Kodak Bureaucracy

Christian Sandström holds a PhD from Chalmers University of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.

(The images in this presentation come from Kodak’s abandoned site in Järfälla, outside of Stockholm, Sweden)

Kodak’s journey into digital imaging has been a troubled one…

… The technological shift changed the rules of the game.

Kodak had played the ’make-money-on-film’ game for more than 100 years.

The digital game was very different: ‘‘We’re moving into an information-based company,. . .[but]

it is very hard to find anything [with profit margins] like color photography that is legal”.

Leo J. Thomas, SVP and director of Kodak research

While Kodak made great efforts to change and should be admired for this work, it was very difficult to change the

logic of the company.

Explanations of why big firms decline often focus on such accusations as ’being too bureaucratic’.

Such explanations are often too simplistic, but surely, there must be some truth in it, right?

This presentation will provide a couple of quotes which illustrate the ’bureaucracy dilemma’…

‘‘No matter what they said they were a film company,. . . Equipment was okay as long as it drove consumables. . .

Executives abhorred anything that looked risky or too innovative, because a mistake in such a massive

manufacturing process would cost thousands of dollars. So the company built itself up around procedures and policies

intended to maintain the status quo.” // Frank Zaffino, a former Kodak executive

Swasy (1997) wrote: ‘‘As in many large old successful companies, people running

it never created a business. They presided over the franchise. . .That’s not a good place to

train people to be tough...

At Kodak this arrogance fueled the growth of a nightmarish bureaucracy so entrenched it could have passed for a

government agency…

... There was an emphasis on doing everything according to company rulebooks… Meetings were

held prior to meetings…

… to discuss issues and establish agreement in order to avoid confrontations, which were considered un-Kodaklike.”

Business Week wrote in 1995: “It was so hierarchically oriented that everybody looked to

the guy above him for what needed to be done.”

Needless to say, a company which at one point had 140 000 employees needed a lot of structures in order to function.

And it would be strange if all this administration and hierarchy didn’t result in an unwillingness to innovate and a

fear to do new things.

A look at the vandalized building confirms this observation.

The architecture isn’t the most inspiring on this planet, it’s a typical site for a large, administratively oriented, mid 20th

century company.

It could have been Ford, GM, RCA, NCR, AT&T, you name it…

Those days are long gone now, and most of these firms have either collapsed or lived on via government support.

Kodak, with all its strengths and weaknesses, should be thought of as a typical 20th century company.

It was huge, bureaucratic, stable, vertically oriented and highly profitable for many, many decades.

Not anymore.

Sources

Lucas, H.C., Goh, J.M. (2009) Disruptive technology: How Kodak missed the digital photography revolution, Journal of Strategic Information Systems 18 46–55.

Swasy, A., 1997. Changing Focus: Kodak and the Battle to Save a Great American Company. Times Business.

Find out more about Kodak:

www.christiansandstrom.org