How Kodak Failed

There are few corporate blunders as staggering as Kodak’s missed opportunities in digital photography, a technology that it invented. This strategic failure was the direct cause of Kodak’s decades-long decline into bankruptcy as digital photography destroyed its film-based business model.

Photo by Kent Weakley

Kodak’s failure offers stark lessons for how other organizations grappling with disruptive technologies might avoid their own Kodak moments.

Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, characterized the initial corporate response to his invention this way:

But it was filmless photography, so management’s reaction was, ‘that’s cute — but don’t tell anyone about it.’

Kodak management’s inability to see digital photography as a disruptive technology, even as its researchers extended the boundaries of the technology, would continue for decades. As late as 2007, as illustrated by the following Kodak marketing video, Kodak management felt the need to trumpet that “Kodak is back “ and that Kodak “wasn’t going to play grab ass anymore” with digital.

To understand how Kodak could stay in denial for so long, let me offer a story that Vince Barabba recounts in his book The Decision Loom: A Design for Interactive Decision-Making in Organizations.

It was 1981 and Sony had just introduced the first electronic camera. One of Kodak’s largest retailer photo finishers asked Barabba, who was Kodak’s head of market intelligence at that time, whether they should be concerned about digital photography. With the support of Kodak’s CEO, Barabba conducted a very extensive research effort that looked at the core technologies and likely adoption curves of traditional, silver halide film versus digital photography.

The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had…