Editor’s blog: Poor old Kodak’s fall from grace

You have to feel some sorrow for poor old Kodak. For the last two decades, the only stories coming out of the venerable photographic company from Rochester New York, founded by George Eastman in 1888, have been tales of increasing woe. This summer they gave up producing their wonderful Kodachrome film, and now comes the news that they are in hock to KKR – not known as the most compassionate of pawnbrokers.

KKR is buying up to $400m of senior secured notes in Kodak, as the hapless photography company tries to shore up its dismal balance sheet (it’s also raising an additional $300m in convertible debt through a private placement, which will partly go towards paying off earlier debt). KKR – which gets two seats on the Kodak board – is also buying warrants that give it the right to buy up to 53m of Kodak’s 268m outstanding shares.

It’s hard to overstate the extent of Kodak’s fall from a position of global domination in its market. Kodak brought photography to ordinary people in the same way as Ford did cars. In encouraging ‘You push the button, we do the rest’, it was so successful that the verb ‘to Kodak’ was used to describe taking a picture as one uses ‘to Google’ today to describe an online search. It generated seas of cash, and as late as 1981, it enjoyed a $10bn turnover as folk all over the world used the vertically-integrated company to take its pictures. But like so many US leviathans, it just did not adapt to change fast enough. It thought the world owed it a living.

Now it’s been almost blown away by the digital firestorm, as kids just take pictures with their phones and don’t even know what photographic film is. Even digital cameras are on the sales slide. No wonder Kodak’s CEO Antonio Perez once described his job as being like standing on ‘a hot burning platform’.

Such is the extent of its woes, one wonders if Kodak can in fact survive (Polaroid didn’t). Sometimes the extent of the problems faced by organisations are just too vast for any strategic move to be effective, and the harsh reality of the evolutionary process kicks in. It’s doubtful if even the most brilliant and revolutionary management could have done anything but change the speed at which they headed for the Big Exit. Like the wooly mammoth or the dodo, maybe Kodak should just shuffle off its mortal coil and move on to a better place. Not before KKR has had its money back, though. Otherwise there will be hell to pay.

In today’s bulletin:

John Lewis puts on a brave face as sales slump
Business face post chaos as Royal Mail strike looms
Editor’s blog: Poor old Kodak’s fall from grace
Burberry needs a little help from its (online) friends
Will recovery be harder than recession for SMEs?

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    This is what happens to large conglomorates when they fail to advance with technological changes in the global market. Kodak should have embraced the digital revolution. My kids do not even know what the name kodak meant.