Kodak and the Digital Revolution: Case Analysis
Since the early 1880’s, Kodak had proven themselves to be great innovators and had worked on building their brand on a domestic and international front. They invested heavily in marketing to establish their image and realized early on that their profits would come from consumables rather than hardware. They sold their equipment at low prices in order to fuel their highly profitable film sales. This use of a razor-blade strategy, coupled with strong relationships with retailers positioned Kodak as an industry leader. Additionally, their heavy investment in R&D allowed Kodak to grow organically, proving fruitful with the advent of color film. Thus, Kodak’s expertise in color film
When George Fisher replaced Whitmore as Kodak CEO in 1993, he attempted to implement a new strategy that focused the company on the entire imaging process and not just printing images onto film. This was a shift from Kodak’s original strategy of selling inexpensive cameras and profiting on the picture film. Fisher wanted to push Kodak into “the five links of the imaging chain: image capture, processing, storage, output, and delivery of images for people and machines everywhere.”2 Fisher’s attempt to transition Kodak into a technology leader in the digital camera industry failed as competition in this market was intense. Even though Fisher’s Kodak invested heavily into research and development of digital imaging, the company lacked a common goal to focus on when delving into new technologies outside of film. Furthermore, Fisher was unable to establish the new focus of Kodak with middle managers who actually ran the business. In 1997, 60% of the company’s loses were from products developed following Fisher’s new hardware based strategy. A combination of an overly broad product focus and poor communication of the strategy to middle management prevented Fisher from successfully implementing his new strategy for Kodak. Fisher reversed his strategic thinking for Kodak and then attempted to move towards a “network and consumables”-based business model.
Our advice to the current CEO of Kodak is to create Kodak.com, a free