Kodak used to be the world’s leading photographic camera manufacturing company with a market share of approximately 90%. But the company’s market share and revenue kept on decreasing and led to the point of bankruptcy by 2012. It is because the company failed to accept the change and adapt innovation and creativity of the digital age. Today, we’ll discuss the top reasons for Kodak change management failure; its brief historical background, and lessons learned from the company’s failure.
Historical Background of Kodak
George Eastman and Henry A Strong laid the foundation of the Kodak Company in 1893. The innovation and discovery of camera equipment made photography more accessible to everyone. Photographers didn’t have to carry large-size cost glass plates.
Kodak strengthened its market position later in the 20th century with the invention of the Brownie Camera, which was affordable and user-friendly. The high demand for Kodak products increased the market share of the company to 90%. In fact, the total sale of Kodak crossed 1 billion dollars by 1962.
The camera brand has established a powerful brand image for its cameras and high-quality films in the photographic industry. But the market interest shifted towards digitalization by the end of the 20th century; that’s where Kodak failed by not accepting the change.
Kodak Change Management Failure
Some of the top reasons for Kodak change management failure are as follows;
Untapped Opportunities
Kodak didn’t take advantage of various opportunities like capitalizing on new markets and accepting digital technology. Failing to tap into such opportunities at the right time made Kodak lose its market dominance in the photographic industry. The company couldn’t establish its market leadership position in the new digital photographic market. Kodak’s failure to adapt to the latest technology and innovation led the company to bankruptcy.
No Diversification
The other step Kodak didn’t take is to diversify its business and expand its business operations in other markets of the world. For instance, Kodak had successfully launched Inkjet Printer, but the company hasn’t invested sufficient resources in the printer market. It allowed competitive companies like HP and Cannon to fill the gap and they earned the market share.
Failed To Exploit Digital Photo Opportunity
As a market leader in the photographic industry, Kodak has got various opportunities to exploit the digital photographic market, but the company didn’t. For instance, Kodak had the resources to launch the first consumer digital camera, but the company decided not to follow up on this idea. The idea of photo sharing became popular in the early 2000s, but the company failed to realize the growth potential of digital photos.
Inflexible Organizational Culture & Structure
Inflexible organizational culture and structure played a significant role in the failure of Kodak and not adapting to the industry shift. The company was following a centralized decision-making process, and the company’s leadership quickly jumped to the decision of whether to accept it or not.
The culture of reluctance to change and avoiding the risk factor made it difficult for the company to acknowledge digital technology and focus on developing new products and services. However, a combination of factors like avoiding risk, organizational culture, and structure created an environment where the company was slow to accept change. Ultimately, it led to the company’s failure.
Reluctant to Embrace change
Kodak had a culture of avoiding everything that won’t generate immediate returns and sales and it resulted in the form of risk avoidance and not adapting to the organizational change. The successful company’s history in the film-based photography market promoted and strengthened this culture. That’s why it was difficult for the company’s leadership to imagine the world without film cameras. Kodak kept on avoiding the latest technology and postponing the idea of adapting digital technology.
Centralized Hierarchical Structure
Kodak had been following the centralized decision-making process and traditional hierarchical structure within the organization. This type of organizational structure worked for the company when Kodak was in the dominant market position. However, it didn’t suit the company when it comes to adapting to the latest technology in the competitive market. Only top executives used to make decisions without informing the employees or taking their feedback for it.
Hesitant To Accept Digitalization
Kodak was investing in digital technology, but the rate of embracing the latest technology was very slow. Film-based products were the main source of revenue for Kodak, and the company was reluctant to leave the yearly proven business model. The risk avoidance mindset and hesitant nature to accept the latest technology pushed the company not to adopt the latest technology.
Wrong Goals of First Digital Investment
Kodak was also the pioneer to invest and develop digital cameras in the 1970s and 1980s. The purpose of the company’s investment in digital technology was to make improvements in film-based products and equipment. Rather than producing a product that is a fully digital camera a separate product. The limited vision of the company allowed its competitors to tap into this area and they launched digital cameras first in the market.
Transition to Digital Photography
The 1980s were the transitional phase when technology was shifting towards digitalization. The digital camera offers a lot of advantages like electronic storage, quick view, editing, and deleting; traditional film camera doesn’t offer these things. Tech advancement and growing demand for digital cameras decreased their cost and made them affordable to ordinary customers.
Lesson From Kodak Change Management Failure
Some of the key lessons we learn from the Kodak change management failure are as follows
Significant of Decision Making & Organizational Structure
The centralized decision-making and quick saying no to the digitalized technology made it difficult for the company to adapt to the latest technology. Kodak was following a strict hierarchical structure and it wasn’t taking the feedback of employees. Therefore, companies should have a flexible hierarchical structure and decentralized decision-making that would encourage the involvement of employees in the change process.
Culture of Improvement & Learning
Businesses and organizations should promote a culture of continuous learning and improvement. The culture of reluctance to change and risk avoidance made it impossible for the company to adapt latest digital technology. Companies should foster a culture of learning, education, and improvement.
Adaptation & Innovation
Kodak failed to invest in the development of innovative products and adapt to the latest technology; it became the main reason for its fall. Therefore, companies should take the risk of investing in innovation and creativity. It would allow them to adapt to new changes and accept new technology.
Conclusion: Kodak Change Management Failure
After an in-depth study of Kodak change management failure; we have realized that Kodak failed because of its inflexible organizational structure and reluctance to change. If you are learning about the reason for Kodak’s failure, then you should keep in mind the abovementioned reasons and factors.
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