How Can That Be, Doesn’t
Have the Best Business Management? America
Capitalists quite often invent the technology that destroys their own business.
Eastman Kodak is a picture-perfect example. It built one of the first digital cameras in 1975.
The decline of Kodak can be documented
Kodak’s revenues peaked at nearly $16 billion in 1996 and its profits at $2.5 billion in 1999. The consensus forecast by analysts is that its revenues in 2011 were $6.2 billion. It recently reported a third-quarter loss of $222m, the ninth quarterly loss in three years. In 1988, Kodak employed over 145,000 workers worldwide; at the last count, barely one-tenth as many.
and is directly tied to the failure of the firm to leave film cameras and film and go in a different direction. How do we know that, because its technological twin, Fuji Film did just that.
While Kodak suffers, its long-time rival Fujifilm is doing rather well. The two firms have much in common. Both enjoyed lucrative near-monopolies of their home markets: Kodak selling film in
America, Fujifilm in . A good deal of the trade friction during the 1990s between Japan America and sprang from Kodak’s desire to keep cheap Japanese film off its patch. Japan
What did Fujifilm do? Well they did what a company with intelligent management would have done, they diversified out of film.
Fujifilm diversified more successfully. Film is a bit like skin: both contain collagen. Just as photos fade because of oxidation, cosmetics firms would like you to think that skin is preserved with anti-oxidants. In Fujifilm’s library of 200,000 chemical compounds, some 4,000 are related to anti-oxidants. So the company launched a line of cosmetics, called Astalift, which is sold in Asia and is being launched in
Europe this year.
Fujifilm also sought new outlets for its expertise in film: for example, making optical films for LCD flat-panel screens. It has invested $4 billion in the business since 2000. And this has paid off. In one sort of film, to expand the LCD viewing angle, Fujifilm enjoys a 100% market share.
So no, the demise of Kodak was not inevitable. Well it was inevitable with a management team that proved so inept that it ran one of the bluest of the blue chips into the ground.