Abstract

"Kodak’s Long Journey: The Role of Technology Substitution Dynamics in Incumbent Failure"

Natalya Vinokurova, Lehigh University (Nav223@lehigh.edu)

Kodak’s failure to transition from film to digital technology has become a canonical example of a dominant incumbent failing in the face of an industry transition. In this paper, we undertake a systematic study of Kodak’s decision-making from its earliest efforts in digital technology in the 1960s through its bankruptcy in 2012. Our analysis of Kodak’s decision-making over the half-century leading up to its bankruptcy finds limited evidence of inertia and extensive evidence of strategic renewal efforts. Kodak committed substantial resources to R&D, commercialized multiple digital products through dedicated business units, incubated start-ups, acquired firms with promising imaging technologies, diversified into adjacent fields, and undertook senior leadership changes, yet it still failed. Despite commercializing multiple cutting-edge products that reflected Kodak’s technological leadership in digital photography, Kodak struggled to translate this leadership into sustained profitability due to delays in realization of demand for digital photography. When the demand for digital cameras materialized in the 2000s, Kodak achieved market leadership and collected billions of dollars from licensing its technology to other firms, however, this was not enough to save the firm from bankruptcy. Our findings suggest that failure of incumbency needs to be understood in the broader technology context.