Kodak and Fuji: a tale of two companies in the face of the same insurmountable problem

by Jamie Flinchbaugh on February 8, 2012 · 1 comment

The Economist had an excellent article detailing the difference between Kodak’s historic bankruptcy and Fujifilm’s equally remarkable success, in The last Kodak moment?, and expanded on in Sharper focus.

Both companies faced the same problem statement: digital photography would replace film. But Eastman Kodak, founded in 1880, despite it’s major innovation capabilities and giant patent library, couldn’t deal with the problem. Fuji, on the other hand, has. The story usually looks like a company that didn’t see the change coming. That couldn’t be further from the truth here.

Kodak built one of the first digital cameras in 1975. In 1979, Kodak executive Larry Matteson wrote a forecast which predicted how different markets would switch from film to digital, including quite accurately the mass market by 2010. They saw the problem. They even understood the problem. They failed to do anything meaningful about it. They instead chased every last market of film buyers hoping for the best.

Fuji did a lot about it. The moved into cosmetics and they made optical films for LCD flat-panels. Mr. Komori of Fuji shared a blunt assessment of the situation:

“It was a painful experience,” says Mr Komori. “But to see the situation as it was, nobody could survive. So we had to reconstruct the business model.”

Although the story itself has nothing to do with lean, it does contrast an essential lean behavior. As I wrote in yesterday’s post:

I believe one of the utmost hallmarks of a lean organization is that someone can talk very openly about the problems which they have no idea how to solve yet.

As Kodak (and GM and Sears before them) certainly saw the writing on the hall, they left the difficult conversations for the hallways and parking lots. The difficult conversations weren’t addressed head-on, on a continuous basis, until they were resolved.

Reflection question: What would you have done 10 years ago if you were at Kodak? What would you have done 1 year ago?

1 Will Grimes June 4, 2012 at 6:13 pm

Amazing. As a “Lean Professional” myself it astonishes me when in the face of improvement opportunities many, many otherwise smart people will simply talk themselves out of doing ANYTHING because it’s seems difficult. What’s worse is when the chain-of-command nods in approval.

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