Friday, 20 January 2012
Eastman Kodak: Distorted Images
By Jonathan Chandler, Partner, ReputationInc.
Jonathan was Communications and Public Affairs Director Europe at Eastman Kodak EMEA from 1998 to 2000.
Rochester, New York, 1999. We weren’t sure if the world was going to end with Y2K or we were going to finally realise Prince’s promise of the party of all-time. Or both.
Certainly those 80,000 of us working at Eastman Kodak didn’t have bankruptcy on our minds. The future looked scary. But filled with possibility. Some analysts predicted the stock would hit a $100. Other's were more sceptical.
A year earlier at the bi-annual photo-fest in Cologne our CEO Dan Carp took a brave view into the future. It was a critical moment for me in the business of forecasting and risk.
He boldly and correctly predicted that we were entering an “explosion” of picture taking. How right he was. He described (first time I'd heard of it) a strategic inflexion point. The chart showed how our business would either accelerate upwards as part of this revolution... or decline at an exponential rate if we didn't ride the curve.
That’s what the chart said. It was an honest forecast of the unknown future.
He rightly described how digital would transform the way we use, share, relate to pictures. And that was even before anyone dreamed of Facebook.
There was excitement about a digitally-created photo book for....say $100. A photo CD for £15. A 2 megapixel camera for $200 (check your phone, that "free" camera you have in your hand has at least twice the power of the brick you could have bought back then).
This was not a leader afraid to confront the future or indeed to predict it.
So what was Kodak doing about it?
At the same show the stalwarts from "consumer imaging" division were lauding the breakthrough of an APS camera (the one with the little film cartridge) that could actually allow you to see the shot you had just taken. On a tiny digital screen. And if someone blinked, take it again, and expose another ray of light on your silver halide film until all 24 frames were exposed. Progress along the curve?
Across the hall the "digital and applied imaging" crowd - West Coast dudes recruited from silicon valley hot-houses - were offering gear that you needed a PhD to operate. Billions of dollars were being poured into the loss-making digital business.
But it seemed they were either chasing the "golden age" by grabbing the camera business back from Japan at "any cost" or driving people back to the 60s and the joys of "home processing", when my Dad was developing film in the bath (not at the same time, that would be dangerous, although I wouldn't put it past him.)
It was the active disruption and confusion of a consumer pattern that Kodak itself had established...9 times in a year in Japan, six times in the US, 3 times a year in Europe, and half a time a year in China... People "on average" would take a roll of film, drop it off and come back in an hour or a day and enjoy. Not that fast moving, in the overall pattern of consumer consumption. I created about 50 facebook albums last year (processing cost, nil) but spent a whole lot more with Moonpig.com doing greetings cards, than ever did on Kodak film.
I always felt if we had just called the chip an "e-film" and encouraged people to take it to Boots or Wal-Green rather than convert their loft into a digital darkroom... We might have bought some more time.
The tragic conclusion to the "strategic inflexion" presentation - which was otherwise spot on - was that silver halide would continue to grow. Because as more people use pictures, film and photographic paper will be a smaller but still growing part of the mix. But what if not? Who was going to fund the (good or bad) investment in digital?
The Rochester campus was about six miles long, has its own coal-burning powerplant, and then "only" employed 35,000 people. Hard to accept a different future without film when you sit in the citadel at the centre of all that.
Forecasting future scenarios takes more than vision. That is arguably the easier part. For an organisation, the challenge is to see itself. To accept that the assumptions on which its franchise, its future, is based are by definition fragile. Be it technological, environmental, regulatory.....no fortress is unassailable.
One of the most powerful reasons to conduct a serious forecast of future issues is to give context to "weak signals" of change. The one's that inconveniently don't fit into the business plan but become a tidal wave a few years later. But even if the signals are loud and clear organisations demonstrate an amazing resilience to change. Visionaries throughout history tend to get short shrift from the status-quo-ers. So anyone serious about future reputation or policy challenges in a major corporation needs to exhibit equal resilience and an adventurous mind. We're proud to work some clients who have just that.
At Kodak, the vision had been set as early as 1998 and surely now we were all pulling together to "inflect" in the right direction.
We even had a booth at the eery void called the Millenium Dome to demonstrate our participation in the brave new world. Assuming there was one when the clock struck twelve.
Back to Rochester, 1999. IT analysts were getting filthy rick fixing our clocks, Prince was limbering up for the big show and Francois Mitterand was asking "what's it for?" (it's the best concert venue in Europe now, stupid).
At a gathering of the PR community, we were addressed by the various global business heads. The Yamamoto-clad cyber gurus made us feel intellectually bankrupt by describing products that you clearly needed to be cleverer than us to find a use for.
Meanwhile the Brooks Brothers consumer suits told us about exciting new yellow boxes, but nothing - at all - that mentioned digital.
I turned to my "digital and applied" colleague for clarity. "Oh, they're not interested", she said.
So I dared to ask the question: "You haven't mentioned digital once, I just wonder what your...opinion is?"
The gent looked at me with some surprise. He consulted with his colleague who was sharing the podium. I presumed he was going to straighten up the "narrative" on the partnerships with the "greats" of the era like AOL or AT&T.
But instead, he delivered a line that could have been a straight from "Sands of Iwo Jima"....
"We're gonna drive 'em back into the sea."