Tuesday, January 24, 2012

Why Kodak failed -- and how to avoid the same fate; Reprographers, please take note!

This morning, I received an e-mail from a Reprographer, who is a frequent visitor to Reprographics 101, and his e-mail included a brief comment and an article about Kodak. Heretofore, I have not posted any articles about Kodak declaring Chapter 11, for that news has been all over the place…. and it was expected, by most, to happen.

But, the article my friend sent me is not, per se, about Kodak’s decision to declare Chapter 11; it’s more about “why Kodak failed” …. and, reprographers, please take note, there are some similarities between Kodak’s failure and the challenges that Reprographers have been experience and will continue to face in the future.

Here’s my friend’s brief comment:

“Joel, this may make for a great post…just remove “photos” and substitute in “plans/specs.” I highlighted key portions.”

The portions that my friend highlighted now appear, below, in bold red type.

Okay, before you read the article, I have a couple of comments to make:

First, with regard printing hard-copy photos (printing “to paper”); our homes are filled with framed photographs of family and friends and of places we’ve visited. In addition, we also have a small collection of “collectible” photographs. My wife’s “project” this week is to organize digital files of photos we recently took when we visited three countries in Europe; once she finishes organizing these photos she’s going to go “on-line” (using MyPublisher.com) to order two hard-copy “photobooks.” We continue to take photos ….. and, nowadays, my $150 personal HP Ink-jet printer is used to print photos much more than it is used to print regular documents. I have no doubt that, once my wife learns how to use MyPublisher, she will, in the future, be ordering more and more “photobooks.” And, we continue to print new individual photos for placement in frames, for us and for gifts. And, yes, we both have “digital libraries” of photos on our MAC laptops. We occasionally share our photos by e-mail and, of course, if we learned how to do this, we could post our photos on photo-sharing sites on the Internet. But, the main point I’m attempting to make is that we still print photos – to paper – and we will continue to do that, because I’m not interested in mounting multiple MAC laptops on my walls and shelves. You get the picture, and, yes, pun intended! And, by the way, the photobook business is growing, not declining.

Secondly, the printing (to hard-copy) of “other” types of documents, and, here, I’ll bring in the term, “plans and specs” is very much different from printing photos. I can’t remember a time when I visited the house of a relative or friend or business associate where they had “A/E plans” (or specs) in frames on their walls or shelves. (Unless the A/E plans were “antiques.”) To me, there’s a fairly big difference between the future of printed “photos” and the future of printed “A/E plans.” To me, the printing of A/E plans is much more susceptible to future decline than is the case with printing photos. Technologies that enable virtual collaboration on, and easy/speedy distribution of, digital files will continue to find their way to market, greatly affecting the volume of A/E/C industry documents that find their way to “hard-copy” printing.

Okay, here’s the article:

“Why Kodak failed -- and how to avoid the same fate”

By Dave Johnson, January 23, 2012 7:21 AM

It was a sad day last week when Kodak -- perhaps the most iconic of all photography companies -- filed for Chapter 11 bankruptcy protection. Of course, that doesn't mean Kodak is down for the count. Quite the opposite. But to see the premier powerhouse of the film age trying to shed debt and restructure to survive is sad. Kodak gave us the first mass-market camera, the Brownie, as well as the first instant cameras. And there's the Paul Simon song, as well.

Anyone who has followed the rise of digital imaging over the last 15 years might shrug this off as inevitable. But Kodak actually made a genuinely solid effort to transform with the digital age. It just hasn't been quite nimble enough. Indeed, there's one critical element that -- had Kodak pulled it off -- might have prevented the current trek through bankruptcy protection. It's a great lesson for any company faced with weathering a disruptive change in its industry.

The bottom line is that in any transformation, you need to embrace the right business model. Kodak made a lot of changes to its core business model in the 1990s and 2000s. It rolled out a line of digital cameras, sold inkjet printers, and bought a photo sharing site called ofoto.com, which it eventually rebranded Kodak Gallery.

Those all sound like smart and reasonable decisions -- the company seemed to move with the industry -- but it wasn't enough. In particular, Kodak was still implicitly married to an outdated business model that relied on people printing their photos.

Kodak's EasyShare brand, for example, married cameras and desktop printers in a way that emphasized convenient and frequent snapshot printing. And ofoto, despite some photo-sharing pretensions, has always been little more than a vehicle for ordering prints. What Kodak missed -- or ignored -- is that the dynamics of photography have changed. Digital photography isn't just about a transition to bits instead of silver halide.

Digital photography is about freedom from printing. People don't print photos anymore -- they share photos online. Indeed, even the fundamentals have changed in that people don't take photos with bulky cameras at special occasions anymore. Cameras -- or, more accurately, cameraphones -- are a ubiquitous part of everyday life in a way that George Eastman could only have dreamed about.

That means that Kodak, had the company recognized that customers no longer wanted to print but rather wanted to share online, would have been smart to deemphasize its printer business and build its online property -- ofoto -- into something more than just an easy way to upload and print photos. The real future business model for digital photography was destined to be social media.

Of course, it's not Kodak's fault that the company couldn't predict Facebook, but imagine if it had.

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