“Take a picture of me with a Kodak”, sang US rapper ‘Pitbull’ in 2011 in his number one single ‘Give me everything tonight’. Yet in 2012, that will become a harder task as Kodak struggles to stay alive following a decade of decline.
The digital revolution is at the heart of Kodak’s collapse. The irony is that Kodak, founded in 1880, was the first company to build a digital camera in 1975.
I worked as a consultant for Kodak in the mid to late 2000s as they sought to downsize their film manufacturing footprint across Europe as smartphones and cheap digital cameras impacted sales of their ‘little yellow boxes’.
At its heart, Kodak was a company that genuinely cared for its employees. “Respect” was the key word for how they wanted to manage the downsizing process, with employees getting early notice of extended consultation periods and very competitive pay offs. Management listened to sensible external advice and gained plaudits from PR Week for ensuring Kodak “escaped the savage criticism the media tend to dish out over mass job losses.”
Part of the outreach was designed to communicate a significant turnaround process and the long-term digital vision of the company. Yet the loyal employees, most of who had been there for many years, didn’t share the management’s optimism as they sat within old film manufacturing sites listening to the chatter of a brighter digital future. They were not negative towards Kodak; they just didn’t believe it was possible.
Often management sees a quiet staff as a happy staff. This is a fundamental mistake. An engaged internal audience that fully understands a business objective, how to meet that objective and what it gains from meeting it (or loses by not meeting it) translates into success for a company that has got its strategic direction right. Kodak had good people but was too late convincing them that the turnaround strategy was a realistic alternative to the status quo.
Change management processes are notoriously difficult, but other companies should heed the warning of the Kodak story. With sales of Kodak’s significant IP portfolio or a Chapter 11 bankruptcy imminent, it demonstrates just how important it is to instigate change as early as possible (as Kodak’s competitor Fujifilm did in the 80s). As Pitbull also sang in his previously mentioned hit, “we might not get tomorrow”; so get it right first time round.
***UPDATE (19/01/12): Early this morning Kodak filed Chapter 11 bankruptcy proceedings in New York after failing to find a buyer for 1,100 digital imaging patents. Kodak said it has secured $950 million from Citigroup and expects to be able to operate its business during bankruptcy reorganisation and pay its 19,000 remaining employees. Anotonio Perez, Chief Executive, said: “We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”***