Another Year, Another Casualty

The pace of technology advancement continues to take its toll on some of the 20th century finest companies.

After years of decline, Eastman Kodak is about to go bankrupt. This is another sad example of a company with amazing legacy, who’s management failed to adapt to the digital age. In an ironic twist, Kodak is the company that invented the digital camera, the technology that brought to its demise.

Indeed, that’s a nasty dilema – realizing that a technological innovation will undercut your main revenue sources – film and the chemicals needed to develop them. A smart management will internalize the fact that times have changed and will adopt for the future. Kodak’s management went for the Ostreich strategy – bury your head in the sand, and hope that the storm will go away. Oops, bad decision. By the time they woke up, it was already too late.

George Eastman, founder of Kodak

The mechanism in which executives are compensated in public-traded companies doesn’t improve these companies chances of survival. As a CEO of publicly-traded company, you receive your bonuses based on short-term profits and stock value. Why would you invest in a long-term strategy shift when you are at the reigns? Better squeeze-in every dollar of short-term profit, cash out and move on to your next CEO gig with pockets full of cash.

Maximizing long-term shareholder value is not the real goal of public companies management teams, but rather maximizing short-term personal gains.

You press the button, we do the rest

Some statistics:

  • Kodak was founded in 1880 by George Eastman. His strategy: sell inexpensive cameras and make large margin in consumables: film, chemicals and paper.
  • in 1976, Kodak had 90% marketshare of photographic film sales in the US.
  • Apple’s QuickTake consumer digital cameras, introduced in 1994, were actually manufactured by Kodak.
  • By 2005, Kodak ranked #1 is sales of digital cameras in the US, with $5.7B in sales.
  • By 2010, Kodak US market share dropped to only 7% in.
  • 2007: The last year in which Kodak made a profit.
  • 2011: Preparing for chapter 11 filing.
  • 1930: Added to the Dow Jones Index. Stayed in the index for 74 years, until 2004.
  • 1996 Market Cap: $26B. 2011: Market Cap: $126M.


Goodbye Kodak, and thank you for all those memories you helped humanity capture.

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