Everyone assumes that Kodak was blind...I am not one of those.
Kodak went exactly where the board of directors wanted it to. Nobody...and I mean nobody is THAT stupid at the COE level. At some point, the board of Directors decided that they were going to end Kodak. They had a pile of businesses that were successful (i.e. chemistry) and a bunch of others that were doing OK, and some that were a mess.
The sold off some of their core businesses to focus on a failing business (imaging). They had a bunch of patents that they developed, they funded research on such things while they were flush with cash, but management had no understanding of what value they could be in the out years.
Yet they members of the Board knew. How? Because they were all members of the boards of other companies who could profit from the use of those patents without paying a hefty license fee to Kodak, and so Kodak’s fate was sealed.
Eastman Chemical, Geospatial to ITT, Blood Analyzers to J&J, and on and on. Until all that was left is what was Kodak of the 20th century, in the 21st century and doomed to bankruptcy. Exactly what they wanted and their IP would go for pennies. Eastman Kodak had huge liabilities in Kodak Park East and KP in general. There is all sorts of nastiness in the ground in KP-E and a huge tax burden for KP-West... Bankrupt there is nobody left to sue and the taxpayers get stuck with the cleanup.
Kodak was actually one of the early players in digital photography. They produced a professional quality dslr by putting their digital back on a Nikon N90s film camera.
Back when 1.3 megapixels was considered pro level, it was used by a lot of newspaper photographers. That was ample resolution for newspaper photos.
They also produced good quality P&S cameras except they had them made in Japan. I have an old 6mp Kodak, probably around 12 years old. I got it out a few weeks ago and noticed the batteries were all bad. I ordered a couple of new ones and the pictures are indistinguishable from my DSLRs unless you really enlarge them.
I have no idea where they lost their way with digital.
I think you are greatly underestimateing randomness, stupidity, inertia, and normalcy bias.