Executive summary
This report is an analysis of the performance of Kodak over time since its inception. The report finds that the dismal performance of Kodak is largely as a result of the poor leadership elected to lead the company. The report traces the failures of the company to the hierarchical and toxic leadership styles that saw the company lag behind in joining the competitors in the migration to digital photography.
The report concludes by highlighting the specific failures of leadership that cost the company a fortune had it transformed into digital promptly. The report recommends a series of actions to redeem the company including a better selection of leaders as well as a regular training program that orients the leadership towards the needed improvements in the field of digital photography.
Introduction
This report analyses the practices that led to the decline in the performance of Kodak as the number one photography brand in America. Specifically, the paper traces the errors of judgement on the part of the leadership that saw the company fall late in its transition to the digital photography era. The report is in four parts: The first part is a background of the Kodak Company including its formation and its tenure as the number one brand in analogue photography. The second part looks at the theories of leadership that explain the failure of leadership at Kodak that delayed its migration into digital photography age. The latter part of the report comprises of the conclusions and recommendations that could practically raise the fortune of Kodak Company and enable it to join the competitors in digital photography.
The advancement of a company from one form of technology to another is largely a component of the company’s culture and the kind of leadership adopted in the company. Failure to catch up with emerging technologies can lead to possibilities of a company lagging behind in what consumers’ desire and eventually have the business out of competition. Such was the case of Kodak, a company once known as an iconic brand in the photography industry (Munir and Phillips 2005).
Founded in 1880, the company became the first one to produce a snapshot camera in 1888 (Lucas and Goh 2009). The management of the company quickly established that more money was more in the consumables of the camera than the camera itself. This was because the cameras relied on huge amounts of film for production of images. The management responded by heavily investing in the film segment, which saw their revenues grow to the tunes of billions in the early 1960s. When the technology of colour photography finally came to be, the company was among the very first ones to venture into the area because during that time, only very few companies had the requisite knowledge to succeed.
However, past that year, competition began setting in and greatly hindered the growth of Kodak as the market leader. Specifically, there was massive competition from Fuji films. The late 1990s saw the company struggle to maintain its dominance through invention of various products all aimed at capturing clearer images but all was not to go as expected since massive competition was setting in and the era of digital photography was beginning to be anticipated. In particular, the vision by Kodak to persist in the technology of photo CDs never matured as the costs became too high leading to a divestment in the project.
In just ten years between 1983 and 1993, Kodak went through a series of restructures to try and reinvent itself including hiring the chairman from Motorola, George Fish, who was viewed as being acquainted with digital transformation, having turned around the fortunes of Motorola company. Fisher, however, never quite changed the face of the company into a digital one as he believed there was great potential of photography in China. He furthered the relationship with Chinese partners through money he had gotten from the sale of some of the assets of Kodak.
This heavy investment in the film industry despite forecasts of its replacement by digital photography would later prove to be detrimental to the fortunes of the Kodak Company as sales for digital cameras quickly replaced those of analogue cameras, all at the backdrop of a heavy investment in the film and analogue camera industry. This would later see efforts by Kodak to invest in digital photography heavily hampered by lack of adequate finances. What initially seemed as the sole source of huge revenues for the company quickly turned out to be the hindering force to the company’s growth into a digitally competitive company.
The failures at the company, however, were more than just a consequence of competition from fast paced adoption of digital technologies but rather also a failure of leadership into the digital era. The subsequent sections of this report shall seek to address the failures of leadership that saw the company drop from a global leader in photography to nearly sinking into bankruptcy. Between 1993 and 2009, Kodak had dropped its labour count by a whole 80% through partly layoffs but also due to retirement. This is an indication of how the company suffered due to lack of accurate focus in the shift into the digital photography era.
Move into the digital photography and the response by Kodak
Conventional photography has since then transformed into digital photography with the computer acting as a storage media for photos as well as for editing using advanced software (Van Dijck 2008). Indeed. The first digital camera was invented by Kodak, which illustrates their awareness that the era of analogue photography was certainly approaching its end. Besides, the camera that was on board the first space shuttle was a digital camera developed by Kodak. The shift to digital photography that took nearly two decades between 1990 and 2010 saw Kodak research heavily into the new technology that was going to significantly affect their operations.
The late 1990s show a quick adoption of digital products, a phenomenon that invited big market players such as HP and Canon into the photography industry (Kalamaras and Kraly 2005). Companies such as Epson were able to make better prints for photos using their advanced printers that had better compatibility with digital cameras. These events gradually saw the fortunes of Kodak dwindle. The management at Kodak saw all this unfold in their face but were never quick enough to adapt to the new technological trends to keep pace with the change in their market segment.
Indeed as presented in the Christens theory of disruptive technologies, firms are usually unwilling to invest heavily in a new disruptive technology (Christensen Horn and Johnson 2008). This ran true of Kodak as from the response that the management at Kodak gave the new development in photography, they apparently had underestimated the impact of the new disruptive technology in digital photography. The facts, however, show a willingness on the part of Kodak to adapt albeit with inefficient leadership that saw little come from the massive investment in digital photography. As Fisher joined Kodak, there had been an investment of over $5B in digital imaging, but no tangible results came from it. Inefficiencies in leadership and the management saw as many as 23 projects in the digital photography agenda go underway all at once, a factor that greatly ate into the revenues of the company without bringing results.
Further leadership failures were evident in the way Kodak handled their plan for a shift into digital photography (Danneels 2004). According to christens theory, disruptive technologies usually should be subcontracted to an external organisation that manages the disruption for the company. Indeed, Kodak had attempted this model when Fisher, the CEO, separated digital imaging from the conventional photography. There was, however, not the desired level of separation as intense infighting was reported between the two sections of the company regarding the style to enter into the new era of digital photography and how to position themselves competitively noting that then, several major companies had shown interest in the field.
It can thus be opined authoritatively that the failures at Kodak in their bid to join digital photography was more a consequence of failed leadership than was a lack of awareness of the extent of impact expected of the new disruptive technology. Broadly, the leadership at Kodak failed in a number of areas including the failure to rally the employees to work towards the vision of the company of transitioning into a digital imaging company, a lack of proper employee training regarding the new expectations in the digital shift and a failure by the management of the company to create strategic partnerships to increase their negotiation strength in the face of fierce competition.
In essence, the failure of leadership at Kodak can be broadly explained through the following famous theories on leadership; the situational leadership theory, the new vision and resistance to change theory, toxic leadership theory and the trait theory. More specifically, however, there was a massive failure in the management of change and organizational culture at Kodak. It resulted in a lack of synergy in the execution team and ultimately the collapse of the digital dream that terribly cost the company both in revenues as well as in great talent that could have propelled the company into greater digital heights.
Situational leadership model and its application to Kodak
The model, loosely interpreted, provides for the need of management to fit into the situational requirements of the organisation and that of the employees (Watkins 2001). As such, the management of any business such as Kodak is expected to behave in such a way that it influences the conduct of the subordinate towards achievement of the desired goal, in this case transition into digital photography. Instead, the management of Kodak is seen taking a different leadership style that has the leadership identify subordinates by the tasks that they perform. The leadership adopted at Kodak was such that there was not the desired levels of cooperation and two-way communication between the top leadership and the junior employees, a situation that saw lack of synergy in the pursuit of the common goal of transitioning into digital photography.
In an ideal leadership situation, cooperation levels are a subsequent of proper leadership by the top management of companies. The practice is encouraged by the top leadership in order to fetch on to the potential know-how of the junior employees which could go towards sharpening the focus of the vision of the company and eventually lead to more efficient achievement of the desired goals. The chances of creation of a rapport between the leadership and the junior employees was partly hampered by the repetitive replacement of the top leadership noting that between just 1990 and 2009, the company had seen four CEOs.
The hopping from one CEO to another within short durations created a situation where there were several incomplete projects, each started under a different CEO who obviously could not understand the goals of the previous leader before them (Clemen and Kwit 2001). Such was the case when George Fish took over a CEO, when the company had a total of 23 incomplete projects. Such a dispersion of interest and focus could potentially get the employees off track and cost the company the chances of achieving its desired goals.
New vision and resistance to change theory
This theory puts upon the top leadership of any company to manage change in their organisation through a series of predefined steps (Lorenzi and Riley 2000). The theory begins by identifying that in any instance of change, there are elements of resistance and that it rests in the hands of the leadership to identify these elements and work proactively to avoid them standing in the path of the company’s goals. Key elements of this theory that are indeed applicable to the case of Kodak are a creation of urgency towards the set goal, creation of an able team to achieve the goal, developing a strategy, communicating the vision and finally developing new approaches to the corporate culture of the organisation.
Kodak nearly failed in all the deliverables of this theory as can be noted in their failure to create a vivid vision to get onto the digital imaging technology ahead of their rivals, failure to communicate the vision to the junior employees and also an inability to inculcate the culture of transformation into its employees (Larsen 2008). Besides, there was not a prior identification of the possible sources of resistance to the new goal, which certainly hampered their efforts to counter such resistance. There were also failures in the composition of an able team to drive the vision due to the occasional replacement of the top leadership of the company.
Toxic leadership
At the centre of the failure of Kodak in transitioning into digital imaging was a highly toxic leadership. Toxic leadership theory identifies among others, a series of undesirable characteristics that include; arrogance, hierarchical leadership, maladjusted leaders, autocratic and incompetent leadership (Padilla, Hogan and Kaiser 2007). All the above elements were evident in the leaderships that were installed to fast track the change of Kodak from an analogue photography company into a digital one.
For instance, the highly hierarchical leadership at Kodak made it hard for anyone to question the leadership of their bosses in regard to the efficacy of their strategies to reinvent photography in the digital age. A possible explanation of this hierarchical leadership was the maladjusted nature of their leaders who displayed a high level of rigidity that limited their chances of smoothly shifting into digital photography (Hamm and Symonds 2006). For instance, Fisher joined the company as the CEO and immediately put too much money towards analogue photography in China. Former and subsequent CEOs made more and more investment in the camera and film industry and showed a significant disregard to investment in the digital photography.
Trait theory
As with the toxic leadership theory, the trait theory builds on the reflection of the individual traits of the leader in their subjects (Colbert, et. al 2012). As such, the erection of leaders that did not embody transformation was a possible teller of the failures of the Kodak Company. The company exhibited a range of leaders that were greatly maladjusted which impacted their effectiveness in driving the desired change. For instance, installation of George Fisher as the CEO saw him express optimism over the future of analogue photography especially in China. This saw him spend a great deal of funds in forming partnerships with the Chinese government, all this as other companies such as HP and Epson transitioned into digital photography.
The making of all the decisions was guided by the normative decision-making theory, as all the leaders never sought outside of their immediate environment for possible solutions to their need (Frederick 2005). As such, most of the decisions were usually a recycle of an idea by a former leader in the company that had not worked. The overall result was an unrealised vision of Kodak becoming a digital photography company ahead of their rivals such as Epson and HP.
Conclusion
As a company that was once the iconic brand in photography, the ills that face the company are largely in the leadership engaged at the company. Failure of leadership has seen not just a less than the prudent allocation of resources but also a failure to create synergy amongst the employees. For instance, the adoption of hierarchical leadership has a highly impactful result in the way employees identify with the organisation that they work for. Intelligent leaders realize that when the employees make contribution to the decisions of the company, it does not only motivate them in the sense that this raises their self-esteem, but also enables the employees to internalize the decisions and visions for the company.
Besides the failure of leadership in the dimension highlighted above, there is also a failure in the efforts to capture the motivation of the employees towards the realization of every employee’s contribution towards the major goals of the company. This is partly as a result of the practice by the company to regularly restructure the top leadership. Since every new leader comes with their own strategies and plans, there is a dispersion of focus amongst employees which results in employees lacking a clear vision for their role in the achievements of the goals of the company.
Recommendations for improvement at Kodak
Conclusions made from the above analysis portray the leadership of Kodak as needing to make changes especially in the following areas:
Communication: the company needs to communicate periodically the vision to the employees to create synergy and ensure that all employees work towards one set goal.
Organizational culture: the company has been largely used to analogue photography. The experience of employees in the area could occasion a rigidity that could hinder the shift into digital photography.
Leadership traits: the company needs to hire managers that embody transformation and them that exhibit desirable characters that can drive change. This is because the failure so far is attributable to the nature of the leadership that the company has elected.
Partnerships: noting the nature the finances of the company have been drained by activities that did not achieve their goal, the company would need to form strategic partnerships that can revive its mission to become an iconic brand in photography.
Training: the leadership, as well as the middle level management, would need to attend regular training on digital photography and the recent practices in the field to allow for maximum utilisation of talent and resource for maximum benefits to the company.
The company also needs to adopt a culture of leadership that integrates all parties to the production process so that all employees are motivated towards the goals for the organisation. The hierarchical nature of the company’s leadership is hurting the morale of some of the employees leading to them being unable to voice some of the valuable opinions they may be having regarding the change needed.
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