Reasons Why Kodak Failed

Reasons Why Kodak Failed

The world we are living in now evolves every single day. Products that were viable a few years ago have become obsolete due to the changing environment we live in. Companies and organizations must be aware of the changes in the environment to remain relevant in the market. Organizations and companies also have to anticipate what products and services will be in the future and when they will need those services (Bauer, & Erdogan, 2009). Kodak, a company that was very successful previously, fell victim to such a situation that had also caught up with other major institutions. So, what really befell Kodak?

Kodak was very successful in its prime years. The success played to its disadvantage of it. It was blinded by success. The rise of digital companies caught Kodak by surprise despite the fact that one of the engineers who invented the digital camera was a worker at Kodak (Anthony, 2016). Despite having the resources, the company did not invest in the invention that other players in the same industry took up. Rapid technology change from the initial… to digital cameras was such a profound development that the company could not cope. Other companies changed quickly to the changing environment that saw people change from printing photos to taking them with digital cameras and phones and storing them in social media rather than in albums. Kodak also insisted on the traditional film’s performance rather than embracing the digital camera’s simplicity, which was the market’s selling point.

Kodak failed to see the industry’s disruptive forces and sufficiently pump adequate resources to engage in the emerging markets. Kodak had developed a digital camera but did not invest in that technology but rather encouraged the engineer not to say a word. The company also new photos would sooner or later be shared online but did not figure out that sharing photos online was a business on its own. This worked against them as the market quickly shifted to the digital space leaving the previous way of sharing photos unattractive to consumers. Despite being termed a threat, disruption offers a great opportunity to grow and transform business models as those who see disruptions as opportunities expand. Ironically, Kodak had all the resources to face the market disruption, from access to technology to a healthy balance sheet; it was important for the company to approach the new developments with utmost humility.

Kodak failed as a company due to resistance to change. There was clear proof that the market preferred digital pictures and social media to document the images. Still, it opted to remain with its trademark way of taking photos, that were incompatible with the new market. This denied the company an opportunity the ability to survive. The resistance to change could be because the management did not want a change of habits on the company to be able to go to digital media and venture to social media. Fear of failure is also a reason that could have led the company to fail to venture into digital media (Anthony, 2016). The digital space was a new venture, and the company did not want to go into it for fear of failure and losses. This, in the overrun, worked against them. Companies that ranked below them and took the risk were hugely successful. It could also be that the company thought there would be a loss of influence among other companies. Being a mogul over the years, venturing into a new space would mean power loss to the company. The resistance costs the company from making important changes.

Kodak’s failure can also be attributed to them not adhering to the models of organizational change. The process involves exploration, planning, action, and integration (Cameron, & Green, 2015). In exploration means Kodak had to explore compelling reasons to embrace change which in they had come up with a digital camera that was part of the revolution, but lack of investment in the idea cost them. This was to be followed by guiding a coalition of staff who support change in which the managers were not fore the idea of change but rather chose not to invest in the idea but instructed the staff not to disclose it. The management was supposed to come up with a vision and strategy for the company’s direction. The management stuck with previous success and did not entertain the vision of venturing into the new space of digital pictures and social media.

The management was to later walk the talk by communicating the vision to the staff. Contrary to this, the management’s communication was to keep with the old technology and not venture into the new technology. Kodak was then supposed to empower the staff to act by removing challenges that would have come up, but the management did not venture into the new idea that would transform the company (Cameron, & Green, 2015). After empowering staff, Kodak was to plan and acknowledge short-term success to demonstrate progress, but this was lacking as the company did not venture into the new idea. This would have been followed by consolidating gains using credibility to encourage more change and finally integrate the new developments into its culture. Kodak did not practice the organizational change models, which were key at that particular time.

Changes in the market condition cause companies to struggle to adjust. Kodak is a perfect example of this. The change to digital cameras and the market preferring to post pictures online caused Kodak to struggle financially. They had the invention with them but failed to capitalize on it, which made other companies which were minnows to Kodak initially take up the market fully. The environment ought to have brought change within the company, but this did not happen. Kodak did not respond to the environmental changes adequately. Consequently, a lack of response to the environmental changes led to poor performance. Kodak being so successful, initially did not realize the eminent changes as normally poor-performing companies tend to change compared to bigger companies (Bauer, & Erdogan, 2009). This can be attributed to overconfidence and inertia. Kodak performed poorly since the inception of digital cameras, had to close down at some point, and returned to a smaller company.

References

Anthony S. D. (2016). Kodak’s downfall wasn’t about technology. Harvard Business Review. https://hbr.org/2016/07/kodaks-downfall-wasnt-about-technology

Bauer, T., & Erdogan, B. (2009). Organizational behavior (1st ed.). New York: Flat World Knowledge.

Cameron, E., &Green, M. (2015). Making Sense of Change Management (4th ed) Croydon, Great Britain: Kogan Page Limited. P.112-114