They give us those nice bright colors
They give us the greens of summers
Makes you think all the world’s a sunny day
I got a Nikon camera
I like to take a photograph
Mama don’t take my Kodachrome away
In 1973, Paul Simon crooned about his Kodachrome all the way to the #2 spot on the Billboard charts. Now his Kodachrome doesn’t even exists and Kodak is filing for bankruptcy. How did the iconic American brand fall so quickly? Failure to adapt to a changing marketplace?
Many blame CEO Antonio Perez for his hesitation to move into the digital space as the world moved away from film. As outlined by Motley Fool, here are 5 mistakes made by CEO Perez that solidified Kodak’s fall from grace:
- Perez decided to focus on competing in the printing space with HP instead of figuring out how to adapt the film business. The company was never going to turn itself around by competing in the printer space
- When Kodak finally got to the digital print market, it was highly saturated and commoditized leaving an extremely small profit margin. Perez noted in August that Kodak was 5 years behind on moving into the digital space.
- In exchange for much needed cash, Kodak sold film licensing rights to IMAX for $10 million up front when the company had $1 billion worth of patents on its hands.
- Perez became extremely litigious as a way to bring in cash, suing anyone who may have infringed on Kodak’s licensing rights.
- Perez couldn’t admit to investors that his turnaround plan wasn’t working and that a bankruptcy filing might come in the future.
Chief Executive Editor-in-Chief JP Donlon disagrees with placing all of the blame with Kodak CEO, Perez:
"To lay all of Kodak’s problems at the feet of Perez doesn’t seem right. When Coca-Cola CEO and Kodak lead director Roberto Goizueta wooed George Fisher away from Motorola to be Kodak’s CEO in Dec 1993, the same problems were evident. (For having reinvigorated Motorola, Fisher was widely viewed as the pre-eminent CEO of his day. Lead director Goizueta thought Fisher could turn his magic on Kodak.)
Fisher saw digital coming and tried to enter it. Unfortunately for him it didn’t work either. Motley Fool may lay the blame on Perez, and no doubt he is the guy on the watch at the time, but there’s something more fundamental that’s lost here. When you have an existing product or business that continues to throw off piles of cash, naturally one is reluctant to close it down in favor of some other business that is less certain and will almost devour one’s cash to a high degree before one can be sure whether it’s a winner.
Kodak knew since Bill Whitmore, its predecessor to Fisher, that the older, silver haloid emulsion technology film was old stuff but it was reluctant to walk away from the cash it was generating. It’s a transition issue. What Perez may have flubbed was the speed of the transition, but he is not unique in this. Look what happened to Reed Hastings when he went too fast in trying to transition from DVD subscriptions to online streaming. Being too quick can be just as much a killer as being too slow."