I bet there is not a single reader of this column who did not feel stunned by the news of the demise of Eastman Kodak. Generations of camera buffs, tourists and members of ordinary households had known no other brand of camera and film. It is almost as if it had been an inseparable part of their lives.

In its heyday, Kodak had literally reached for the skies. A Kodak camera was used by the US astronauts on the Apollo 11 mission in 1969 to film the lunar soil from only inches away. Since its founding in 1880, Kodak film has been used on 80 movies that have won Best Picture Oscars.

At its zenith, it could claim nearly 90 per cent of the camera and film sales in the US and a 70 per cent margin on its products and processes. That it should be reduced to the pathetic plight of filing for loan and bankruptcy protection is probably the worst illustration of the fate that can overtake companies that do not keep abreast of advances in technologies and changes in customer-preferences.

For, Kodak is not the first to fade away. There have, for instance, been the EMI, Polaroid and Xerox, which had also gambled on their once great, but currently, irrelevant strengths, and “fumbled the future”. Nor will it be the last. Some technology and market watchers have begun to caution Hewlett-Packard, RIM and Nokia that they too may fold up if they do not catch up.

Airplane without wings

The Western media have gone to great lengths to distil the revealing lessons the Kodak debacle holds for other companies. I just give the gist without elaborating them, as the logic must be self-evident to the worldly-wise.

A company progressively, and unbeknownst to those running it, loses its élan vital by sticking too long with its core competence, without being proactive enough to explore ever newer avenues to make its impact. Invention alone, without the accompanying drive to market it, is like an airplane without wings. Kodak had the raw materials to become a player in the new digital world, but it was not serious about putting them to the best use.

It did make forays into “adjacent” businesses where it may have had some expertise, but soon got out of depth when it had to contend with different types of customers and products and different organisational cultures, business models and rules of the game. Diversifying into businesses away from what a company had been traditionally been focused on and it was most comfortable with has seldom worked.

Kodak expanded into chemicals, bathroom cleaners and medical-testing devices but this only led to an enormous drain on resources, aggravated further by mounting overheads on generous compensation packages and pension benefits. Timely selling of the company while it still had some value left might have saved it, but this is always a difficult proposition to implement and Kodak's decision-makers could not be blamed for dragging their feet until well past the eleventh hour. (It may be of interest here to recall that its own founder George Eastman committed suicide at age 77, leaving a note saying, “To my friends, my work is done. Why wait?”)

Need for upgradation

There is yet another factor that governs companies but this has not figured in the analysis widely made in the media. Organisations too, like those they employ, fall victims to the Peter Principle, rising to their level of incompetence. The implication of this for those in charge of companies is that they should be ruthless in getting rid of dead wood, and induct fresh blood laterally at various levels of policy making. The top echelons should not consider themselves to be an exception to this. In fact, the need for constant intellectual and technological upgradation is imperative in their case.

Nowhere does human obsolescence manifest itself so direly as when a company is undermined, by what has been called ‘disruptive innovations'. In the case of Kodak, complacency in the face of the multiplier effects of digital technology and smart phones acting as cameras, simply robbed it of its appeal and swept it off its feet when confronted with the tsunami of competition. RIP.

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