KODAK FAILURE Preet Singh Sahota, Venkata M. Sana, Younga Ho

KODAK FAILURE Preet Singh Sahota, Venkata M. Sana, Younga Hong, Eloisa Goncalez Rodrigues, Benarji B.Vemulamada Dr. Rashi Gaur April 27th, 2019 FISHBone DIAGRAM OF KODAK Production Line Management

Kodak's failure is a classic example of how technological complacency, poor strategic adaptation, and organizational inertia can lead to the downfall of a once-dominant corporation. The analysis of Kodak’s decline reveals multiple interconnected issues ranging from declining film sales to the inability to transition effectively into the digital era. This paper explores the core causes leading to Kodak's failure, emphasizing the role of internal and external factors through a Fishbone (Ishikawa) diagram approach, and discusses lessons learned for modern organizations navigating disruptive innovation.

Introduction

Eastman Kodak Company, once a giant in the photography industry, experienced a rapid decline in market share and profitability, culminating in bankruptcy filings in 2012. The company's downfall stemmed from a combination of internal complacency, technological evolution, and market changes. While Kodak was a pioneer in photographic film technology, it missed the critical shift toward digital photography, which fundamentally altered the industry landscape. This paper uses the Fishbone diagram methodology to analyze the problem of Kodak's failure, identifying root causes and their effects on the company’s trajectory.

External Factors Contributing to Kodak’s Decline

Technological Disruption

The advent of digital photography fundamentally disrupted the traditional film-based market. Competitors like Sony and Fuji aggressively invested in digital product development, capturing significant market share. Kodak's initial digital camera development was hampered by internal conflicts and strategic hesitation, leading to a loss of momentum. External competition gripped the industry by embracing innovation, whereas Kodak was slow to capitalize on digital technologies.

Changing Consumer Preferences

Consumer behavior shifted dramatically from film to digital imaging. The ease of digital cameras and smartphones made photography more accessible and instant, reducing demand for traditional film products. Kodak's revenue from chemical and film sales plummeted as digital became the standard. Companies neglecting to adapt to the digital lifestyle faced declining profitability and relevance.

Market Dynamics

Globalization and digitization increased competition. New entrants with innovative digital solutions gained dominance, challenging Kodak's market share. Moreover, the declining profitability of traditional film products resulted in shrinking margins and diminished investment capacity for innovation.

Internal Factors and Organizational Challenges

Strategic Complacency and Risk Aversion

Kodak’s leadership was overly reliant on its legacy film business. Despite owning a significant digital patent portfolio, Kodak hesitated to aggressively pursue digital markets fearing cannibalization of its film profits. This strategic shortsightedness delayed digital transformation, allowing competitors to leap ahead.

Technological Inertia and Management Resistance

Internal resistance to change and an organizational culture anchored in traditional manufacturing practices hindered innovation. Kodak’s management was reluctant to phase out the established film business, causing delays in adopting new digital-centric strategies. The failure to foster a culture of agility and risk-taking prevented timely adaptation.

Operational Inefficiencies and Resource Allocation

Imperative investments in R&D and digital infrastructure were insufficient or misaligned. The company's inability to effectively reallocate resources toward digital product development hampered its capacity to compete effectively with more innovative rivals.

Root Causes Identified via Fishbone Diagram

The Fishbone diagram highlights primary causes with their interconnected sub-causes:

  • Technological Transition – delayed digital innovation, patent underutilization
  • Market Shift – consumer preference for digital, mobile technology explosion
  • Organizational Culture – resistance to change, risk aversion
  • Management Decision-Making – short-term focus on film profits, underinvestment in digital
  • Competitive Landscape – new entrants, aggressive digital marketing by competitors
  • Supply Chain and Operations – inefficiencies, misallocation of resources

Consequences of the Root Causes

The interconnected root causes led to several pivotal effects:

  • Declining Profits – from film and chemical products
  • Loss of Market Share – to digital-first competitors like Sony and Canon
  • Brand Deterioration – perception as a traditional, outdated company
  • Financial Instability – reduced investment, bankruptcy proceedings
  • Layoffs and Restructuring – organizational upheavals to cut costs

Lessons Learned and Conclusion

Kodak’s failure underscores the vital importance of continuous innovation, strategic agility, and proactive change management. Companies must recognize technological shifts early and adapt their core competencies accordingly. Kodak's story illustrates that dependence on legacy products and complacency toward emerging technologies can be fatal. Modern organizations can draw lessons from Kodak by fostering a culture of innovation, investing in R&D, and maintaining strategic flexibility to navigate disruptive environments.

In conclusion, Kodak’s decline was not predicated solely on external factors but was significantly driven by internal missteps, including resistance to change, poor strategic decisions, and organizational inertia. Recognizing and addressing these issues proactively can help companies avoid similar pitfalls in a rapidly evolving technological landscape.

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