Kodak Assignment

Name : Rachel FlorentciaTirtaatmadja

SID : 6923589
Module Title :310HRM - Innovation and Change  
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Kodak Assignment
Introduction
Innovation is the grounds for change. Change has to be converted into action for
innovation to take place. Innovation is the execution of creative ideas within an organization. An
organization obtains a specific change in a product, service or business process after innovation
occurs (CIMA, 2007).
Eastman Kodak Company, a USA based company founded in 1888 and commonly
known as Kodak has been a leading company of printing and photography for over a century
globally. The company is famous for providing imaging solutions for businesses and individual
customers. Headquarter of Kodak is situated in Rochester, New York, USA, and operated
largely in USA, Europe, and Asian markets. The innovative production techniques followed by
the company in leading period are low cost manufacturing, global distribution, high customer
orientation, and extensive promotional campaigns on mass media. The heritage of company is a
culture of change and innovation and invested heavily in research and development. The
company has faced severe decline in business in late nineties due to lagging behind on digital
technology and photography.
This paper attempts to examine Kodak’s problem and its strategies for the
implementation of change and innovation. The document further explores how such a change
would be managed and successfully implemented by the organization. A review of the faced risk
and barriers has been done in order to recommend a suitable strategy for the management of
the company to follow.
Evaluation of Kodak problem and Strategies
Despite the long success record of Kodak in nearly a century long business in segments
of film photography with only one main competitor Fuji Films in global markets. The marketing
strategy followed by Kodak is termed as ‘razor-blade strategy’, i.e. an aggressive sales at low
costs as high production volumes an leading edge in research and development make easy low
cost production of cameras and photo graphic films. Company has also made profits in
developing and printing services at retail outlets. The business has been highly profitable for the
company in post-World War II period and company has expanded globally. The matching
products like film and printing technology were the actual profit sources for the company. On the
other hand, introduction of digital photography in late 1990s affected severely in Kodak business
and sales started declining hugely.
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Innovative management aimed at finding new ways to serve the customers in a better
way by means of which organizational excellence is achieved. This is to stay ahead in the
competition and ensure the development of both the employees and organization itself. The
general process model for managing innovation in the organization was suggested by Morris,
(2011). The major failures of the companies are discussed below:
Discovery or Creation of Problem
Starting from the problem discovery gives an idea to the management. Kodak was facing
issues in the failure to rapid changes in business strategy in view of major change of digital
photography. Beginning of 1990s was the point where Kodak management refused to see the
main changes in company revenue due to preference of consumers to new digital technology.
On the other hand, company has increased investment in improving photographic film
technology and introducing new improved versions in consumers markets.
Feasibility
Necessary resources especially funds and innovation capital have to be enough. This
was not the case with Kodak, as the company failed to achieve market share and to retain its
customers who moved to digital technology products. The late response of company to start
innovation in digital technology and continuous investment in traditional photography innovation
technologies become the actual reason of further decline in profits. A possible project has the
needed resources to finally solve the problem in a way that meets all the required standards
(Morris 2011). Thus the company was unable to guess the future of photography and
technological growth of paired products like fixed cameras in mobile phones that limit the trust of
common consumers on Kodak cameras and photographic films (Economist 2005).
Solution
Finding the right solution is central to the creative process model. Learning initiates
change which in turn repays the organization by success in finding new ways to perform
business (CIMA, 2007).Kodak needs to invest sufficient amount of resources in research and
development in order to secure their market share and customer base. In contrast, Despite the
invention of required digital technology in Kodak cameras, 2007 was the last year that shown a
profit due t to complacency of top management. Thus Kodak need change in strategy in the
beginning of 1990s to invest in utilizing digital technology and shift the existing technologies to
use the potential of new opportunities of digital photography in global markets.
Feedback
Morris (2011) suggested that regular feedback after execution of solution is also
important. Market responses and changes in top management behaviour to guide the
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organization in suitable strategic direction were important. Thus consumers’ feedback and
reports on sales and market share changes were the main sources for the company to test the
impacts of strategic changes made.
Need for Change Management at Kodak
The contrast between Kodak's usual business and digital was as odd as the rhythm is
unique because of the type of abilities need to make the change. Though, the top management
knows that they need a upsetting change, yet they failed to react accordingly. In contrast to
Senge's (1990) proposition of a learning organization that slowly adapt to change as a repeated
procedure was argued by Hamel and Prahalad (1990) and favoured main changes in view of
the changes observed in information technology revolution in organizations. According to
Mendes (2015), Kodak needs re-engineering and reform of human resources and expanded
utilization of new digital technology invested in Kodak. However, the strategic planning failed to
respond quickly to the needed changes in organization,though they were capable of managing
these changes as industry leaders for over a century. Thus, learning organizations cannot
operate and stay aggressive by adopting continuous change during new technology period like
that of digital photography revolution (Porter 2008). Kodak also faced an issue of contentment
from the top management, though, the CEO was a technology expert but failed to respond at
the required rate, otherwise the company would not face huge strategy failures in later stages
((Forbes 2012).
Analytical Tools for Change Management at Kodak
Kodak needs to consider the aspects where change is required. Rapid change with a
rapid pace creates a change resistance in the employees. On the other hand change leaders
remain under pressure to finish the process within a limited time and funds. They have to relate
the issue of employee be tired to the top management and make necessary change at the same
time they are required to talk the proper limit by which to finish the job (Mathew, 2011). The
important change models applied in this case are as follows:
Force Field Analysis
This analysis is performed to evaluate driving and conflict forces acting in Kodak in
1990s, during the period of revolutionary change requirements. The forces mentioned in
company analysis of Mendes (2015) are given below:
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Driving Forces Restraining Forces

 Change and innovation  Lack of long term vision

resources  contentment of senior
 Inventor of digital management
photography  failure of top management to
 Market leaders in foresee the technical and industry
photography changes
 Trained and capable human  Lack of drive to make necessary
resources changes in products
 New opportunities in digital Stable  High resistance in employees to
photography and imaging Quasi – adopt new market changes
technologies Stationary

 Expansion to new markets Equilibrium

 Resources and technical R&D

 Shareholders help in
expansion to new businesses
Source: Adapted by Author
Thus the change leader in Kodak will have to work on two fronts – the members of the
organization and the top management. Using a orderly Approach of leadership may be useful
for a change leader to manage change for Kodak in effective resultant benefits in a regular
approach is way (Beerel, 2009).
Lewin’s Model of Change Management
A change model supports change and innovation in the organization. Lewin’s, (1951)
change model described by Armstrong, (2006) is applied on Kodak case as:
Unfreezing
At this point the present situation is analyzed and it is seen if there is any deficiency in
the present state of situation that require change. This step states that there is a risk of people
in organization not accepting the change and supporting the present balance. Such as failure to
foresee the future markets of DSLR cameras, Kodak lost majority of its market share. The
process of change started in Kodak in January 2012, when company filed for assurance of
liquidation under article 11 in USA. The company decided to cease the production of digital
cameras, digital image casings, and pocket camcorders and decided to concentrate on
corporate digital imaging solutions market only. The insolvency was allowed and Kodak has
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offered sale for business scanners, photographic film, and other related businesses. Further,
after receiving permission for bankruptcy financing, Kodak sold licenses and patents for a large
sum of $525 million to IT companies like Google, Apple, Amazon and many others (Mendes
2015).
Changing
According to Lewin (1951), this stage requires organising and mobilising the resources
required to bring about the change. In case of Kodak, as a result of bankruptcy financing
initiatives, company has followed a change management plan. According to Antonio M. Perez,
CEO of Kodak, declared solid changes and total cost structure decreases to mirror Kodak's key
spotlight on the Business, Bundling and Practical Printing Arrangements and Endeavor
Administrations business, and the business procedures of its Customized Imaging and Record
Imaging businesses (Kodak Website 2016). In words of Perez, "Kodak is turning into a more
engaged and strong level organization," Perez further added that management see that Kodak
should really and soon decrease present cost structure, which is intended for a much bigger,
more enhanced arrangement of businesses (Kodak USA 2012). Another change initiative was
relocation of senior executives to proper locations to increase the speed of reform and create
advantages for new products and consumer future needs performance.
Refreezing
The change is stabilized by initiating new responses into the scared employees and
resources (Armstrong 2006). As a result of change management, Kodak gained the complex
ready renewal and successfully divided in three major segments of Digital Printing,
entertainment and commercial photography, and Graphics solutions for enterprises. Though,
this step resulted in downsizing of workforce by roughly 3,700 employees globally till end of
2012, but company managed to save the declared sum of $330 million in reward of these
employees (Kodak website 2016). Hence, the business of three segments started pleasantly
after making these changes and stability is achieved in Kodak to a certain extent.
Adaptation of Change in Kodak
Innovation is a different sort of spending than most of the others where the risk is high
with the involvement of different components of the firm and their resources for alliance,
therefore, both the management and the employees cannot afford to have a back seat attitude
(Gersick, 1991; Schaeffer et al 2011). On the other hand it is a reality in today’s world that the
innovation is the key to an organization’s success and survival. There is no option to proactive
response to the transformational changes in industry if Kodak wants to achieve viable
advantage (Stone and Keating, 2010).In this aspect, Mendes (2015) compared the Resource
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Based View (RBV) by Barney (1991), and the Market Based View (MBV) of Porter (2008). This
is separate against the MBV, especially taking after Porter competitive strategy in change
management process that proposes firms ought to rather persistently take their surroundings as
the beginning stage while deciding strategy. In view of MBV approach, Kodak has largely
extended product lines in traditional technology and adopted a gradual change strategy despite
being the pioneer in digital technology. On the other hand, MBV approach demands rapid
changes in company strategy in view of the fast environmental changes and Kodak was not
able to capitalize the resources when the change was actually required.
Barriers to Implementing Change at Kodak
Barriers overshadowed the implementation of required strategic changes. According to
Lindsay et al., (2009), the three factors below work as barriers towards innovation.
OrganizationalBarriers
Kodak fails to identify real opportunities and fails to collect information from the members
of the organization. As the company was leading the industry for over a century, therefore, it
was expected to be proactive in this era of technology as well and influence the change
management process from the very beginning of digital technology era.
External Barriers
Sometimes due to environmental factors an innovated technology may become useless
in some areas. The introduction of new competitive digital technology solutions by Sony and
Cannon, increase in use of cameras improved performance in mobile phones, and the
avoidance of photographic film technology due to environmental pollution concerns are some
external barriers affected the company’s decisions.
Recommendations
The recommendations for improvement of change management process at Kodak are
given below:
1. The regular and steady approach of change management was proposed by
Senge (1990) in learning organization, but Kodak needs to follow the unruly and evolutionary
changes in implementing the research and development of new digital technologies in view of
MBV of Porter (2008). Top management at Kodak should use a mixed view recognized by
Regular Approach for enabling both the employees and top management of Kodak to
appreciate each other’s interest and limitations. As a result both groups can find it easier to
make the best adjustments in strategies.
2. A change manager has to effectively design the line of authority and delegation.
This will enable the manager and employees of Kodak to balance their role of authority and
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control (Beerel, 2009). Therefore, the change management training and hiring of young and
dynamic professionals will not only restructure the core processes at the company, but also add
the value to the products features and expertise.
3. The organization must center its actions on growth in all product offerings, in this
way defending and keeping up its premium market position (Ouden 2012). Innovation is the key
competitive advantage of Kodak that can assist them to improve the technology further in order
to launch separate products at low prices in three business segments. Further, the launch of
new products is suggested to be supported by special promotional campaigns and instruction
manuals that further instruct the consumers about the power of Kodak products. Widespread
advertising was one of the key success factors of organization since the beginning, therefore
latest social media tools and digital advertising techniques will prove to be effective and cost
sensitive.
Conclusion
Innovation and change management cannot be fruitful without a proactive strategic
planning, proper monitoring, good leadership and participants’ willingness and skills. These
activitiesrequire a positive approach and a proactive attitude of senior management which is not
observed in the case of Kodak. Despite,marker leadership, ample technological and
innovativeresources, pool of talented and qualified human resources, the company was not able
to change the business strategy at the right time. The outcome for the company was optimal
market share losses and liquidation financing in the end. The company is recommended to stay
proactive t the technical changes and innovation means effectively at the right time.
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