Future considerations for Kodak
Recently, I was asked to perform an organizational analysis of Eastman Kodak based on an article published in The Economist titled, “The last Kodak moment?”. Here are my views if I was a new CEO sending a memo to the Board of Directors:
Eastman Kodak has been around for more than 132 years. In these years Kodak has seen the best of time and the worst of times. In the best of times, we were the envy of our competitors and as recently as 1996, we had revenues reaching $16 billion but now we have reported a net loss of $222 million. Some of the issues that I decipher by going over the company history are the failures to adapt to new markets and not listening to our customers. While there are certain things beyond our control but there are other things that we can control. Why is that the builder of the digital camera in 1975, we are now at the bottom.
In my current analysis, I have observed that we are structured by our product line. This has worked in the past but we cannot sustain this organizational structure if we have to move forward. It is apparent that the power within the organization resides with the product owners and not the customers. Since we held majority of the market in the past and were able to keep our competitors at bay, over time we have developed a culture of thinking that the customer will come to us and we do not have to change. Additionally, although we may have the best technology in the past and a highly lucrative intellectual property (IP) portfolio, this is not enough to make Kodak go into the black. In light of all of this I am recommending the following:
Firstly, I recommend changing the structural design of our organization by turning it into a Front/Back organization. The reason for this would be so that our marketing and sales team can directly interface with the clients, work with them to figure out what issues they would like to solve and then develop solutions around them. Customer is king and we have to respect that. Additionally I would like to open offices in new markets so that we do not surround ourselves with “yes” men only here in Rochester, NY. The new offices would be in India and China where not only that we will have marketing and sales offices but also research and development (R&D) offices.
Secondly, as I read Larry Matteson’s report from 1979, I am surprised that we did not pay attention to the people who could help us divert the current mess that we are in. This will have to change, the feedback and reports that are being generated by our executives who are closer to the action should be held at a greater value. I am recommending an office within Kodak whose purpose solely would be to assess internal and external threats to our corporation and make recommendations. This office will report directly to me so we can erase any management or bureaucratic barriers.
Thirdly, as the strategic design changes, we will be changing the culture of the organization as well by institutionalizing Customer Satisfaction Assessment Reports (CSAR) in which we will solicit feedback from internal and external customer and ask them how they see we can improve the services that we provide. As you are well aware that most of the innovation comes from the people who are at the front lines as well as the customers. Doing this will not only give us a way to improve our current services and products but also open potential markets which we may not be aware of. The flow of this captured information is very important and thus the new office that I mentioned above would also house these suggestions and make actionable recommendations which I will review personally. In this way I am creating an open door for anyone who has an idea to talk to this team and thus making all levels of the organization realize that we are in this together.
Lastly, I would recommend that the current IP that we have should not be merely sold off so that we can stay afloat. I ask you for how long can we stay afloat by merely selling our IP and how long can we survive. In this regard, I would recommend the beginning of a strong R&D arm which will not only continue to develop new IPs but also help us in developing new product features. This R&D arm will have several offices in several countries so that we are not limited by what we only know here in the USA but we can leverage globalization in a new way and all together for the future of the company.
We are not Fujifilm. We are better!
I look forward to working with you and thank you for your time.
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