Introduction

Photography has undergone a remarkable evolution since its inception, with one company at the forefront of this transformation: Kodak. Established in 1888, Kodak played a pivotal role in shaping the world of photography through its innovative film-based products. This report explores the extraordinary journey of Kodak and how its introduction of film-based photography made capturing moments accessible to a wider audience.

Through effective marketing and flawless execution, Kodak became synonymous with photography in the early 1900s. The company capitalized on its film-based technology and launched various initiatives to promote photography as a mainstream activity. Kodak introduced the concept of “Kodak moments,” emphasizing the ease and joy of capturing cherished memories. The iconic yellow packaging and the slogan “You press the button, we do the rest” resonated with consumers, solidifying Kodak’s position as the go-to brand for photography.

Vision on Film-Based Photography

Before the advent of film-based photography, early photographic processes such as heliography and the daguerreotype required intricate procedures involving fire and chemicals. These methods were complex and inaccessible to the average person. Kodak’s invention of film-based photography simplified the entire process. With Kodak’s cameras, users could capture images effortlessly with a single click, eliminating the need for technical expertise or cumbersome equipment. This disruptive technology gave Kodak a distinctive edge in the market, setting it apart from traditional methods and establishing a competitive advantage.

Kodak’s vision was to make photography accessible to everyone (Company, 2022b). By developing film-based products, Kodak revolutionized the industry, making photography more convenient and affordable for casual consumers. The introduction of the box camera, equipped with a roll of film, simplified the photographic process, enabling users to capture images with the simple press of a button. This breakthrough democratized photography, transforming it from a specialized art form to a popular hobby and a means of personal expression.

How Film-based Camera Works

Film photography involves capturing visual moments using light-sensitive film. The film has silver halide crystals that react to light, creating a latent image. This image is developed using chemicals, resulting in a visible grayscale image. The film is then fixed, washed, and dried to preserve it.

The developed film serves as a negative, with inverted colors and values. To create a final photograph, the negative is printed onto light-sensitive paper, creating a positive image. This process, known as printing, can be done in a darkroom, allowing photographers to experiment with image exposure and shutter speed. Film-based photography offers total control over these aspects, enabling artists to better understand the image-making process.

Kodak revolutionized photography by streamlining the entire process into a simple, one-step operation that enabled users to effortlessly capture a picture with just the press of a button, thereby making photography accessible to anyone.

Technology and features of the first camera

The first film photography camera had a lightweight rectangular design made of cardboard and wood. It featured a fixed-focus lens and a single shutter button on the front. The camera used roll film, eliminating the need for glass plates or film sheets. It came preloaded with a roll capable of up to 100 exposures. Kodak provided comprehensive services for processing film, printing photos, and reloading the camera. The first camera cost $US25 (HKD$195).

Picture by Victoria Collections (1889)

History of Photography

The early history of photography was marked by significant challenges and breakthroughs. One of the earliest milestones came in 1826 when French inventor Joseph Nicéphore Niépce created the first permanent photograph using a process known as heliography (Masoner, 2023). Niépce’s method involved coating a pewter plate with bitumen and exposing it to light for several hours, resulting in a fixed image that could be viewed. However, this process was time-consuming and produced images of poor quality.

The processes involved in capturing and preserving photographic images remained complex, time-consuming, and required specialized technical knowledge. In 1839, the daguerreotype process was invented, which produced higher-quality images (Masoner, 2023). However, this method still required meticulous handling of hazardous chemicals, such as mercury vapor. Furthermore, the equipment used for early photography was large, bulky, and demanded significant expertise, making it inaccessible to the general public.

The breakthrough came with the introduction of the Kodak camera in the 1880s. Kodak pioneered the concept of “You press the button, we do the rest,” which emphasized the simplicity and convenience of their product. This approach made photography more approachable for amateur and casual users who previously found the process daunting and intimidating.

    Picture from Masoner (2023)

Competitors in Film-based Photography

In 1880, when Kodak film cameras were first introduced, they faced indirect competition from earlier photographic technologies like the daguerreotype and heliography, which were seen as overly complicated compared to the user-friendly Kodak cameras.

Hence, during the late 19th century, Kodak dominated the photography industry after it invented film photography in 1888. At that time, Kodak faced limited competition, as its main indirect competitors were practitioners of the heliography process. In the 1980s, Fujifilm emerged as a major rival to Kodak. The two companies had highly similar business models, product development histories, product portfolios, and market focus, as they both specialized in photographic film and equipment (Ho & Chen, 2018).

By the early 2000s, Kodak and Fujifilm were leading players in the global film market in terms of revenue, employees, and market share. However, the emergence of digital photography brought new competitors like Sony and Canon. Kodak struggled to adapt its camera offerings to the digital shift, leading to declining sales and market share. This ultimately resulted in Kodak filing for bankruptcy in 2012. (Source: Bonanos, 2023)

1999 statistics from Digital Technology (n.d.)

2003 statistics from The Economist (2010)

Adoption of Film-based Photography

Kodak employed a diverse array of innovative promotional tactics to drive widespread adoption of film based photography worldwide. One particularly compelling case study was Kodak’s concerted efforts to penetrate the Kenyan market during the mid-20th century. 

One of the key strategies Kodak utilized was direct retail expansion. In the early 1900s, the company established its own retail outlets, known as Lite Labs, in Kenya. This allowed Kodak to have a direct presence in the Kenyan market and better control the distribution and promotion of its products. Additionally, Kodak had a fully commercial lab in its own premises in Kenya, which served not only the local market but also other countries in Africa. This vertical integration enabled Kodak to ensure the quality and accessibility of its services, further strengthening its foothold in the region (Kimani, 2014).

Another effective strategy employed by Kodak was price penetration. When entering the Kenyan market, the company introduced its products at lower prices compared to its competitors. This strategic pricing allowed Kodak to gain a larger market share and create widespread awareness of its goods and services. By offering its products at more affordable prices, Kodak was able to appeal to a broader consumer base and quickly establish itself as a prominent player in the Kenyan photography market (Kimani, 2014).

How does Kodak come up with such developments? (Internal survey)

The company conducted internal surveys to analyze its development strategies (Kimani, 2014). The survey involved interviewing departmental managers, and the resulting data was qualitative in nature. Through content analysis, the company found that its successful entry into the Kenyan market was attributed to strategies such as signing up dealers and opening up its own outlets in various towns within the country. This successful market expansion was made possible by the insights gained from the internal survey. Keeping the survey findings confidential was a strategic move to maintain the company’s competitive advantage in the Kenyan market.

Stage Gate Analysis in 1997

In Appendix 3, it is evident that Kodak implemented stage gate analysis as discussed by Adams (1998). This strategic approach played a pivotal role in setting them apart. Referred to as the Orion Project, it involved collaborative efforts with their competitors to enhance film photography, making it one of the most intricate undertakings of its time. The implementation of the stage gate method enabled them to swiftly discard ideas and greatly enhance their efficiency.

Film-photography Timeline

In order to provide a comprehensive overview of the adoption process prior to the emergence of digital products, a timeline spanning from 1990 to 1993, covering a total of four years, is necessary. Below is the picture of the whole 4 year timeline.

In 1992, a new, more efficient film-based product was launched to compete against other film cameras offerings from rival companies. To prepare for the launch, Kodak invested heavily in further research and development to optimize the product’s design and manufacturing processes within their existing facilities. Once the enhanced film product was ready, Kodak needed to establish a comprehensive marketing strategy to effectively promote it to their target customers. This included a formal marketing plan outlining Kodak’s branding, advertising, and sales initiatives for the new film offering (Company, 2022b).

After the initial product launch in 1992, Kodak closely monitored customer response and sales performance, making iterative adjustments to the marketing approach as needed to drive increased adoption and revenue for this core film business. By the mid-1990s, the enhanced Kodak film product was fully market-ready, allowing the company to ramp up promotional efforts and continue refining their go-to-market strategy based on ongoing performance data and market feedback.

Causes of Failure

Despite film products dominating the market in the late 1900s, Kodak encountered a series of challenges that led to its decline and eventual bankruptcy. Among the primary hindrances was the company’s failure to innovate and adapt to the emergence of digital photography, a highly disruptive technology that reshaped the industry. Kodak struggled to diversify its product offerings and upgrade from its film-based products, ultimately impeding its ability to stay competitive in the evolving market (Moon & Paul, 2019).

Kodak’s corporate structure proved to be a major obstacle in its ability to navigate the evolving landscape of the industry. The company had grown unwieldy, burdened by a large workforce and an inflexible organizational framework. This lack of agility made it challenging for Kodak to swiftly respond to market changes and take advantage of emerging technologies. Moreover, the wide and elongated organizational structure compounded the challenges faced by Kodak, as it contributed to sluggish communication between departments and those under their authority. The bureaucratic nature of the organization further impeded its progress and hindered the adoption of new strategies (Alkhatib, 2015b). 

The picture below is the M-form corporate structure Kodak used. 

Picture from Alkhatib (2015b)

Kodak’s downfall can be attributed to its complacent culture and flawed assumptions about the market transition. The company failed to anticipate the rise of camera phones and the shift towards digital storage. Kodak clung to the belief that consumers would continue printing digital photos on paper, unaware of the decline of physical photo albums. The company’s failure to conduct thorough market research exacerbated the situation, leading to its bankruptcy in 2012. (Moon & Paul, 2019)

SWOT Analysis

A thorough SWOT analysis can help Kodak determine the most promising path forward by identifying the company’s key strengths, weaknesses, opportunities, and threats.

This report will propose two strategies to prevent Kodak’s decline and eventual bankruptcy in 2012, when the company lost significant market share. We have thoroughly assessed the development plan with the greatest potential, despite the anticipated challenges it may pose below.

The following developments should take place in the early 2000s, specifically 2003, when the digital market is emerging. These are to prevent decline in sales and being outcompeted, to ultimately prevent getting out of business. 

Digital Photography as Core: Development Plan 1

In an ever-evolving digital landscape, Kodak needs to recognize the need to stay ahead of the curve and continuously improve its offerings to provide users with a superior photography experience. While film-based photography held dominance in the late 1900s, the company needed to understand that complacency is not an option in today’s dynamic market. Therefore, I propose a digital product strategy that focuses on speed, higher quality, and accessibility while remaining true to our vision of making photography accessible to all.

To achieve this, Kodak must wholeheartedly embrace digital photography and allocate significant resources to research and development. By investing in cutting-edge technology, we can create disruptive innovations that push the boundaries of what is possible in the world of photography. This commitment to continuous improvement will ensure that Kodak remains at the forefront of the industry, delivering products that exceed user expectations and set new standards for image resolution, clarity, and overall quality. 

Technology and features of the new digital camera

The new digital camera we aim to develop will employ advanced image sensors like CCD to offer a higher resolution of 50 megapixels. This allows the camera to have a versatile lens system that supports interchangeable lenses, providing a wide range of high-quality optics that can adapt to different shooting scenarios. Additionally, the camera will have a built-in GPS for geotagging of pictures and built-in Bluetooth for easy transfer of photos, enhancing the overall user experience and functionality of the device. 

A range of color options will be provided for the compact and lightweight camera design. Feedback from focus groups and user surveys will be used to refine the design. The camera will have an intuitive button layout and a user manual for easy operation. It will also come with a rope for wearing it as a necklace, increasing its portability and accessibility.

First digital camera we aim to develop.

Essential development prerequisites

The transition from film to digital photography has brought about significant changes in technology and required new skill sets. Traditional film photography used chemically developed film, while digital photography relies on electronic image sensors to capture light and convert it into digital files. This shift has created a demand for professionals skilled in software, mechanics, and electronics, particularly in the design, manufacturing, and processing of digital cameras. It is recommended to recruit at least 2 experts from each domain to meet the diverse requirements of this transition.

Cost-benefit analysis

As the industry will transition to digital, companies have to hire employees with expertise in these emerging technical disciplines, as well as retrain existing staff to diversify their capabilities. This human capital transformation will be critical to supporting the shift to digital photography and ensuring the continued innovation and competitiveness of the industry.

This digital transformation will require significant upfront investment and time to implement. The company will need to train and hire new employees with the necessary digital skills, as well as restructure its production processes to shift to digital manufacturing. While this transition will be costly and time-consuming, the advantages ultimately outweigh the disadvantages.

The shift to digital will allow the company to improve its operational efficiency and increase the resolution of its products. This will enable greater product differentiation, especially as competitors like Fuji and Sony continue to innovate. The improved quality and differentiation will translate to higher revenue and sales, as customers are willing to pay more for the superior product. Additionally, the enhanced capabilities will allow the company to penetrate new markets and capture greater market share from rivals with inferior offerings. Ultimately, this strategic digital transformation will help the company avoid the risk of obsolescence and maintain its competitive edge.

Restructuring Corporate Structure: Development Plan 2

To enable the sustainable practice of continuous innovation and research and development, the organization needs to address its complacent culture. Communication channels must also be improved to facilitate faster adaptation of film, digital, or future product offerings to enhance quality. Addressing the key issue of slow adoption of new technologies is crucial.

Restructuring the corporate framework: key transformations and enhancements

A crucial first step towards improving the corporate structure is establishing a robust communication channel that facilitates seamless interaction and information sharing between departments. By implementing a dedicated communication platform, such as project management software or internal social networks, employees can easily connect, collaborate, and exchange ideas. This will break down silos and promote a culture of open communication, allowing for more efficient decision-making and problem-solving.

To further enhance communication, it is essential to re-evaluate and optimize the organizational structure. This involves reducing hierarchical length and width by minimizing excessive layers of management. A flatter structure empowers employees, enabling them to take ownership of their work and make decisions more autonomously. Additionally, implementing cross-functional teams that consist of members from different divisions fosters collaboration and knowledge sharing. This approach encourages a holistic perspective when addressing challenges and promotes a culture of cooperation and innovation.

How we should change the corporate structure back in 2003 (Alkhatib, 2015b).

Benefits of development

The most fundamental change required is a shift from the traditional M-form corporate structure to a more cross-functional model. This will enable faster communication of change across different departments and levels of authority. This, in turn, will facilitate more comprehensive discussions to analyze the rapidly evolving market and adapt quickly. Increased cross-functional collaboration will lead to better-informed development plans and proposed changes from various departments, not just the R&D team. This will help transition from the old complacent culture to a more innovative mindset, which will be crucial for attracting and retaining top talent for the future.

By implementing this restructuring, the organization can foster an environment that is responsive to market dynamics and empowers employees to drive continuous improvement. This will be a critical enabler for developing higher-quality products that can successfully compete against rivals in the fast-paced digital landscape.

Essential development prerequisites

Transitioning to a cross-functional organizational structure will require a comprehensive realignment of the company’s infrastructure and processes. This shift will necessitate several key changes to facilitate seamless communication, collaboration, and decision-making across the organization.

First and foremost, the company must invest in modern communication and collaboration technologies that enable real-time information sharing, virtual meetings, and collaborative project management. This could involve deploying enterprise-wide communication platforms, such as video conferencing tools, cloud-based productivity suites, and integrated data management systems. Additionally, the company must ensure that all departments and employee levels have access to these digital tools and are trained on their efficient utilization, empowering everyone to participate in cross-functional initiatives.

Alongside the technological upgrades, the company must also revise its organizational policies, KPIs, and performance management systems to align with the new cross-functional model. This may include flattening hierarchies, empowering cross-functional teams, and implementing agile project management methodologies. Furthermore, the company must foster a culture of knowledge sharing, continuous learning, and innovation to encourage employees to actively contribute to the digital transformation efforts. This could involve introducing regular cross-departmental hackathons, idea-sharing sessions, and collaborative workshops to stimulate the exchange of ideas and promote a mindset of continuous improvement.

Additionally, the company may need to restructure its job roles and responsibilities to facilitate seamless collaboration and decision-making across functions. This could involve introducing new positions, such as “cross-functional project managers” or “digital transformation champions,” who can coordinate and integrate the efforts of various teams. The company must also implement robust change management processes to ensure a smooth transition and maintain employee engagement throughout the transformation journey.

To effectively facilitate the transition, the implementation of the proposed change will necessitate the involvement of restructuring consultants, HR professionals, and legal advisors. A dedicated team consisting of 2-3 experts from each respective field will be assembled to ensure comprehensive support and guidance throughout the entire process.

New Development Timeline

Kodak must undergo a transformation to recover. They should research new opportunities in digital imaging and related technologies, analyze feedback, competitors, and the market, address organizational issues through an internal survey, create a comprehensive restructuring plan, implement changes, and provide training. Developing innovative products, effective marketing, and prioritizing innovation, agility, and customer-centricity are crucial. The first two years are important, followed by launching new products, monitoring performance, and adapting to the market. By doing this, Kodak can regain its position as an imaging industry leader.

Having clear plans and milestones in place provides employees and managers with a defined direction, fostering motivation and focus towards Kodak’s purpose. This will move away from the complacent culture as well, leading to a more focused culture within the company (Nunan, 2017).

Budgeting for both development plans

Given Kodak’s net income of 950 million HKD in 2003, this can serve as a benchmark to guide the budget for both development projects (The Economist, 2010).

Regarding the costs of development 1 and 2, this report has made the assumption that the majority of changes will occur within the first year. Therefore, the following estimated costs are based on the average cost in 2003.

Cost Assessment for Development 1

To support our operations effectively, we will allocate a budget of HKD$70,000 per employee per year, totaling HKD$420,000 for two employees in each software, mechanical, and electronic department. Additionally, we will invest HKD$80,000 in hiring additional personnel, resulting in a total workforce cost of HKD$500,000. Retraining programs costing HKD$5,000 per employee will be implemented for the entire workforce, amounting to HKD$500,000. We have earmarked HKD$800,000 for infrastructure and HKD$350,000,000 for research and development initiatives to drive innovation and remain at the forefront of technological advancements. Market research and promotion will amount to HKD$120,000.

Cost Assessment for Development 2

There will be staff training, which encompasses various expenses such as development costs of 1, recruiting and layoff expenses totaling HKD$50,000, legal and consultation fees amounting to HKD$280,000, and infrastructure costs reaching HKD$800,000.

Total cost and assumptions

Both development projects have a total cost of HKD$ 350 million, which is just one-third of Kodak’s net income in 2003. The costs are assumed to be the average cost of each individual item listed, based on the 2003 pricing. For instance, an assumption that it takes HKD$70,000/year to hire a mechanical engineer.

More details can be seen in the appendix 2.

Pricing Strategy on Digital Product

The cost breakdown for manufacturing a digital camera is as follows: raw materials and manufacturing expenses amount to US$80, delivery costs US$2, and other expenses such as employee costs, patent fees, and miscellaneous expenses sum up to US$10. Therefore, the total cost to produce the camera is US$92 (Kodak, n.d.). The delivery and miscellaneous cost are assumptions.

To determine the retail price of the camera using a markup pricing strategy, where the production cost represents 10% of the selling price, we can calculate as follows:

Production cost = $92

Markup percentage = 10% = 0.1

Selling price = Production cost / (1 – Markup percentage)

Selling price = $92 / (1 – 0.1)

Selling price = $92 / 0.9

Selling price = US$920 (~HKD$7000) (rounded to two decimal places)

Therefore, based on the markup pricing strategy, the retail price for the digital camera should be approximately US$920 (~HKD$7000) when it is released in 2003. This premium price takes into consideration the disruptive nature of the technology, the associated research and development costs, and other relevant factors.

Cumulative Cash Flow Projection

Assumptions:

• Discount rate: 5.75% (Authority, 2023)

• Customer base: 500k

• Market share: 7%

• Penetration rate: 20%
• Year 2003, digital photography emerging

Assuming the assumptions above, the customer base for Kodak’s digital products is expected to rise from 40,000 to 1 million by 2007. This would result in a shift from a net loss of HKD$300 million in the prior year to a net income of HKD$900 million in 2003, representing a compound annual growth rate (CAGR) of 28.46%. More details can be seen in appendix 2.

Survey and Answers

The questions posed to individuals generally revolved around their thoughts on the two development processes, specifically whether they believed it would revamp Kodak. The results indicated that the majority of respondents expressed the belief that it would indeed bring about a revival. Out of the 10 participants, 3 were avid photography enthusiasts. Further information can be found in the appendix 1.

Conclusion

In conclusion, Kodak’s remarkable journey in photography was marked by innovations and disruptions, but ultimately, its failure to adapt to the emergence of digital photography led to its downfall. The company’s inability to innovate and diversify its product offerings, as well as its complacent culture and bureaucratic structure, hindered its ability to respond to market changes and stay competitive.

To prevent its decline, Kodak needed to recognize the need to stay ahead of the curve and continuously improve its offerings. The proposed development plans, including adopting digital photography as a core business and restructuring its corporate structure, could have helped Kodak to regain its footing in the industry. By investing in cutting-edge technology, fostering a culture of innovation and continuous learning, and empowering employees to drive change, Kodak could have reclaimed its position as a leader in the imaging industry.

In today’s fast-paced business environment, companies must learn from Kodak’s mistakes and ensure they do not fall victim to the same fate. To remain competitive, it is essential to stay at the forefront of market trends, adapt to changing market conditions, and react quickly to the latest advancements in technology. Understanding the market and its customers is crucial to developing innovative products that meet their needs and preferences. By doing so, companies can avoid the pitfalls that led to Kodak’s failure and remain agile and adaptable in the face of evolving market dynamics. Therefore, it is imperative that businesses learn from Kodak’s experience and prioritize continuous learning, innovation, and flexibility to succeed in today’s competitive business landscape.

 

* This report was entirely created by me, with the assistance of chatGPT for grammar/vocabulary improvements. The specific version of chatGPT employed in this process was the GPT-3.5 model by openAI.

Full docs link here

Appendix 1

 

Appendix 2

Appendix 3

 

References

Adams, C. (1998). A Kodak moment: Advantix project named 1997 international project of the year. PM Network, 12(1), 21–27.

 

Alkhatib, A. (2015b). KODAK from top to nothing: How organization structure affects its ability to adopt market demand. www.academia.edu. 

https://www.academia.edu/19228954/KODAK_from_top_to_nothing_How_organization_structure_affects_its_ability_to_adopt_market_demand

 

Authority, H. K. M. (2023, July 20). Hong Kong Monetary Authority – Adjustment of the base rate. Hong Kong Monetary Authority. https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/07/20230727-3/

 

Camera – Eastman Kodak Co., “Kodak No. 1”, U.S.A., circa 1889. (1889). Museums Victoria Collections. https://collections.museumsvictoria.com.au/items/399846

 

Company, E. K. (2022b, June 21). History. Kodak. 

https://www.kodak.com/en/company/page/history/

 

Digital technology. (n.d.). https://websites.umich.edu/~afuah/cases/case9.html

 

Ho, J., & Chen, H. (2018). Managing the disruptive and sustaining the disrupted: the case of Kodak and Fujifilm in the face of digital disruption. the Review of Policy Research, 35(3), 352–371. https://doi.org/10.1111/ropr.12278

 

Masoner, L. (2023, July 6). A brief history of photography and the camera. The Spruce Crafts. https://www.thesprucecrafts.com/brief-history-of-photography-2688527

 

Moon, & Paul, T. S. (2019). Missed moments: Kodak’s failure to define the consumer market for digital photography. Buffalo_State. https://digitalcommons.buffalostate.edu/cgi/viewcontent.cgi?article=1051&context=history_theses

 

Nunan, D. (2017). Reflections on the Future of the Market Research Industry: Is Market Research having its ‘Kodak Moment’? International Journal of Market Research, 59(5), 553–555. https://doi.org/10.2501/ijmr-2017-043

 

Original Kodak Camera, Serial No. 540. (n.d.). https://americanhistory.si.edu/collections/nmah_760118

 

The Economist. (2010, February 27). Kodak changes the picture. The Economist. https://www.economist.com/unknown/2004/01/23/kodak-changes-the-picture

 

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