Kodak Bottleneck

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Information about Kodak Bottleneck

Published on November 12, 2009

Author: Christiansandstrom

Source: slideshare.net


Middle management - the bottleneck is always just below the top of the bottle...

Kodak Bottleneck

Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaksabout disruptive innovation and technological change.

This presentation provides some interestingexplanations to the decline of Kodak in the shift to digital imaging…

(The images in this presentation come from Kodak’sabandoned site in Järfälla, outside of Stockholm, Sweden)

The place has been subject to a lot of Creative Destruction.

There seems to be a curse over firms which experience a fundamental shift in the underlying technology.

Top management usually get the blame for the demise of big companies like Kodak…

… They’re brought to the gallow and are accused ofincompetence, greed, arrogance and too much focus on short term profits.

Of course, the chief executives bear a lot of responsibility, for anything in a company…

… But that doesn’t imply that they are the biggest problem.

My friend Bengt Järrehult often saysthat the bottleneck isalways just below the top of the bottle.

Middle management has a lot to lose, orwin. It is populated bypeople who still want to climb the ladder,who’ve been steeped into the corporateculture and are pretty good at company politics…

And moreover, middle management is the function thatfilters out information in the company, in both directions.

Forcing profound changes upon a company isn’t easy forexecutives, particularly when these changes will have plenty of political consequences inside the firm.

Business Week wrote about this in 1997: “The old-line manufacturing culture continues to impede Fisher’s efforts to turn Kodak into a high-tech growth company. Fisher has been able tochange the culture at the very top...

… But he hasn’t beenable to change the huge mass of middlemanagers, and they just don’t understand this [digital] world.”

Giovanni Gavettiinterviewed Fisher (theCEO in the 1990s) after he’d left the company: “I think that the fear drove paralysis thatmanifested itself as timewent on, to rigidity withrespect to changing our strategy and I didn’t see that at the start. . .

… we really had to work very aggressively to getmiddle management first of all understanding what we were trying to do and believe that this was astory of opportunity, that we were in the picture business…

... That digital was just a technology just like film was, and that picturebusiness opportunity was gigantic, and there was a future for them. . .

… Their arguments would be all over the map. . . Kodak can’t succeed in this market. We’ve tried some consumer products before andfailed miserably. There is no money in this business; it’s all low margin. . .There is a new set of competitors. . .we don’t know anything about them…

… I also believe firmly. . .(that) digital imaging waseverything in the future. Therefore we were either going tobe in the picture space. . .or we weren’t. If we were going to be in it, we’d have to make an all out assault on digital imaging which meant a step function change.”

One wouldn’texpect someone who was topmanagement to blame top management.Nevertheless, he’s got a point.

If the stair structure starts to shake because of a storm,those people who are currently climbing it will be very scared, and hold on to thestructure, even when it’s falling down.

SourcesGavetti, G., 2005b. Kodak: Interview with Dr. George Fisher (DVD). HBS Publishing.Lucas, H.C., Goh, J.M. (2009) Disruptive technology: How Kodak missed the digital photography revolution, Journal of Strategic Information Systems 18 46–55.Swasy, A., 1997. Changing Focus: Kodak and the Battle to Save a Great American Company. Times Business.

Find out more about Kodak:www.christiansandstrom.org

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