Failed organization change in Eastman Kodak

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Introduction

Founded by inventor George Eastman, Kodak became one of the world’s most recognized brands. The brand became known for its innovative marketing and pioneering technology. Before Kodak, Photography was typically confined to professionals in studios. The brand managed to move photography out of studios and into family life. The success of Kodak was characterized by high-profile advertising campaigns.  For much of the twentieth century, the brand was one of America’s industrial icons. It once enjoyed a similar status as technology giant Apple enjoys today.  The company transformed photography from an alchemy-like activity dominated to become an integral part of people’s lives. Eastman Kodak became a huge company with hundreds of thousands of workers. Despite its strengths that included good relations, a rigorous approach to business and hefty investment in research, Kodak is today an example of failed organization change.

Failed organization change

There are various challenges that faced Kodak. The first problem is that the company failed to move into the digital world fast enough. Top executives did not fully grasp how the world around was changing. Given the longstanding relations with its customers and community, Kodak never imagined that people would part with hard prints. Executives saw the firm’s digital cameras as a direct substitute for film based photography.  Digital cameras dominated the industry. As a result, with innovations in mobile technology that has cameras as a prime feature, Kodak’s business was soon to be rendered obsolete. Kodak’s longtime rival Fujifilm transformed itself into the new business mobile to acquire an edge in the competitive market (Kotter, 2012).

Fujifilm adopted a strategy to switch to digital and invested heavily in the digital business. Unfortunately, this was not the case with Kodak.  Kodak was slower to adapt despite realizing the profitability of digital photography. The firm faced the technological discontinuities challenge. As with new technology, the firm would face low margins, fierce competitions that would cannibalize its high-margin core business. The executives did not take decisive action to battle the inevitable challenges. They clearly had the capacity to envision how the new technology would transform their customer experience for the better. With the mindset, the company’s products became obsolete (Gershon, 2013).

The second factor that contributed to the failed organization change is that the organization overflowed with complacency.  The complacency culture did not help the firm. Kodak was characterized by a culture of a complacent monopolist. This weakness was exposed by Fujifilm’s move to sponsor 1984 Olympics. The publicity arising from Fujifilm’s move enabled the firm to acquire an edge in Kodak’s home market.Executive’s mentality was also a factor in Kodak’s organization’s failed change.  The management suffered from a mentality of perfect products in place of the high-tech mindset. The failure to read emerging market correctly also significantly contributed to the failed organization change. The company had high expectations in new Chinese middle class. The target customer bought the films for a little while before adapting digital cameras.  Many individuals in the target market adopted digital cameras once they came into the market (Vaughan, 2013).

Kodak did not keep up with the digital revolution when Fuji started making changes in the roll-film business. With the complacency, top executives at Kodak did not devote their priorities toward turning the problem into an urgent matter around a prospective opportunity. Some individuals in the hierarchy saw oncoming problems but did not make any progress to implement the solution.  Additionally, Kodak competed through its marketing instead of adopting a product or business development strategy.  On the other hand, competitor Fuji Films faced the exact challenges as Kodak but managed to survive and thrive in a similar business climate that drove Kodak to ruin. Despite the writing on the wall, Kodak was unwilling to let go the exceptionally lucrative film business. Trying to prolong the life of film can be seen as half-hearted attempts by Kodak. The company made these efforts using digitally coded film, smaller cameras and hybrid technologies such as Photo CD. The company did not realize its own limitations and as a result, its strategy for revival did not have any impact.  Bankruptcy became the only option that would maximize the company’s value of patents in digital imaging (Gualtieri, 2012).

Organization change theory: Improvisation model

There are various change management models developed to gain a broader understanding of change management.  In a complex environment, changes are present unique challenges. Process-based theories promote an enabling rather than a controlling approach to change management. The Improvisational Change Model by Orlikowski and Hofman was developed to overcome this challenge. Contrary to conventional wisdom, many successful organization changes are not always those with the most comprehensive upfront plans.  The improvisation model stresses the importance of organizational flexibility in safeguarding itself against unanticipated consequences and taking advantage of new technologies (Orlikowski & Hoffman, 1997).

Improvisation model is an alternative model that allows an organization to manage change as an ongoing process. The model recognizes the difficulties that accompany Technology enabled changes and how they are actually implemented.  Effective management of technological changes enables entities to take advantage of the emerging practices, evolving capabilities, market trends and unanticipated outcomes that characterize adoption of new technologies. The improvisational model for managing technological change as suggested by Orlikowski and Hofman (1997) is more suitable for organizations that desire to manage change successfully as a key competitive strength. It is based on research on the execution and use of open-ended technologies. Improvisation model recognizes three types of change. These include emergent, anticipated and opportunity-based. The authors study different types of software companies to illustrate the importance of embracing improvisational change model by those organizations that are open to capabilities offered by new technological platforms. Orlikowski and Hofman offer criteria for the application of the model for open-ended customizable technologies (Orlikowski & Hoffman, 1997).

Organizations now operate in a networked economy, considerably facilitated through technology.  It follows that technology development and its implementation takes place in this fiercely contested market. The rate at which change occurs has increased, and firms are continually experiencing change processes. Many of these change processes are externally imposed. Improvisation model requires the alignment of the organization’s values, mission, and objectives with proposed change. It also recognizes organization’s inability to anticipate all forms of changes. The model is appropriate where it is difficult to establish the impact of changes in the organization (Orlikowski & Hoffman, 1997).

How the organization change theory could be applied to the failed organization change

The key dimensions referred to in the improvisation model include organizational context, technology, and change model. The alignment of the dimensions requires ongoing and explicit assessment and modification. Kodak’s story is not unique. The failed organization change can be attributed to a single disruptive technology and changes in market trend. When trying to make sense of complex technology challenges that faced Kodak, it is important to assess the factors that prevented the company to implement the technology. Based on the case, Kodak would have applied improvisation model.

Many of the factors are common problems in change management. What make Kodak’s case different is the main challenges arising from the inability to move quickly and the alignment of internal organizational change with its mission, objectives, and values.  Historically, the company was built on a culture of change and innovation. It was the type of culture that was full of passionate innovators inherently in tune to the urgency that characterized changes in technology and the market.  The ability to change would help the organization move ahead steadily instead of falling behind.  The organization change in question did not require a comprehensive upfront plan. The improvisation model stresses the importance of organizational flexibility in safeguarding itself against unanticipated consequences and taking advantage of new technologies.

The adoption of improvisation theory would enable Kodak to stay flexible to explore new ways of working, take advantage of new opportunities and resolve unanticipated consequences. Using the Improvisation model would allow Kodak to manage change as an ongoing process. Kodak could have done this by implementing measures to address the change in a flexible manner. Te model would also allow Kodak to adapt when it was impossible to foresee.   Allowing flexibility also requires executives to release some control.  A culture of improvisation and experimentation would also be necessary for Kodak.


References

Gershon, R. A. (2013). A Case Study Analysis of Eastman Kodak and Blockbuster Inc. Media Management and Economics Research in a Transmedia Environment, 46-68.

Gualtieri, E. (2012). Kodak Modernism: Avant-Garde Poetry in the Age of Popular Photography. Modernist Cultures, 7(2), 180-204.

Kotter, J. (2012). Barriers to change: The real reason behind the Kodak downfall. Forbes, May, 2.

Orlikowski, W., & Hoffman, D. (1997). An Imporvisational Model for Change Managment: The Case of Groupware Technologies. Inventing the Organizations of the 21st Century, MIT, Boston, MA, 265-282.

Vaughan, J. (2013). Technological innovation: Perceptions and definitions. American Library Association.



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