- Introduction
One of the most popular companies a couple of decades ago is Kodak. Eastman Kodak Company (more popularly known as just Kodak) is a US Multi-National Enterprise (MNE) that specializes in photographic equipment, film, digital imaging and other related products. Established in Rochester, New York in1889 by George Eastman, the company became one of the most valuable brands in the world and by the 1970s, became the most dominant player in the United States in the film industry having a total market share of about 90%. It also dominated the camera market having a staggering 85% of the entire market. In 1996, Kodak was at the top of the industry having gross revenue of US$ 16 billion revenue and US$ 2.5 billion in net profits (The Economist, 2012).
Today, the company is in financial distress. The company’s fortunes have taken a sharp down turn and by 2011, the company was already at the brink of bankruptcy. Revenues, stock price and employee morale are all down. The question of what has happened to the once mighty giant shall be discussed here, as well as the fortunes of its more successful rival, Fujifilm (Yahoo! Finance, 2013).
Figure 1 Kodak's 5-Year Market Capitalization and Stock Price
Fujifilm Holdings Corporation (more popularly known as Fujifilm), is Japanese Multinational Enterprise that was established in 1934. Like Kodak, Fujifilm had a monopoly-like control of the Japanese film market. By 1950, the company began exporting products into new territories, finally sinking its claim in the US after participating as the “official film” of the 1980 Los Angeles Olympics.
Today Fujifilm is a successful organization that is very much different from Kodak. Fujifilm was able to successfully diversify its business to the point that it has almost re-invented itself. The company linked its film business with digital photography. From there it developed new business lines in digital processing, cosmetics, and component suppliers for other technical industries.
Figure 2 Fujifilm's 5-Year Market Capitalization and Stock Price
- Innovation and Change
The difference between Kodak and Fujifilm is their ability to cope with change and innovate for the sake of remaining relevant. Fujifilm is an F1 race car, speeding through the tarmac while Kodak is a dilapidated old station-wagon in terms of their pace of innovation.
Kodak on the other hand, did not innovate until it was too late. When it did so, its efforts were too half-baked and ill-advised, thereby aggravating its situation even more.
- Managing by Example
Part of Fujifilm’s innovative approach is the remodelling of its management style. Japanese companies are known for being conservative, deliberate, calculating and pain-stakingly slow. This was not the case of Fujifilm, who overhauled its business processes. It embraced a Silicon-Valley style making a mantra out of the principle “making a product, launching a product, fixing a product”. The company then jettisoned more than US$ 3.3 billion in costs for depreciation of departments that had no use and also removed a lot of its employees. This was a very bold move since it is uncustomary for Japanese companies to do so, having invested in long-term personal relationships. However it was a necessary sacrifice that Fujifilm had to take to survive (Finnerty, 2000).
Kodad did none of those things until again, it was too late. It sat on the fence on diversification, acquisition and change management. Its managers felt supreme over the competitors, only to wake up one morning with an empty bucket. It did not ride innovation and did not manage change and is now a sad American tale of a once proud company.
- Ethics and Social Responsibility
The ethical standards of both companies are considerably high. The Economist (2012) reports that during its prime, Kodak was a premier brand and an admired company and was appreciated by its shareholders, managers, employees and regulating agencies. Fujifilm, by Japanese standards also approached operations with high ethical regard. The only tussle between the two was a brief debacle during the 1984 Los Angeles Olympics, when Kodad, the US company lost its bid to become the official film of the games to Fujifilm, a foreign competitor. Kodak then cried foul and filed cases on trade anomalies, only to be addressed by Fujifilm subsequently as an “irresponsible” act by Kodak. The newest low for Kodak is its bid to sue Apple and HTC for what it believes are intellectual infringements over some patents.
- Extent of Management Change
Silverman (2012) reports that in Fujifilm, the father of innovation Shigetaka Komori, overhauled the entire firm to survive. In Kodak, the top leaders rested their laurels on their brand and crashed. This is the in a nutshell the extent of how management changed in the companies with Fujifilm doing a 180 degree change and Kodak deciding to do so when it was already too late. For a Japanese company to severe its traditional ties, Fujifilm became a truly global organization. For a well-entrenched company that resisted change, Kodak became irrelevant. For a company that values its heritage, Kodak is now reduced to a fraction of its old glory, in terms of manpower, finance and global influence.
- Building Flexibility
Here are some ways that these companies can build in flexibilities to their organization
- Diversify
According to Silverman (2012), Fujifilm has diversified its business interests remarkably thus becoming relevant and viable even as its main business line has become obsolete. Kodak had the opportunity to diversify into many other profitable business lines but chose not to do so because of their full belief in the superiority of their brand and the loyalty of their customers. Both of those assumptions did not hold up. In addition to that, the company suffered from what is known as Paralysis by Analysis, which is characterized as a condition wherein no decision is made because managers are waiting for perfect information to make the decision. This normally never happens in real life, no assumptions can be ascertained as fully accurate, no calculation as real as what will happen in real life. The closing down of business and moving out into new lines require innovation and guts.
- Imagine
The traditional business lines of both companies were closing down fast but new opportunities were emerging for both. Unfortunately, only Fujifilm was able to think out of the box enough and Kodak decided to resist the winds of change as much as possible. Fujifilm had to bite the bullet, even if it meant making very difficult sacrifices and even if it went against the very same tradition that established the company, it did so and then thought of ways of using that momentum to re-establish itself. Kodak never thought of doing anything tangent to its business lines, it went into a pharmacy line but only to find a place for its displaced chemical research department, failing eventually. It moved into acquisitions but without its heart into it, was never much of a factor. In the end, Kodak simply resisted change.
- Embrace Change
There will always be change in the world and change, the type that disrupts, diminishes and destroys businesses is in fact welcome. Kodak suffers because it did not respect change. Its managers saw change coming, it had time to prepare. But the company believed in its size, in its achievements, in its previous glory and did not see that even the smallest ripple in the water could change the game. Fujifilm saw the same thing coming but decided to ride change rather than fight it. For a company that large, it went back to its entrepreneurial roots and made the right changes where it could to turn the disadvantage of a failing industry its advantage. With that attitude, Fujifilm remains one of the most significant companies in Japan and the world.
References
Silverman, P. 2012. Kodak vs. Fujifilm: Lessons Learned Looking at Winners and Losers in the Digital Photography Market. PaulSilverman.Com. Retrieved from http://paulbsilverman.com/2012/01/31/kodak-vs-fujifilmlessons-learned-looking-at-winners-and-losers-digital-photography-market/
Finnerty, T. 2000. Kodak Vs. Fuji: The Battle for Global Market Share. Retrieved from http://www.pace.edu/emplibrary/tfinnerty.pdf
The Economist. 2012. The Last Kodak Moment? Retrieved from http://www.economist.com/node/21542796
Yahoo! Finance. Fujifilm Holdings Corporation. Retrieved from http://finance.yahoo.com/echarts?s=FUJIY+Interactive#symbol=fujiy;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Yahoo! Finance. Eastman Kodak Company. Retrieved from http://finance.yahoo.com/echarts?s=EKDKQ+Interactive#symbol=ekdkq;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
