Good morning Franky. You probably don't remember the days of film. You're such a young pup that you grew up in the age of digital photography. But film was something that was around for over 100 years, and it made a company named Kodak famous and very wealthy for a number of years. What's happened to Kodak is a modern tragedy. You will explore that in this week's video lectures. So, why don't you relax and learn a little bit about this company that has such a tremendous history in the business literature. Kodak was actually founded in 1880. It created the first snapshot camera [SOUND] in 1888. Here is a diagram or a picture of what that might have looked like, and an ad for it. And something that is very interesting here, and this is a phrase that Kodak advertised for a long time. You press the button, we do the rest. Look down here at the price of this camera. $25 in the late 1800s, early 1900s, that was a lot of money. So only the wealthy were able to take pictures. You push the button, we do the rest. But the breakthrough came when, in February of 1900, out came the Brownie. This is a picture of the Brownie. It was actually made out of cardboard, if you can believe that. In 1962 Kodak reached a billion dollars in sales. And in 1976 it had 90%of the market for film and 85% for cameras. It probably had one of the best known brands in the world. In 1975, an engineer named Steve Sasson at Kodak invented the first digital camera. And here is the irony, Kodak invented the digital camera. And it was the digital camera and the associated use of it was the Internet that pushed Kodak into bankruptcy. Further in that innovation in 1996 Kodak came out with the first mega pixel digital camera. So what kind of a company are we talking about? Well in the video that preceded this one, we discussed different kinds of organizations and their structure. In the case of Kodak, you're looking at a highly bureaucratic company with many layers of management. Remember we said that it would look like this, so each layer would have a number of managers was according, and you have lots of layers. This is something I'd never seen before and it's, [LAUGH] I'm using I guess a person who studied Kodak and wrote a book about it, about 20 years ago. Said that individuals would have pre meetings to prepare for scheduled meetings, because Kodak was a company that didn't like controversy. And that's kind of a problem, right? Because there's something like we call constructive controversy, constructive discussion about alternatives. If all you're looking for is agreement, then you're going to have trouble responding to a destructive technology. The company was very paternalistic to taking care of it's employees. And the fact that it was a film company meant that it was basically a chemicals company and that's an analog business, not a digital business. So here's a timeline for some of the key events in Kodak starting in 1985, and it shows a number of things. First of all, Kodak's management was easily distracted. So Kodak came out with a instant photography product, camera and Polaroid sued it for patent violation and it lost that suit to Polaroid. It acquired Sterling Drug Company and IBM's copier division. So you might say why would a film company get into the drug business? Copier business, well, it's an imaging business, so maybe a Kodak copier made some kind of sense for them. In 1990, Kodak produced something called the Photo CD system. It was kind of clumsy to use, and it never took off. George Fisher became the CEO in 1993, and he was hired by the board of directors, who thought that he was what they called a digital man. He had turned around Motorola and was considered to be a part of the technology industry. And the board thought that he could bring that knowledge, that emphasis on digital products to Kodak. He sold off some of the chemical businesses and its clinical diagnostics division and used that money to pay down debt. Fisher tried very hard to move Kodak more towards a digital future. And in an interview he suggested that the top managers at Kodak understood digital and were committed to it. But he was never able to convince middle managers that they needed to think about a digital business and a digital future. Kodak charged Fujifilm, which was eating into some of its film business, with violating the World Trade Organization rules, but that body ruled against Kodak. Again, it took attention away from its main business. Fisher stepped down as CEO in 2000, Daniel Carp became the CEO. Kodak acquired a photo sharing service on the web called Ofoto. But by early 2000s, 2004, Kodak stops selling film cameras. It called itself a company that was undergoing a digital transformation in 2004. But why did it take so long? Digital transformation started back when Steve Sasson invented the digital camera. And in 2005, Antonio Perez became the CEO of Kodak. Perez had been the head of the printer division for Hewlett Packard. And we will see that this has influenced Kodak's strategy as Perez has tried to bring the company first into bankruptcy then out of bankruptcy as a different kind of organization. In 2012, Kodak filed for bankruptcy. Now so the question here is, what happened? How did Kodak miss the digital revolution after it had invented the digital camera? We will explore this further in our next video.
