Eastman Kodak's Digital Strategy
Eastman Kodak started a digital strategy in 1992 with the intention of transforming its performance in the digital imaging market. The initial step in the strategy was a gradual transition from the conventional to the digital imaging procedures. The plan was based on the idea that photography has undergone evolutionary rather than revolutionary changes (Grant, 2016). Kodak, however, did not completely transition from analog to digital photography. The business decided to develop hybrid technologies in order to improve the functioning for its customers. This strategy produced photo editors that allowed users to edit and print pictures digitally. There was also photofinisher that was utilized in the digitization of film negatives leading to the elimination of common problems.
Emphasis on Simplicity and Ease of Use
A second component of the company's digital strategy was an emphasis on simplicity and ease of use. Targeting the mass market with its new range of products, Kodak intended to introduce digital products that are easy to use, and enhance the experience of the user. Kodak recognized that people needed to transfer their photos to computers and consequently share such through email or printing. Therefore, Kodak came up with EasyShare system that came with favorable features to accomplish this goal (Grant, 2016). Kodak also targeted commercial and healthcare sectors, which were its leading market for its digital products. The inkjet technology and variable data printing, which allowed for the customization of the printing process, were tailored for this segment of the market.
Hiring Professionals and Executives in IT
As part of its digital strategy, the Kodak also hired professionals and executives in the information technology to help in the advancement of its technologies. Willy Shih, who previously worked at Silicon Graphics and IBM was brought in to help steer the digital strategy. Willy Shih was in charge of digital imaging at Kodak. Kodak also hired specialists from established corporations such as Hewlett-Packard, Apple, Xerox, GE Medical Electronics, and Lockheed Martin among others (Grant, 2016). Kodak also collaborated with some companies that dominated or were perceived to be leaders in specific segments of the market. For instance, the company collaborated with Canon to advance its interests in SLR cameras, Intel for digital storage technology and Olympus for the development of digital camera technology. Kodak also made acquisitions of organizations that it believed were critical to its digitization efforts. The acquisitions were motivated by the need to complement its expertise in certain sections of the market to come up with products that would meet the needs of the market.
Why the Strategy Failed
While implementing the digital strategy, Kodak did not consider the possibility of the digital technology replacing image printing that has been on the market for long. The company was stronger in image printing compared to digital imaging hence its continued focus on image printing in the face of the digital revolution that characterized the market at the time of implementing its digital strategy. Kodak was specialized in the printing images through its chromatic and chemical expertise. Upon the entry of Perez, Kodak continued with its focus on image printing technologies. Perez led Kodak's investment in inkjet technology for image printing is considered the significant undoing of the company that led to the failure of its digital strategy (Grant, 2016). The company attempted to charge lower prices for its products, but this did not work as many of the customers had shifted to the digital products that were being offered by other companies such as Hewlett-Packard. Through the focus on image printing, Kodak was not in touch with the changing needs of the market. It lost out to other players in the industry so that by 2011, the company's products constituted just 6% of the market share against the competitors such as Hewlett Packard that accounted for up to 6% of the market (Grant, 2016).
Alternative Strategy for Kodak
Kodak has alternatives that would have worked to maintain and exemplify its position as the market leaders. Instead of looking at the changes in technology from as evolutionary, the company should have moved to revolutionize its products consistent with other players in the industry. Kodak would have paid attention to what other players in the same industry were doing to create products that would ensure they achieve a competitive edge. Instead of creating a hybrid of the conventional and digital technologies, Kodak would have anticipated the exponential increase in the preference for digital images (Adner, 2016. Through this, the focus of the company would have been to specialize in products aimed at enhancing image processing and recognition. By taking this alternative, the company would have occupied a unique market niche, and create value for the customers is thereby safeguarding its performance and survival in the market.
Diversification into Medical Imaging
Another viable alternative that would have helped Kodak was to diversify its products. The leadership of the corporation would have identified the most attractive components of the organization's ventures. The company sold the medical imaging business, which was a promising venture by Kodak. Instead of incremental improvement of its digital products, Kodak would have concentrated on medical imaging (Adner, 2016). Such might have saved the company from the increased competition resulting from the participation of some established and specialized companies in the medical sector. At the time of implementing the digital strategy, medical imaging has fewer players and this provided room for innovation and creation of more valuable products that would affirm Kodak's position as the market leader in that segment.
Proposed Strategies after 2012
During this time, the company's share of the market had excessively reduced. Kodak should focus on a single segment of the market in which it has advantages over the rest of the players in the industry. Instead of focusing on multiple aspects of the market, Kodak would have considered specialization on image processing technologies. As noted in the case study, despite registering exceedingly lower overall performance the company was considerably strong in the production of image processing technologies required in enhancing sharpness, noise reduction and reproduction of colors.
Kodak, by positioning itself as the producer of image processing technologies, the company would have enhanced its value proposition capabilities. By specializing in the image processing technologies, Kodak would be able to inn innovate and introduce features revolutionary features of image processing so that it can attract and maintain a particular niche in the industry (Alton, 2016). The specialization on the image processing technologies would also make it easier for Kodak to improve the quality and usability of its technology consistently. The era is a digital one, specializing in this segment would have ensured a conformity of its products with the needs of the customers. Therefore, choosing image processing as a specialty would have enhanced the performance and survival of the imaging industry.
References
Adner, R. (2016). Many Companies Still Don’t Know How to Compete in the Digital Age. Harvard Business Review. Retrieved 25 November 2017 from https://hbr.org/2016/03/many-companies-still-dont-know-how-to-compete-in-the-digital-age
Alton, L. (2016). 5 Reasons Modern Businesses Are Turning To Specialization. Forbes. Retrieved 25 November 2017 from https://www.forbes.com/sites/larryalton/2016/12/20/5-reasons-modern-businesses-are-turning-to-specialization/#4202f0994a29
Grant, R. M. (2016). Eastman Kodak Case Study. In Contemporary Strategy Analysis. Hoboken, NJ: John Wiley & Sons.
