Kodak – A Question of Leadership

January 27, 2012 | By More

A sign of the times

Much is already written about the qualities of a good leader. Books written, and best sellers promoted ad-nauseum. Arguments can be made one way or the other about whether leaders are born or made.

One thing is for sure, without good leadership, a company is rudderless like a ship in the ocean – drifting along at the mercy of wind and the elements until it hits land or crashes onto reef.

This, unfortunately, was what happened recently. The sad news last week was the announcement of Kodak’s bankruptcy on Thursday 19 Jan 2012. After over 130 years of business single-handedly creating the film and camera market, Kodak declared itself bankrupt.

Kodak’s gradual slide from dominance had been observed by all in the past 15 years. What was sad to see was that Kodak’s management was not able to arrest this slow free fall while its arch rival FujiFilm was able to adapt and change its stripes in spite of being in the same business and market.

Steven Sasson, the Kodak engineer who invented the world's first digital camera in 1975

In the heyday of the mid 1970’s Kodak accounted for 90% of film and 85% of camera sales in USA, employing over 145,000 workers worldwide by the end of 1980’s. Revenues peaked at nearly $16 billion in 1996.

A lot has been written about its demise. Some say Kodak was not able to innovate out of its box, others talk about being unable to cross the digital chasm that they themselves created when Steven Sasson, a Kodak engineer, invented the world’s first digital camera in 1975. Yet columns have been written to describe indecisive management and missed market opportunities. [read more about it here:  BBC, Wall Street Journal]

My personal opinion is that Kodak in the past decade and more, had been like a rudderless ship. Would a strong leader be able to save the ship?

Over 300,000 Kodak's 3A folding cameras were sold between 1914 and 1934

The answer seemed to be yes. FujiFilm, having a virtually identical business and market, in the 2000’s slashed costs and jobs, restructured, shed superfluous distributors and labs to create a leaner and more nimble operation. Shigetaka Komori, FujiFlim’s CEO who drove the changes, hints that Kodak had been complacent even when its troubles were obvious. He lead the company to enter new markets and diversified the company successfully into areas such as cosmetics, LCD panels, and others. FujiFilm’s market cap is today about $12.6 billion compared with Kodak’s $220 million.

Although both companies realised the change needed from conventional film based photography to digital, Kodak had been slow to adapt. The finger is also pointed to Kodak’s culture. Despite its strengths in research and manufacturing, many believed Kodak had become complacent. Even when Kodak decided to diversify, it took years to make an acquisition, and never made bets big enough to make a difference.

In short, Kodak lacked leadership – for a long time.

The lessons to be taken away about this story is this: you may attribute your troubles to the market, or even industry trends; you may be able to blame it on culture, management or even complacency of staff, vendors and suppliers. You may complain about the competition.

However, ultimately it rests on your shoulders as the CEO – how are you going to lead your company out of the stormy weather?

Do you want to be like FujiFilm’s Mr Komori or be one of the nameless faces at Kodak’s management and board? It is a question of leadership.

 

More reading about Kodak’s bankruptcy at The Economist:
The Last Kodak Moment
Gone in a Flash

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

Comments (1)

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  1. Kris says:

    Hi Eng Tong:

    A thoughtful and incisive post. The other great example, of course, is Steve Jobs who led Apple to massive growth – Twice! While team, technology and “territory” are all critical, nothing will substitute for effective leadership. The bankruptcy of Kodak is a sad example.