Thursday, January 19, 2012

Bow Wow, Kodak

A sampling of reader comments from the New York Times story of Kodak's bankruptcy announcement:
  • "First Twinkies, now Brownies. My childhood is going bankrupt!" - Wasting Time, DC
  • "How could Kodak be so over-exposed?" - Technic Ally, Toronto
  • "Kodak's recipe for decline parallels that of all too many companies too many MBAs and too many corporate lawyers running things, and not enough visionaries and technical people - this, no less, from the company that pioneered digital imaging." - mancuroc, Rochester NY
  • "Excellent, part of Kodak's corporate turnaround strategy is to become a patent troll suing other companies." - omalley69, Toronto
  • "A note to Perez - it's too late to sell patents to buggy whips." - Shining Light, North Coas
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Was it management incompetence?

Take a look at the selection of opinions above.  I've never said right-wing capitalists are wrong when it comes to the moderate business mindset of the New York Times and its readers!

Whereas capitalists esteem Capitalism as a power that can do no evil, the Times and its readership aren't always so sure.  Classic proof of this can be seen in such responses to Kodak's bankruptcy filing, in which management gets skewered for completely bungled the switch from film to digital photography over the past couple of decades.

According to information reported in the Times, part of Kodak's proposed restructuring under bankruptcy protection will be to aggressively sue other companies allegedly violating Kodak's copyrights on a vast assortment of technologies.  Not exactly a textbook gameplan for long-term fiscal sustainability, is it?  They've already been trying to sell some of their patents, even though it's unclear how patents they couldn't profit from themselves could be so valuable to anybody else.  Kodak also intends to complete what many consider to be a misguided transformation from photographic film inventor into a desktop printer manufacturer, much like Apple's transformation, shifting from laptops to iPods.

Trouble is, according to skeptics, Kodak's current CEO is no Steve Jobs.

No Longer on a Roll

Perhaps not surprisingly, however, reader comments to the same news from Kodak has been decidedly different on the Wall Street Journal's website, where a pronounced defense of the MBA culture - plus some hostility at Kodak's rank-and-file employees and professional engineers - runs through many posted opinions.

It's a popular ax for pro-management pundits to grind, even as they're likely trying to protect the value of their own MBAs:  Kodak is yet another big business that has suffered at the hands of its workers.

Considering how many tens of thousands of its employees Kodak has laid off over the past decade, isn't that argument a bit dubious?  But then again, Kodak's besieged CEO, Antonio Perez, has replaced most of his executive suite's old guard since taking over in 2005, and that hasn't helped the company yet, either.  So deciphering which employee group is to blame for the storied corporation's fall from grace may be left for history to confirm.  Indeed, while it's certainly obvious that the film producer completely screwed up its response to society's digital transformation of photography, how it could and should have anticipated and engaged with digital imaging will likely be the topic of debate for some time.

Actually, the debate has already started!  Across the Internet, highly-educated engineers who have either retired from Kodak, or were fired from it during incessant waves of layoffs, have written articles for business websites and blogs about the intransigent corporate culture at Kodak's storied headquarters in Rochester, New York.

Although the company could attract engineering and executive talent from around the globe to that smallish urban outpost near Lake Ontario, once executives became ensconced in the city Kodak's founder built, they tended to congeal into a boardroom groupthink.  While engineers down in the labs kept on churning out inventions - including, to Kodak's everlasting shame, the digital camera itself - company management scoffed at the notion that its core film business would ever go bust.

The Tail Wagging the Dog?

Yet herein may lie yet another culprit for Kodak's inability to re-invent itself.

The legendary George Eastman didn't invent photography, but he invented roll film, which brought photography to the masses.  He founded Kodak and developed it into an economic powerhouse by hiring gifted inventors who continuously improved his original product.  Kodak thrived on innovation, but it was innovation fueled by gifted engineers, more than the boardroom machinations by MBA's.  Eastman treated all of his employees well because he understood that innovation is best nurtured within contented employees, and executives don't mix photographic chemicals to create the products from which profits are derived.

However, as current CEO Perez has been thrashing about, trying to salvage Eastman's legendary brand, it doesn't appear that he's realized the secret to Eastman's success.  Did Eastman announce a goal, and then push his engineers to pull products to support it out of a hat?  Or did Eastman hire brilliant engineers, build state-of the-art laboratories, and let his people tinker, innovate, and bring their inventions to his executives to sell?

Granted, Eastman died decades before Kodak began to fall apart at the seams, but he created a culture of discovery and development that his predecessors ultimately turned on its head, where the tail started wagging the dog.

Witness Steven Sasson's digital camera, which he invented in 1975.  Kodak's executives obviously weren't looking to bring a digital camera to market.  They didn't know what to do with it, primarily because they had already succumbed to the corporate groupthink that would bring the company to this day of bankruptcy.

Ever since the rumor mill started churning through Kodak bankruptcy gossip last year, Perez has been under fire for what observers claim has been his inept leadership, but isn't it possible that his tenure at Kodak has simply been too little too late?  Didn't Perez inherit a corporate culture that no longer knew what to do with technology or how deep innovation should run?

If corporate management is supposed to know how to assess trends, evaluate new opportunities, and capitalize on product development - even products consumers might not yet know they need - then the legend of Steve Jobs, who never finished college, let alone got an MBA, provides a compelling parallel to the dysfunction in Kodak's corporate suite.

Can Innovation Burn in this Crucible?

Not that an MBA, in and of itself, is a bad thing.  It simply isn't the magic elixir corporate America thinks it is.

And maybe all of the things the Journal's readers criticize Eastman for - free dental care and other generous employee benefits, plus lavish civic philanthropy, for example - are unsustainable in today's corporate world.  At least for a purveyor of ultra-competitive consumer technology.

But might one of Eastman's strategies - letting his cracker-jack engineering department set the pace for his company's products - be something today's Kodak should consider re-implementing?

Perez has said he's pushing whomever's left in his engineering labs to develop new products to fit his new business model for Kodak, but not only does Kodak not have a good track record with change, it's never had to scramble to meet such top-down changes.  Does Perez not understand that inventors can't always react immediately to orders for making square pegs fit round holes?

To the extent that Perez may actually be making more of a valiant effort to keep Kodak afloat than many people are willing to credit him with, then hopefully, this bankruptcy will give him the time and, unfortunately, the finances salvaged from collateral damage to employment and pensions, to succeed.

But in how many ways is Kodak not at all like Apple?  It's older, with a more deeply-ingrained methodology, and what must be a severely disillusioned and threadbare workforce.

Engineers and inventions used to lead the company, and corporate followed along to find and stock markets for their innovations.

Now corporate is trying to engineer a re-invention of the company by commissioning innovations that have historically occurred through scientific experimentation, not bankruptcy timetables.

Can the tail wag this dog back to good health?
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1 comment:

  1. I was comfortable with a box camera in 1950s, no high tech, simple black andwhite pics. I could appreciate Kodak when we visited Rochester, US. They had made a camera as cheap as one dollar, every student had it. I cannot reconcile it can go for bankrupcy!

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