How Kodak suffered due to a wrong decision.
Kodak, because of its market dominance until the 1990s, was the one of the world's top five most valuable brands. Kodak's filing for Chapter 11 bankruptcy protection brings to an end over 130 years of a brand that our grandparents' generation would have seen as revolutionising their lives. Kodak, the company that George Eastman started over 130 years ago was to become part of the lives of everyone who wanted to take pictures of events both special and mundane. Indeed, the fact that it also sold the film - its Kodachrome was accepted as the best available - meant that Kodak grew to a position that made it unassailable. In 1976 in America Kodak accounted for 90% of film and 85% of camera sales. Kodak was a brand that was both profitable and enjoyed high levels of sentiment from customers. What could go wrong? With the benefit hindsight Kodak should have realised that digital cameras would be a threat to the 'cash cow' of the film and cameras they sold. Given that Kodak had developed a prototype of the digital camera in 1975 should have meant that it was well placed to cope with a phenomenon known as 'disruptive innovation'. However, even though Kodak research boffins had insights into what the future held for traditional cameras and films, most of its executives did not share the view. Larry Matteson, who now teaches at the University of Rochester's Simon School of Business, and was an executive at Kodak in the 1970s was an exception. He produced a report in 1979 which provided a fairly accurate assessment of the threat that digital cameras would eventually pose. Perhaps, because Matteson predicted that the mass market switch from traditional to digital would not occur until 2010 there was complacency. Indeed, as even he accepted, the profits from digital would be a significant reduction from that being made on film (some 70%). Nonetheless, we can see that there was a classic case of hubris by executives who preferred...
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