This question originally appeared on CoFoundersLab: Why did Kodak fail and what can we all learn from it?
Answer from Usarian Skiff, CEO, Ultra Notitia
Well, I'll tell you exactly why they failed.
My father worked there all through the 90s and I worked there for a few years in the early 2000s, so I got the inside scoop for you right here.
First, you have to understand WHAT Kodak is.
Eastman Kodak, in the 1990s, consisted of several plants around the country and some overseas. The biggest plant was located in Rochester, NY and was dubbed "Kodak Park.”
Kodak Park was shaped like an L, and was seven miles long one way and three miles long the other way. The oldest building in the park was built by founder George Eastman in 1888 and the rest of the park grew up around it.
Kodak Park was a chemical plant from the start. It's products were film (cellophane coated with a chemical emulsion) and paper. The Park was built to facilitate the efficient production of these products. It featured more than 600 buildings, many of which housed 100-year-old, well -maintained, steam-driven machines; steam producing plants; and steam handling systems, mostly located underground.
As a chemical plant in the 1800s, before laws and popular opinion drew a moral line in the dirt against pollution, Kodak dumped massive amounts of waste for decades. To this day, Kodak is responsible for paying fines to the state for this pollution — which is still seeping into the Genesee River and Lake Ontario.
It's within this context that George Fisher came on the scene. He was the first CEO that Kodak hired from outside of the company. On the day he started, Fisher made a speech in which he stated that "digital will never surpass film".
The thinking at the time was that film has resolution based on molecules, while digital’s was based on mechanical sensors. Besides consumer cameras and film, Kodak was the main producer of many kinds of movie film and the government's proprietary (and secret) high-speed and high-resolution films. They had a lock on a market that was going nowhere. So while, yes, Fisher did make a smaller effort to lead in digital cameras and digital hosting and sharing (as well as online digital photo processing-by-mail), he also amped up film to make sure it wasn't overtaken anytime soon by advances in digital imaging.
But the company's bread and butter was paper and film — consumables. There simply was no way for a company built on selling consumables to transition to selling quality, irreplaceable products. Kodak created sub-par digital cameras, making no effort whatsoever to compete with Canon or other camera manufacturers, who still relied on Kodak to fill their pro-quality cameras with pro-quality film.
It wasn't long before consumers started buying moderately priced quality digital cameras and then using their phones to capture images. There was no longer any kind of market at all for disposable film, paper, or cameras. Kodak, it turns out, was a flash in the pan — a relic of the 1900s.