Posted on 01/06/2012 7:01:32 AM PST by SeekAndFind
Bankruptcy: News that Eastman Kodak may file for bankruptcy brought a flood of nostalgia for the venerable company. But Kodak's demise underscores the unique strength of our free-market economy — its constant renewal.
Sixty-two years after Kodak was founded, economist Joseph Schumpeter popularized the term "creative destruction" to describe a key function of free market economies.
"New consumers, goods, the new methods of production or transportation, the new markets, the new forms of industrial organization" were, he said, constantly creating new industries and new companies, while destroying old ones.
Now, 70 years after Schumpeter put his finger on this phenomenon, Kodak looks like it will finally surrender to it. At its peak, Kodak employed 145,000 people, dominated the film and photographic paper market, and was deeply embedded in the culture. People talked about "Kodak moments" and sang songs about its film.
But the rapid rise of digital photography destroyed Kodak's market. As a result, the once mighty blue chip company now employs just 19,000, and few growing up today have ever heard of it, much less used one of its products.
Kodak is hardly the first to suffer the consequences of Schumpeter's "perennial gale of creative destruction."
Edison's light bulb and the electric industry it spawned, for example, quickly and completely wiped out what had been a vast and lucrative gas lamp industry.
IBM, once feared for its tremendous market power, is now a shadow of its former self.
(Excerpt) Read more at news.investors.com ...
In the era of smart phones, among those under 30, who but the professional photographer takes photos with cameras anymore?
Digital music is easier, but vinyl still sounds better.
So, why?
Easy answer..Kodak was and is heavily unionized..IBM isn't. IBM was able to make the needed changes to survive, and to change..Kodak couldn't..the unions wouldn't let them..so they hung on, chopping off arms and legs...( layoffs) until how it's only the head left to cut off..
But they should have jumped into the digital market when they had the chance, or come up with some innovation that would have kept them competitive.
I bought my last roll of Kodak film more than 15 years ago.
I’m not against unions per se, but when they become too powerful, they become job killers.
There was a factory in town here about a year ago that employed several hundred workers. Management told them that, to stay open, they would have to accept some modest wage and benefits reductions. The union heads said flat out no way, and the workers defiantly agreed.
The building now sits vacant, an empty shell, and several hundred jobs are gone forever.
Maybe I’m a little dense, but how exactly does that help the union rank and file?
They were first to the digital market and they axed it because they didn’t get instant results. They had great printers early on and they axed them too. They had amazing digital software that could measure the images and even determine where the photographer was standing. They gave it away and axed it. They were loaded with people who only listened to those with the “right education” and constantly berated their employees. Not surprised they are toast. They screwed themselves over.
Kodak developed the Digital Camera.
From what Ive read, Kodak was a cash cow that lost all ability to look forward and innovate. They could have jumped ahead of Shutterfly and others, but instead they continued to pedal old technology.
Kodak was not unionized.
IMHO two things doomed Kodak. First in the 1970s Kodak rested on their photographic laurels dabbling in the specialty chemical and photocopier markets while Fujifilm gained hold in the US film market and soon eclipsed Kodak. Second they were slow to get on the digital photography bandwagon especially in the market for higher quality cameras.
I knew Kodak was finished, when I turned over my new Kodak camera - and it said “Made in China”.
Just a matter of time, at that point.
Both industries got clobbered by technology.
“creative destruction”
needs to be applied to a few Federal Agencies as well...
This syndrome seems to be common in Union shops. Labor and Management engage in an ongoing low-level war and consequently stop listening to each other. It stifles innovation. My father saw this same thing happen at Western Union (whose primary business model was based on the telegram).
Sad thing is the EK had tons of amazing innovation. They just refused to sell it or decided that no one wanted it if it wasn’t an overnight success. No common sense whatsoever.
Uh... IBM has been the *the* IT turnaround success story of the 21st century; it's revenue is about to top USD 100 and has been growing at 5-8% (non currency adjusted) and IBM has a recent operating margin of around 45-48%.
The sad thing is Xerox invented so many technologies that they were unable to market.
Execution is key.
That is exactly the point. Bill Gates offered to sell DOS to IBM - twice! (for under $150,000) Xerox invented the mouse. Kodak invented the digital camera.
It is hard for big companies to embrace change.
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