Focus on past glory kept Kodak from digital win

Thu Jan 19, 2012 12:10pm EST
 
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By Ernest Scheyder

NEW YORK (Reuters) - Eastman Kodak Co's long decline that culminated in a bankruptcy filing on Thursday can be traced back to one source: the former king of photography's failure to reinvent itself in the digital age.

The more than 130-year-old American icon filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York, saying it had obtained a $950 million credit facility to stay afloat while it tries to cut more than $6 billion in liabilities.

The filing was not unexpected: Kodak has already become a cautionary tale for anyone considering a career in business.

Students at top M.B.A. programs read a case study each year that explores, in painful detail, the strategic mistakes that led to the company's slide as digital photography overtook film.

Unlike peers such as IBM and Xerox Corp, which managed to create new revenue streams when their legacy businesses declined, critics fault Kodak for abandoning new projects too quickly, for spreading its digital investments too broadly, and for a complacency in its Rochester, New York, base that blinded the company from technological leaps elsewhere.

"The seeds of the problems of today go back several decades," said Rosabeth Kanter, the Arbuckle professor of business administration at Harvard Business School.

"Kodak was very Rochester-centric and never really developed a presence in centers of the world that were developing new technologies," she said. "It's like they're living in a museum."

CRIPPLED BY NOSTALGIA   Continued...

 
<p>A Kodak Retina camera is seen in a photo store in London January 19, 2012. Eastman Kodak Co, the photography icon that invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged plunge for one of America's best-known companies. REUTERS/Stefan Wermuth</p>