On more than one occasion I’ve visited Eastman House in Rochester NY. Situated in the south-east section of the city, the house which Kodak founder George Eastman built stands on a beautiful tree-lined street which is particularly delightful to visit in the fall. Entry to the house occurs in the side furthest from the road and the visitor finds himself passing through the International Museum of Photography and Film before coming to the house proper.
Exhibits of cameras and photographs, famous and unknown, fill the halls and line the walls of the museum, emphasizing and re-emphasizing the revolution that George Eastman’s innovations played in the development of the modern world. After all, Eastman’s products shaped society and helped birth such modern day fixtures as motion pictures, photo journalism, scientific imaging and the like. They also netted Eastman a vast fortune.
His house, which lies just beyond the museum, is a grand mansion in the true captain-of-industry style, worthy of the money he earned in his lifetime. Eastman was so wealthy that he was actually able to have the house enlarged by having it cut down the middle, separating the pieces by several feet and then having the gap subsequently filled in and decorated. The first floor of the house is preserved essentially in the style and furnishings of its owner at the time of his death. On the second floor, however, some of the rooms have been turned into multimedia exhibits where the visitor may learn more about the man and the vision that netted him his wealth.
George Eastman, was born in 1854 to what could be called an upper-middle class family. His father, George Washington Eastman, had started a business school in the early 1840s, but the family fortunes took a steep downturn shortly after George’s birth when his father took ill. The family moved to Rochester in 1860, just two years before the father’s death from a brain disorder.
George eventually left his schooling behind and went to work as a bank teller to raise money to support his mother and himself. Extremely dissatisfied with his experiences with professional photographers of the day, Eastman spent his spare time tinkering with the chemical processes underlying the capture of a photographic still. From 1880 to 1884, he successfully filed for 3 patents for new ways of applying photographic emulsions and the invention of photographic film. Four years later, he invented the first camera designed to use the film. Four years after that (1892) he founded the Eastman Kodak company, which enabled him to earn vast sums of money, positively affect the lives of his employees and the people of Rochester, and to donate over 100 million dollars to various institutions of higher learning here in the United States and abroad. His invention of film earned him the Gold Medal of the American Institute of Chemists in 1930. He died of a self-inflicted wound two years later, in 1932.
It is easy to look on George Eastman’s life, his wealth and fame, his philanthropy and public works, and miss the one main ingredient that led to his success. It was the simple business idea that people would want to take photos for themselves. His innovations, especially the Brownie, were means to the end of bringing photography out of the hands of the experts and putting into the hands of anybody with an enthusiasm for capturing an image, documenting a memory, or making a piece of art. That’s how George succeeded. And, unfortunately, it was the loss of that idea that led Kodak to fail.
When Eastman was at the helm, Kodak reflected his innovative spirit and his desire to put people first. The company was unafraid to try new things, such as a 13-month accounting year or a 40 hour work week, not because they wanted to be seen innovating nor because it was shiny and new, but because they cared about people.
After his death, Kodak began a strange trajectory in the business world. From the 1930s to the 1990s, Kodak ruled the landscape of film photography, with the company commanding 90% of film sales and 85% of camera sales as late as 1976. The constant revenue supply fueled a research development engine that generated many inventions. Some of the most notable are:
- Invention of the tunable dye laser (1970)
- Invention of the digital camera (1975)
- Development of the Bayer filter for digital color photos (1976)
- Launch of the first megapixel camera (1986)
Nonetheless, the same time frame saw a huge number of missteps. Kodak assumed that its customer base would remain loyal under the encroachment of Fuji Film in the later 1970s and early 1980s. During the 1990s and early 2000s, the corporate motif was one of mergers and acquisition, and subsequent divestitures of same, sales of intellectual property, stock issues, seemingly endless branding and re-branding. All of this finally culminated with Kodak filing for Chapter 11 bankruptcy protection on January 19, 2012.
Having emerged from bankruptcy, Kodak now says that it:
has transformed itself into a technology company focused on imaging for business. Today's Kodak provides:
- World-class R&D, based on Kodak's unique strengths in the materials, imaging and deposition sciences
- Breakthrough products enabling customers to achieve transformational improvements in quality, productivity and sustainability
- A broad solution set across graphic communications, product goods packaging, functional printing enabling
- Software and professional services businesses use to redefine information flow and security
In an interesting take on Kodak’s bankruptcy, How Kodak Squandered Every Single Digital Opportunity It Had, Pete Pachal notes that
But Kodak's inability to make any of its products stand out over the last decade is demonstrative of an overall reluctance to innovate. Certainly, if you asked Kodak executives in the early 2000s if they were committed to innovation, they would have answered yes, but real innovation requires risk and vision. You don't kill all Wi-Fi cameras just because the first model got a lukewarm response from the market — that is, if you really believe in the core idea.
I think that Pachal is close to the mark in his criticism but that he misses the final point. It isn’t innovation that matters but a clear focus on ‘the what’ of your business not ‘the how’. Eastman clearly understood this distinction, since his moves were always a means to an end. Development of film was the method to bring photography to everyone. The Kodak and Brownie cameras were not innovations for the sake of being committed to innovation but rather a service being provided by Eastman to people everywhere.
During the years between Eastman’s death and filing for Chapter 11, we saw a lot of bumbling and stumbling from a culture inculcated during Kodak’s dominance; a culture focused on how to do things not what to do. We saw research and development done for its own sake, because that’s how a company stays on top. We saw companies being drawn into and spun off of the central corporate structure because that’s how a powerful business operates. We saw a slavish devotion to film because that’s how Kodak made their money.
That’s why it wouldn’t have mattered if Kodak had stayed with WiFi for photo-sharing, or if had embraced something else that was innovative. Rather, if the company had stayed focused on the human element, they would have continued to grow digital photography and they would have invented WiFi, cloud computing technology, and no doubt launched their own kind of Instagram. Not because it was how to succeed but because it was what people would have wanted. This Kodak would have known when to throw away old ideas in favor of new, and would have stayed ahead of the curve because this Kodak would have thought just like the customers they serve.
As a result, I would argue that the new Kodak is in no better position to succeed than the old Kodak before it emerged from Chapter 11 protection. Not because the new Kodak has picked the wrong core competencies or is focused on the wrong market segment, but because the new Kodak shows no indications that it is focused on service. It may stay in business, but it will never thrive again until the company is run by people with a vision like George Eastman's; people who know what the customer wants.
If George Eastman were alive today he would be profoundly disappointed.