Balancing Nostalgia and Innovation

Context

The phrase “Kodak moment” has become synonymous with capturing cherished moments. This reflects Kodak’s once ubiquitous presence and iconic status in popular culture. But Kodak’s own legacy is one of a spectacular rise and an equally dramatic fall – a classic cautionary tale for businesses. 

Founded in 1888 by George Eastman in Rochester, New York, Kodak revolutionised photography by making it accessible to the masses. Before Eastman’s innovations, photography was a complex craft reserved for professionals. 

By the mid-20th century, Kodak controlled around 70% of the US film market and enjoyed global influence. Despite its pioneering spirit, Kodak’s fortunes started to shift in the 1980s. Japanese rival Fujifilm gained traction with competitive pricing and high-quality products. Yet the real challenge came from within.

Real-Life Story

In 1975, Kodak’s own engineer invented the first digital camera, but instead of seizing the opportunity, the company shelved it – fearing digital would cannibalise its lucrative film business.  

Complacency became Kodak’s Achilles’ heel. While Fujifilm adapted, Kodak remained entrenched in its legacy. By the 1990s, digital photography was rapidly gaining ground. Competitors like Sony and Canon embraced the technological shift, while Kodak clung to old tools. 

Even as it belatedly entered the digital space, poor execution and a lack of investment in imaging software and sensors left it lagging. By 2006, Kodak’s digital division was haemorrhaging money.  

Kodak’s leadership stumbled time and again. In 2007, the company sold its healthcare imaging business for US$2.35bn, forfeiting a sector with growing potential. Meanwhile, Fujifilm diversified into pharmaceuticals and cosmetics, cushioning itself from the digital storm.  

The rise of smartphones delivered another decisive blow. Apple and Samsung turned mobile phones into powerful cameras, rendering traditional cameras redundant for the average consumer. While Nikon and Canon pivoted to premium digital photography, Kodak’s failure to innovate sealed its fate.  

Out of Focus

By 2011, Kodak’s financial health had deteriorated. Cash reserves had plummeted to $957m from $1.6bn a decade earlier. Faced with mounting losses and debt, the company filed for Chapter 11 bankruptcy in 2012. Kodak, once an unshakable legacy brand, now faced the reckoning of its own making.  

The workforce shrank from a peak of nearly 150,000 employees in 1988 to around 4,000 by 2023. In a desperate bid to regain financial footing, Kodak exited unprofitable consumer lines, including digital cameras and photo kiosks. By spinning off its photo business into Kodak Alaris, it reduced pension liabilities and streamlined operations. Monetising its patent portfolio brought in $525m from tech giants such as Apple, Google, and Microsoft. This injected much-needed capital.

Despite losing its consumer dominance, Kodak retained a foothold in niche markets such as motion picture film production, striking agreements with major studios in 2015 and 2020.  

Kodak’s story didn’t end with bankruptcy. It doubled down on commercial printing and introduced innovations. Competing with traditional offset printing, it met the demand for high-quality packaging and industrial applications.

By 2025, the company’s successful turnaround has become a testament to its resilience and strategic shift. 

Emerging from the ashes of Chapter 11 in 2013, Kodak restructured into a leaner operation, shedding its consumer baggage and embracing commercial and industrial markets.  

Under the leadership of CEO and restructuring veteran Jeffrey J. Clarke, Kodak adopted a long-term innovation mindset. Short-term thinking gave way to disciplined financial management and efficiency. 

PostScript: Today, Kodak’s commitment to profitable growth has paid dividends. While annual revenue declined by 7% in 2024, net income surged by 36%, a testament to its operational discipline. The company’s gross profit margins remained steady by prioritising smart revenue over unsustainable expansion.

Recognised with the Gold Stevie Award for Best Business Technology Pivot, Kodak’s evolution earned industry acclaim. The company’s resilience serves as a blueprint for business leaders seeking not just survival, but renewal. 

Key Lessons

1) Balance Nostalgia with Progress

While Kodak maintained its legacy in motion picture film, it pivoted to commercial printing. WarTime CEOs honour heritage but never let sentiment impede growth. They recognise that it’s better to disrupt themselves than be disrupted.

2) Lean Operations Win Battles

Shedding excess and streamlining operations helped Kodak regain profitability. A lean, agile structure is a tactical advantage in volatile markets. WarTime CEOs prioritise sustainable profitability over aggressive expansion.

3) Monetise Intellectual Property 

Kodak’s patents fetched millions from tech giants. In times of crisis, undervalued IP assets can serve as valuable war chests.

4) Stay the Course Even Under Fire

Kodak’s resilience post-bankruptcy proved the importance of commitment to a long-term vision. WarTime CEOs weather short-term setbacks with unwavering resolve.

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Until next week, may the force be with you.

Kevin

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