot of time trawling through the various retrospective reports about the company written since January as well as interviewing the owner of my local photography shop amongst other things) but APUG came to mind (even though I admit it had been a long time since I logged on ) as a good place to get lot of expertise and opinions all at once, and it hasn't let me down. Thanks!
PS; This has reminded me just what a usefull community APUG is, I'll try to log on more often from now on

 

[SilverGlow]

In short, Kodak got into this mess because it made decisions from it's "heart" instead of it's "head".

It lost objectivity, and succumbed to fantasy.

It ignored market forces.

It lost it's edge with digital technology.

It tried to be all things analoge and digital.

I would guess that there was too much Group-Think there and not enough leadership from the top.

Perhaps one can add to the list arrogance, paralysis from analysis too.

 

[RattyMouse]

In short, Kodak got into this mess because it made decisions from it's "heart" instead of it's "head".

It lost objectivity, and succumbed to fantasy.

It ignored market forces.

It lost it's edge with digital technology.

It tried to be all things analoge and digital.

I would guess that there was too much Group-Think there and not enough leadership from the top.

Perhaps one can add to the list arrogance, paralysis from analysis too.

I'm not sure any of this is true at all. Kodak grew to an enormous sized company in the 80's. A company of that size needs profits, lots and lots of profits. Profits to sustain the beast. Is there any evidence at all that a digital company makes the profits that are needed to keep Kodak alive?

Out of ALL the camera companies, only Nikon is a stand alone camera company. Every last other one has far more revenue from other streams of products. I seriously doubt Kodak could have sustained itself with enough profit even if their cameras were successful. The entire paradigm of Kodak's existence went obsolete. That is what Kodak had to fight against.

Look at Fujifilm. They are a survivor. How did they survive? They got into totally different businesses. Medical devices, flat panel coatings, pharmaceuticals, personal care products, office machines, industrial scanners, and information management. Fujifilm only survived by shrinking their film business, which is now at 1% of its former size.

 

[Photo Engineer]

There are only about 3 or 4 members of APUG who were at Kodak during this era. To state what was going on implies that you were there. You just don't know any more than any of us really do.

PE

 

[Prof_Pixel]

Look at Fujifilm. They are a survivor. How did they survive? They got into totally different businesses. Medical devices, flat panel coatings, pharmaceuticals, personal care products, office machines, industrial scanners, and information management. Fujifilm only survived by shrinking their film business, which is now at 1% of its former size.

Kodak was a player in most of those areas you mentioned, but sold those business units off over the last 25 years.

 

[RattyMouse]

Kodak was a player in most of those areas you mentioned, but sold those business units off over the last 25 years.

Very true.

 

[kb3lms]

I was one of those 3 or 4 at Kodak in the 80's. It was a great place to work and they were very, very good to me. Yes, the top level management was completely clueless (starting about 3 levels up from where I was as an engineer in the corporate hierarchy) but whatever Kodak may or may not be, I can't bitch about them as an employer at that time. Not all at Kodak was stupid, not at all, and I worked with a lot of first class people who damn well knew what they were doing.

People should really stick with what you really know. Don't shoot from the hip and don't guess at what you don't know. End of lecture.

Look at Fujifilm. They are a survivor. How did they survive? They got into totally different businesses. Medical devices, flat panel coatings, pharmaceuticals, personal care products, office machines, industrial scanners, and information management. Fujifilm only survived by shrinking their film business, which is now at 1% of its former size.

Kodak was, and in some cases may still be, in each and every one of these businesses with outstanding products. They couldn't market them for SH%$ but that goes to the issues at 343 State Street. In many cases they bailed out before the market actually took off. An example would be 8mm video. EK practically invented it and were in and out of the market before Sony and the other players that really capitalized on it showed up. Pharmaceuticals were another case of not waiting for the plan to come together. Of course, the Sterling/Winthrop mess was Whitmore's disastrous legacy. (Since I see that he has passed in 2004 I will keep my personal comments about the man out of my ramble.)

In some cases EK's products were just before their time. In most cases it was seriously screwed up top-level management that couldn't move anything if it wasn't film.

So I suppose I still have some loyalty to my long ago employer.

 

[kb3lms]

If you really want a little insight at some of the things that were happening and some of the thinking in the late 80's and early 90's at Kodak and what helped to drive them to where they are today, read this 1989 article from The New York Times. I remember this announcement like it was yesterday. It concerns when the top-level management "holy triumverate" of Whitmore, Samper and Chandler were ousted by the board of directors and replaced by just Whitmore as CEO, president and grand poobah.

http://www.nytimes.com/1989/12/09/business/click-up-down-and-out-at-kodak.html?pagewanted=2&src=pm

As you can see from the article, Mr. Whitmore was most concerned with reining in all that nasty product development in the name of "core strengths and values" and squeezing everything possible out of Kodak Film. And Wall Street was demanding just that. Chandler and Samper, IMHO and others may not agree, were busy trying to architect future lines of business for the company. They knew the "digital demise" was coming. They weren't completely stupid as individuals. I met Mr. Chandler and asked that very question of him regarding how Kodak was planning to deal with the obvious development of digital imaging. However, the investors would have none of that and their insistence has come back to haunt them today. Where would Kodak be if Whitmore hadn't caved to Wall Street? We'll never know, of course, but what we do know is that all the cost cutting and squeezing every damn dime possible out of those yellow boxes didn't prove a thing in the end.

In my opinion, the moment in time documented in this news article is the notable starting point when everything went wrong for Kodak.

 

[kb3lms]

Sorry if I came off a bit harsh above. This film division selling thing has touched a nerve with me. (Read that posting again about the cathartic thing!) Kodak is being thrown around here in 20/20 hindsight as a big, bumbling, corporate, conglomerate of dolts that had no idea what they were doing and that just isn't always the case. There were/are serious issues at 343 State Street and that is a fact. But there were many, many people outside of KO that poured their heart and soul into making things go right at EK. Most of those people are gone now, either just from EK or in many cases from this Earth, and that should be remembered as well.

Signing off, now.

 

[benjiboy]

It's very easy for people to pontificate and have opinions on subjects that don't have access to the full fact on, if I knew the correct answer to why Kodak finished up in it's current state I would be teaching economics at one of the Worlds top university s,not sitting here worrying how I'm going to pay the coming winters utility bills.

 

[wblynch]

It ended up where it did precisely due to what is taught at the Worlds top universities.

Vampire Economics.

 

[Prof_Pixel]

It was a great place to work and they were very, very good to me. Yes, the top level management was completely clueless (starting about 3 levels up from where I was as an engineer in the corporate hierarchy) but whatever Kodak may or may not be, I can't bitch about them as an employer at that time. Not all at Kodak was stupid, not at all, and I worked with a lot of first class people who damn well knew what they were doing.

It was a great place to work and there were lots of great people!

 

[SilverGlow]

It's very easy for people to pontificate and have opinions on subjects that don't have access to the full fact on, if I knew the correct answer to why Kodak finished up in it's current state I would be teaching economics at one of the Worlds top university s,not sitting here worrying how I'm going to pay the coming winters utility bills.

There is some truth to what you wrote, and who better then PE and other alumni know better?

However, being on the outside looking in, using one's eyes, ears, reading abilities, and looking at Kodak's history, and current demise, one steps back and sees all this as Self-Evident. And apply one's own business experiences, seeing this same type of thing happen many times before, one gets a good feel for what really happened. No, not in details, but surely at a birds eye view.

In other words, one does not necessarily have to be an insider to get a good feel for why Kodak hit the skids.

 

[railwayman3]

There is some truth to what you wrote, and who better then PE and other alumni know better?

However, being on the outside looking in, using one's eyes, ears, reading abilities, and looking at Kodak's history, and current demise, one steps back and sees all this as Self-Evident. And apply one's own business experiences, seeing this same type of thing happen many times before, one gets a good feel for what really happened. No, not in details, but surely at a birds eye view.

In other words, one does not necessarily have to be an insider to get a good feel for why Kodak hit the skids.

My own past experience in business advisory services confirms that exactly. Many very competent business owners and managers are so involved in keeping their business running efficiently day-to-day that they don't step back and review the "bigger picture" of where the business is going in the future, or notice the outside influences and developments which could affect its success.

Sometimes the more busy and profitable a business is, the more difficult it becomes for the owners or managers to have the time or energy to step onto the outside and have a look in!
And their success, often through their own abilities and hard work, can, perhaps understandably, make them reluctant to listen to any outsiders!

 

[SilverGlow]

My own past experience in business advisory services confirms that exactly. Many very competent business owners and managers are so involved in keeping their business running efficiently day-to-day that they don't step back and review the "bigger picture" of where the business is going in the future, or notice the outside influences and developments which could affect its success.

Sometimes the more busy and profitable a business is, the more difficult it becomes for the owners or managers to have the time or energy to step onto the outside and have a look in!
And their success, often through their own abilities and hard work, can, perhaps understandably, make them reluctant to listen to any outsiders!

So true...I saw this same thing happen at Apple Computer in the late 1980's and early '90s. Back then they went from feast to famine, and a few times nearly crashed to a complete end. A company that has many highly talented people is still only as good as it's high-echelon management. So when Apple went from crashing to trending up what changed? They mostly had the same people there, but what changed was the top dog...Sculley kicked out, Jobs back in. Kodak needed a Steve Jobs, and had they had one, they'd be flying high today. I suspect one of the big causes of Kodak's demise was too much group-think, commettee thing, and not enough from a passionate crazy dictator!

 

[benveniste]

If I knew the correct answer to why Kodak finished up in it's current state I would be teaching economics at one of the Worlds top university s,not sitting here worrying how I'm going to pay the coming winters utility bills.

If you knew why and published an accurate prediction, say, in 1995 or 2000, I might almost agree with you. But hindsight is 20/20, and it's a lot easier to see what went wrong rather than what's going to go wrong.

I say "might almost," because Kodak's problems were not fundamentally problems of economics. They were grounded in organizational behavior, communication, psychology, marketing and leadership. I don't claim to be any sort of expert, and I've been surprised by more than one company that was brought back from the brink and disappointed by lots of others. What I will say is that I sold my Kodak holdings in 2005 at just over $30 per share.

 

[Felinik]

Fred, a Kodak Technological Forecasting group (capital letters internally ) decided in the late 80s that digital would not become an important imaging method until about 2020. I disagreed with that and went to CPD management with my opinion only to be rebuffed. Message me for details.

PE

They had no risk management at all at that company??

Still, question is what would've happened if cellphone cameras never had become reality?

I have a strong feeling that a lot of people would've still been shooting their old analog cameras if their cellphones, now smartphones, hadn't had a built in camera. Every time I am at the local photo store here, tons of low-sumers are there to get prints done, from their memorycards, which for them is the same thing as a roll of film (though reusable). And today the cameras in the phones are as good as any Point-And-Shoot-Digital, or as any compact 35mm, cameras, go figure!

I blame Sony and Apple...

hehe!

 

[Photo Engineer]

In the late 90s, I watched EK invest $50M in an update project to an existing internal item during the time that film was beginning to falter. One manager was in favor of doing it, but doing it with less money and another was "directed" to do it at the higher cost regardless. I talked to both of them before I retired and the conversation was revealing.

Among other things, they were using material from a small struggling company, when a huge company supplied the same thing at the same cost. I had long discussions about this in the months before I retired. They went with the small company. About five years after I retired, the small company went out of business and EK had to convert the entire project to product from the larger company. This entailed even greater expense.

The major managers that spurred this either left the company or were promoted within EK.

Now, for those of you outside of the company, I have a question. Did you know of the above? I can cite about a dozen such projects which as an aggregate run up a tab of several hundred million. NONE are known outside of EK at this time. I have given one minor interview to Scott Sheppard (who has been quite ill lately) and Scott and I have discussed an update to this interview.

The point is that EK, like many other companies, had a lot of internal and unknown things going on. Some were good and some fell flat!

PE

 

[Ian Grant]

Sorry if I came off a bit harsh above. This film division selling thing has touched a nerve with me. (Read that posting again about the cathartic thing!) Kodak is being thrown around here in 20/20 hindsight as a big, bumbling, corporate, conglomerate of dolts that had no idea what they were doing and that just isn't always the case. There were/are serious issues at 343 State Street and that is a fact. But there were many, many people outside of KO that poured their heart and soul into making things go right at EK. Most of those people are gone now, either just from EK or in many cases from this Earth, and that should be remembered as well.

Signing off, now.

The problem is that we as film photographers think of Kodak as the film coating division, where as it's the Kodak company as a whole that is in trouble and it's the senior management that let everyone down, customers, shareholders and employees.

There have been hard hitting exposes of the Kodak management's failings by various highly reputable journalists and economists, in any country other than the US the directors would be under serious investigation but instead they draw even more bonuses for driving the company into the ground. That last part just about says it all.

Ian

 

[wblynch]

...I can cite about a dozen such projects which as an aggregate run up a tab of several hundred million...

...The point is that EK, like many other companies, had a lot of internal and unknown things going on. Some were good and some fell flat!

PE

Right on!

I can say from my observations as a consultant who has worked deep inside over 30 major US corporations that MOST managerial decisions are not made in the best interest of the company, but for a myriad of personal/egotistical reasons.

The worst driver is supposed "cost savings". Seldom properly measured or proven. Just put the number you need it to be on a spreadsheet or power point presentation.

Most management gets rewarded for things other than the best interest of the company.

Promotions, bonuses, assignments, prime office space... it goes to the BS'ers and self-promoters who never, ever consider the benefit of the company in their decisions.

 

[Hatchetman]

Most management gets rewarded for things other than the best interest of the company.

Promotions, bonuses, assignments, prime office space... it goes to the BS'ers and self-promoters who never, ever consider the benefit of the company in their decisions.

I agree with this. Basically poor management from the top down. Incentives in publicly traded companies are geared toward short-term stock performance. Kodak had a lot going for it: a lot of cash, a great name, smart people. Yes, their core business was eroding but they had plenty of time (15-20 years?) to adapt. Instead they risked it all on digital printing, an industry already loaded with stiff competition. That has to be one of the dumbest ideas ever. It will be probably be talked about in MBA seminars for the next century!

 

[SilverGlow]

I agree with this. Basically poor management from the top down. Incentives in publicly traded companies are geared toward short-term stock performance. Kodak had a lot going for it: a lot of cash, a great name, smart people. Yes, their core business was eroding but they had plenty of time (15-20 years?) to adapt. Instead they risked it all on digital printing, an industry already loaded with stiff competition. That has to be one of the dumbest ideas ever. It will be probably be talked about in MBA seminars for the next century!

Yup, 15-20 years to adapt. And riddle me this: How did they go from inventing the digital camera, and feeding Canon and Nikon high-end state of the art full frame sensors to where they're at today? Surely one does not have to be an alumni or insider to come up with reasons. Is there any other short answer then this: Upper and perhapd middle management were fat rich idiots?!? I've consulted too, with 100+ companies and the one common denominator I often see is that corporate America is no longer a Meritocracy...it's long past the days when it mattered what skills you have and your productivity rate. Not enough Steve Jobs....too many liberal-socialist types that do too many group-think decisions.

 

[Prof_Pixel]

I had lunch with an old Kodak K Pro marketing type friend today and one of the points we discussed was that Kodak had too many 'order takers' and very few real marketing people.