Media Relations Specialist
Media Alert: Jan. 19, 2012
UMD Business Experts Available to Comment on Kodak and
its Bankruptcy Filing
COLLEGE PARK, Md. - With the Eastman Kodak Company filing for bankruptcy, the
Robert H. Smith School of Business at the University of Maryland offers experts
for related commentary. The Smith School has an in-house facility for live or taped
interviews via fiber-optic line for television or multimedia content.
Kodak: Too Little, Too Late
Hank Lucas, the Robert H. Smith Professor of Information systems, has written the forthcoming book,
Searching for Survival: Lessons from Disruptive Technologies (Praeger,
June 2012). It includes a chapter (summarized below), "Kodak Misses its Moment."
Contact him at 301-405-0100 or email@example.com.
Kodak is a tragic example of a company that had everything going for it, but
was unable to cope when innovative digital technologies came along. Kodak’s demise
was brought about not by a single event, but as with many disasters, a series of
conditions and events brought the company down. These include:
Kodak’s own invention of the digital camera in 1975.
The firm’s inability to understand that others flooding the market with digital
cameras, combined with the Internet, changed the process by which people captured
and shared images.
The company’s rigid bureaucratic structure prevented it from responding quickly
Senior management was unable to convince middle managers to move away from their
analog, chemical and film mindset.
Management was distracted by foreign competition (e.g. Fuji) in film and a suit
by Polaroid on instant photography.
Kodak exhibited a certain amount of arrogance thinking that it could control
the pace at which consumers converted from film to digital photography.
The company wanted to protect its cash cow film business as long as possible.
Over the years Kodak tried to diversify into unrelated fields and then pulled
One hundred-plus years of success and a market share that at times exceeded 90
These factors led to skepticism about digital photography and denial of the threat
to Kodak from digital technologies. Kodak appears to have never understood the Internet
and digital technologies.
Current CEO, Antonio Perez, came from Hewlett Packard’s printer division, and
picked up on Kodak’s research in this area to turn the company into a manufacturer
of consumer and commercial printers while living off of its patent inventory. Unfortunately,
this strategy has taken too long to work as Kodak has less than a three-percent
market share of printers and is rapidly running out of cash. It is trying to sell
its patent trove, which is a little like cutting off your arm as one analyst put
Now, Kodak has joined a growing list of companies like Blockbuster and Borders.
For a these firms, the new business models based on technological innovations were
well publicized, but the incumbents did not respond until too late, and then they
were unable even to copy their competitors, much less come up with something more
innovative themselves. Kodak’s inability to respond to a digital world has been
a disaster for its employees. In the 1980s the company employed 145,000 people around
the world. Today that number is around 19,000, and with a bankruptcy filing imminent,
their jobs are in jeopardy, as well.
What’s a company to do? For Kodak, it may be all over at this point. In bankruptcy,
Kodak can sell its patent portfolio, find a buyer for its printer business and liquidate.
Hopefully Kodak’s story will be a lesson for other companies confronted by technological
innovations: You cannot wait, and your response must be bold.
Kodak Should Have Folded Earlier
Brent Goldfarb, associate professor of entrepreneurship and management, recently
co-authored "Optimal Inertia: When Organizations Should Fail" recently in the journal
Ecology and Strategy. He says Kodak is one such company that should have "failed,"
or closed down in an orderly fashion, instead of turning to bankruptcy.
at 301-405-9672 or firstname.lastname@example.org.
Goldfarb's position, detailed in
this Smith YouTube Channel video,
is summarized here:
Kodak was faced with a particularly difficult problem. The production of film
is a very sensitive process, and for this reason Kodak was a rigid organization
- small mistakes could have large consequences. This made the transition to digital
costly. Ironically, Kodak was reasonably successful in their transition and quickly
achieved a market leading position. The problem was that market leadership in a
low-margin business is not a great prize. Kodak was not a victim of poor management,
rather, the poor circumstance of being on the wrong side of creative destruction;
its fate largely unavoidable.
Instead of trying to pursue the digital photography market, (Kodak) would have
been better off slowly shutting down while profiting as much as possible from the
dying film market. While this is a terrible outcome for Kodak stakeholders, particularly
employees, history did not treat the company kindly anyway. They might have
been better off trying to provide enough resources to the employees being displaced
and to those managing the shrinking enterprise so as to ensure continuity and thereby
extracting as much profit as possible from the market. They could then return what's
left to the shareholders, whose dividends are increased further with the company
not plowing money back into research and development.