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“Mother Kodak”

January 6, 2012

 I’m a “Kodak kid” – my dad worked at Kodak in Rochester NY for 23 years, I cut my teeth there as an electrical engineering co-op starting in my senior year of highschool. I was offered a full time job there upon graduation with my Bachelor of Science, paying ~$5,000 more than any other job  I was offered as a new college grad in the early 1990’s

I had enough presence of mind to turn them down, and start moving westward. I hadn’t really root caused WHY the computer/electronics industry was on the downturn. I pragmatically recognized it’s easier to move as a single woman, than to uproot the family I hoped to have in order to follow job prospects years later

as stories swirl that [Kodak] will soon declare bankruptcy or be delisted by the New York Stock Exchange, …How could the mighty fall so far? It’s not as if Kodak was blind to the coming of digital cameras — its own engineers are credited with making the first prototype back in 1975….

“The digital business was not going to be nearly as profitable as the film business, in any respect,” he said. “The film and chemical business was one of the all-time great business models. A lot of the change was going to come whether Kodak aggressively embraced digital business or not.”

Progressives and geese: The pensions  & benefits were too generous to continue indefinitely, and the perpetually progressive/liberal voting base in that area took the same approach the California government is taking today. Strangle the goose to lay more eggs until the goose evades your grasp (or dies)

The wrong knowledge base in the power base: Success generates a power base from specific domains & areas of expertise. Most of the top technically oriented executives in place during critical decision points were by background Chemical engineers. My dad – who won’t be able to resist commenting here – saw this as he worked on a digital color copier using lasers/optics that could print at 32mm quality (in 1984, years before Canon). The most powerful decision makers didn’t have the background to know what they were looking at, other than a threat to the businesses where they cut their teeth.

Geographic isolation: I suspect this is one reason Silicon Valley suffers less from creative destruction than the north east and Detroit/Michigan. Play a name association game with cities in the North east in the 1980’s – it looks like the following

  1. Poukeepsie NY – IBM
  2. Hudson MA: Digital Equipment
  3. Ottowa CA: Nortel
  4. Rochester NY: Kodak
  5. Webster NY: Xerox

Not only were the cities and towns “one company shops” plus service businesses (retail, restaurants, etc),  small to medium sized cities in the North east don’t have a culture of mobility outside set boundaries. Example: A friend once admitted she struggled to support her husband seeking  jobs on the west coast (after 18 months of unemployment in Austin TX). She always wanted to “go back east”

Lastly: Timing is everything – No one gets promoted for undermining today’s business before it’s absolutely necessary.  

Comments and observations welcome

UPDATED: with link to California gov’t story

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2 Comments leave one →
  1. Ellend permalink
    January 9, 2012 12:48 pm

    Sadly, Kodak seems to be a follower rather than a leader these days. Kodak still seems to be trying to capitalize on printing services. Seems like most people are sharing through on-line albums, Facebook or other digital means, rather than printing out pictures like they used to.

    Regarding your “timing is everything” comment. The Osborne effect was named after Osborne computer who pre-announced a new product, further tanking sales of an existing one. They probably would have gone bankrupt in any case since their products were no longer competitive, but the premature product announcement was considered a big contributor at the time.

  2. January 9, 2012 9:22 am

    Having worked with Kodak in the ’90’s on digital imaging, I can say that they just didn’t get why people would want to play with a “toy” while cameras were so much better. Their solution was to sell a new camera format (which I bought, and which was actually okay in concept) and supply you CDs if you really wanted them. But then the interface for the consumer was based on what they wanted professionals to use.

    This is a classic case of a company just plain missing a market, and then not finding a way to recover once they realized they were wrong.

    Case in point: Kodak, like HP, has/had a significant revenue stream in ink, chemicals, and paper. But they didn’t find a way to capitalize on consumer imaging until the last couple years. Moving that slowly just doesn’t work in the digital age. Watch HP push harder on printing and ink today while the world moves to Facebook…

    It’s sad to see Kodak at this low point. It’s a company that revolutionized the way people share memories so many times. Have they really lost all that vision?

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