Aug 20, 2013

Kodak Bankruptcy

Founded by George Eastman in 1880, Eastman Kodak Co. popularized photography in the 20th century. One of the great American brands is now fighting for it's life after filing for bankruptcy protection in U.S. Federal Court.

How does an iconic brand end up on the brink of extinction?
Just 12 years ago when I was studying finance at Miami University Kodak was one of the most lucrative jobs you could get out of college. The Rochester, New York based company only hired the brightest students and if you were one of the lucky few you could expect to make $80,000 after graduation. It's shocking and sad to see such an iconic brand fall so far from grace. So what happened?

Technology happened.

It's a cliche but this is just another example of an old company that was unable to adapt to change. The obvious culprit is the rapid advancements made in digital photography. Digital photography came on fast and made film photography obsolete. Digital cameras and then smart phones took over and made high quality photography easier and cheaper for the masses. You no longer needed what Kodak had to offer.

But the story is deeper than that.

As I mentioned previously Kodak was a company full of brilliant minds. They had engineers and analysts that rivaled those at Microsoft, Google and Goldman Sachs. What Kodak lacked was leadership. I know it's another cliche but when technology is introduced to the world a company needs to either adapt or die.

In Kodak's case they had the brand, infrastructure, cash and talent to make a transition. The reason the company is now hanging in the balance is because the leaders of the company either weren't willing or able to adapt to changes in digital photography, imaging and storage. If Kodak had exceptional leadership they could have used their vast resources and assets to reposition the brand for the next 100 years.

Kodak certainly isn't the first company to succumb to the forces of technology and competition, and it won't be the last. But it's yet another case study for young business leaders, small business owners and entrepreneurs alike. Don't resist change... embrace it and use it to your advantage.

Conclusion - Technology has been changing the competitive landscape for centuries. The best horse-and-buggy cart in the world was obsolete when Henry Ford introduced the Model T. We're always going to see companies come and go due to innovation. But the companies that continue to adapt to change and innovate from within can endure forever (e.g. IBM).