Negative Kodak pays for lack of focus
A Cambridge University academic says flawed strategy plunged Eastman Kodak into bankruptcy – and claims the crisis need never have happened.
The US giant filed for bankruptcy in the US a few days ago – exactly three years after closing its Cambridge UK R & D centre and five years after Dr Kamal Munir warned the company to spin out its Digital Imaging Division.
Dr Munir, who has been teaching at the Judge Business School since 2000, has followed Eastman Kodak’s fortunes for more than a decade.
He said that with sounder judgement the company could have hit the heights of Apple or created a Facebook or Flickr.
Dr Munir warned the company five years ago that unless it realised that the world had changed and came up with a new strategy for the digital age (like Apple had done with the iPod and iPhone), its ‘bits-and-pieces’ business model would not be able to save it.
“What Kodak should have done long ago was to completely separate out the Digital Imaging Division,” he says.
During his research of the company that created the famous ‘Kodak Moment’, Dr Munir found that the Digital Imaging Division was pawn to the powerful Consumer Imaging Division where it was viewed as ‘cannibalising’ Kodak’s operational strategy.
He said: “They should have taken this business (the Digital Imaging Division) to Silicon Valley, separated it completely from their existing business and given it a free rein.
“They could have invested in 10 different companies run by teenagers or ‘twenty some-things’ and today they could have owned the likes of Facebook today or Flickr.
“The best way forward for them was to reinvent themselves but they were completely entrenched in a mindset which was ‘people take pictures to preserve memories’.
“People change their behaviour all the time. They don’t take pictures any more to preserve memories – they take pictures to share experiences.”
Kodak had big plans for its Cambridge Science Park research hothouse in the UK – set up under the directorship of Sam Weller in July 2005. Ironically digital imaging was one of the thrusts behind the Cambridge move.
Cambridge University medical researchers and others on the Addenbrooke’s Campus had long since realised the potential power of digital imaging in the MedTech sector.
But it pulled the Cambridge facility in February 2009 and retrenched to New York as part of a global rationalisation that saw around 4,500 job cuts internationally.
The company said that maintaining a small team of researchers at a location thousands of miles away from the mother ship proved too expensive.
To listen to Dr Munir’s Judge Business School podcast or to watch the video, visit:www.jbs.cam.ac.uk/interactive/expert_comment/2012/munir_kodak.html
• PHOTOGRAPH SHOWS: Dr Kamal Munir