Kodak Case Memos

• How would you assess Fisher's attempt to transform Kodak? How would you assess the logic of his strategy? Why did it fail?

Fisher, who was totally an outsider of photography industry but an electronic business advocator became Kodak’s CEO in the late 1993. After the appointment, he quickly cut the knot by dumping the unprofitable diversified departments like Eastman Chemical and focused back on Kodak’s core business on imaging. He believed in the magic power of electronics on photography and imaging. He formulated and started to implement a digital strategy which focused on digital imaging business while maintained the mass production of film. This hybrid approach seemed reasonable and promising at that time. However, this strategy eventually turned out the worst possible outcome diametrically.

    Historically, Kodak followed the razor-blade culture and deprived profit from every single film it sold and paid little attention on the equipment itself. The active transition program to digital imaging put forward by Fisher was not late in this emerging industry. However, the middle managers in Kodak avoided confrontation and bureaucracy was rooted deeply in people’s mind. People tended to avoid abrupt innovation and want the company to stay in the old profitable style of doing business. The attempt to create a healthy company culture which processed high employee morale and working motivation failed. It didn't come as a shock that Fisher’s initiatives were impeded by a mass group of middle managers, which partially accounted for the failure of Fisher’s attempt to transform Kodak.

    Fisher started a hybrid approach to make vigorous development in digital imaging, which obtained fund and resource from its established film business. Kodak made every effort to enter the digital imaging industry like launching software that could be used for photo editing and making alliance with other industry leaders to produce consumer and professional cameras.

However, he gave a cold shoulder to the film business which was destined to perish in the near future. That is to say, Kodak did not only recognize the threat at an early point of the disaster of the film industry. Fisher made joint ventures with the Chinese government and put large investments to Chinese facilities, kiosks and mini-labs. Now we can see that, every investment that was made in the film industry was deemed to be a waste of money. The burgeoning digital imaging would render film obsolete and push film to its death. As the development and commercialization of digital imaging, all the key resources, capital investment, established international distribution network of film and core technology related to film production and chemical became absolute rubbish. Kodak could not continue its historical high net profit with the help of razor-blade business strategy. The shift to digital imaging while maintain the mass production of the film took lots of money and made Kodak mired in deep debt.