Kodak struggled with the technological shift from film to digital imaging due to its entrenched bureaucracy and focus on maintaining the status quo. Former executives described Kodak as a film company that saw equipment only as a means to sell more film and avoided anything seen as risky. The bureaucracy grew so large over Kodak's 100+ years of success in film that decision making required many approvals and meetings to avoid confrontation. This risk-averse culture made it difficult for Kodak to innovate and adapt to digital photography, ultimately leading to the company's decline.

1. Kodak Bureaucracy

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

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

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

5. … The technological shift changed the rules of the game.

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

7. 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

8. 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.

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

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

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

12. ‘‘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

13. 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...

14. At Kodak this arrogance fueled the growth of a nightmarish
bureaucracy so entrenched it could have passed for a
government agency…

15. ... There was an emphasis on doing everything
according to company rulebooks… Meetings were
held prior to meetings…

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

17. Business Week wrote in 1995:
“It was so hierarchically oriented that everybody looked to
the guy above him for what needed to be done.”

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

19. 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.

20. A look at the vandalized building confirms this observation.

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

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

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

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

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

26. Not anymore.

27. 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.

28. Find out more about Kodak:
www.christiansandstrom.org