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8/4/2019 the2kodakdisruptions-090710044054-phpapp02 (1)

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Kodak has been through some really tough timessince the rise of digital imaging.


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I th l t 1980 th l d


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In the late 1980s the company employedabout 140 000 people, today this figure has

gone down to less than 20 000.


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The rise and decline of Kodak can to a large

extent be explained by using a frameworkdeveloped by Clayton Christensen at Harvard.


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Christensen studied technological shifts, how

they happen and why established firms tendto be overthrown when they occur.


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He made a distinction between disruptive andsustaining technologies.


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A sustaining technology is one that improves the

performance of a product according to the attributesthat the established customer base appreciates.


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It doesnt matter if it is radical or incremental.


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A disruptive technology on the other hand offers an

initially worse performance according to whatcustomers have appreciated.


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At the same time it brings new performance

attributes such as simplicity or portability to themarketplace.


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Therefore it tends to prosper in new customersegments and as it improves along the mainstream

dimensions, it eventually displaces the formertechnolo .


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Established firms therefore miss the boat bylistening to their existing customers and by keep

moving up into increasingly sophisticatedse ments.


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It looks like this.


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It attacks from below, becomes good enough

and overthrows the established firms,whove been listening to their customers.


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This framework can help us to explainboth the rise and the fall of Kodak.


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Kodaksintroduction of

the roll film in1888 is an

excellentexample of a

disruptiveinnovation.


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It fundamentally changed the role ofphotos and the way they were used.


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Prior to this,people went to astudio and had

their photo takenby a professional

photographer.


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The roll film

did notcompete

along theimage quality

dimension.


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Instead, itbrought newperformance

attributes to themarketplace.


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Portability.


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Simplicity.


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Affordability.


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This valueproposition

was very

differentfrom the one

that theleading

photography

companiesoffered backthen.


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The leading photographic companies in theU.S. were Anthony and Scovill (who merged

into Anthony & Scovill in 1901, later shortened

to Ansco). Their very successful businesseswere focused on meeting the needs of portraitstudios and serious amateurs.


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Kodak prosperedby targeting non-photographers.


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People who hadnot been takingpictures beforecould suddenly

do so.


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As the performance of roll films improved iteventually displaced dry plate photography.


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A schoolbook example


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of a disruptiveinnovation that

toppled the dominant

firms and put Kodakin the leadingposition.


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From this point and on, Kodak kept developingsustaining innovations successfully.


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Colour film was introduced in the 1930s


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profits kept rising and Kodak continued to launch

products that sustained the dominant filmtechnology and strengthened its position.


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About a century after the disruption of dry

plates by the roll film, another disruptivestorm was about to change the industry.


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Digital imaging

was on the rise.

If Kodak and the roll film had simplifiedh t g h digit l i gi g d it h


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photography, digital imaging made it cheaper

and simpler than ever before.

The image quality was significantly worse, butdigital imaging offered new performance attributes


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digital imaging offered new performance attributes

that were valued by non-photographers.

The image could be viewed instantly, it didnot cost anything to capture a picture and


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not cost anything to capture a picture and

they could be shared easily with the help fromcomputers and the internet

Once the digital cameras had reached the


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gpoint of being good enough, sales exploded.

0

5

10

15

20

25

30

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Number of film and digital camerassold in the United States.


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Just like the roll film, digital imaging

attacked from below and brought newperformance attributes to the market.

Once digital camera sales


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exploded, film sales imploded...

And 100 years after Kodak had disruptedthe industry it was Kodaks turn to be put in


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the industry, it was Kodak s turn to be put in

trouble by a new technology.


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Kodak had seen it coming:


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6 million pixel resolution isgood enough for mostapplications. The

perception of colour ismore important than the

perception of sharpness.

Kodak, 1996


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But more than a century of high

profits related to film were stillgoing to be removed

And Kodak was now in deep trouble.


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Over the last 150 years photography has

been popularized in a way that no onecould have imagined back then.


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The roll film wasthe first

disruptive waveand it catapulted

Kodak intoindustrial

leadership.

Digital imaging


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Digital imagingwas the second

wave ofpopularization

and it disruptedKodaks

profitable filmbusiness.


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Image attributions
http://www.flickr.com/


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Thanks to:

Terry Faulkner, former Director and Vice

President of Strategic Initiatives at Kodak.


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Christian Sandstrm is aPhD student at Chalmers

University of Technology inGothenburg, Sweden. Hewrites and speaks about

disruptive innovation andtechnological change.

www.christiansandstrom.orgchristian.sandstrom at chalmers.se
http://www.christiansandstrom.org/http://www.christiansandstrom.org/

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