Week 9: Cumulative Lecture
Kodak Case Study
MIS5001: Management Information Systems
David S. McGettigan
Agenda
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Prior Lecture Recap
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Kodak Case Study
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Next Week
2
Prior Lecture Recap
Prior Lecture Recap
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Cost / Benefit Analysis
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Financial Formulas
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Tangible vs. Intangible Benefits
Total Cost of Ownership
Enables value comparison of projects versus each other
Enables value comparison of projects versus a company’s
cost of capital
Portfolio Management
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Business Drivers
Methodology
Portfolio Types
4
Kodak Case Study
Nothing is more important than the value of our name
and the quality that it stands for.
George Eastman
Cumulative Case Study
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The Kodak Case brings together several of the key
concepts discussed in the course to date:
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Disruptive technology
Innovation and the culture of innovation
Financial concepts such as NPV
Change management
We will approach the Kodak case in the
following fashion:
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Foundation / history
Pre-Fisher Era
Fisher’s Era
Today
6
Foundation / History
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What was the company’s fundamental
product philosophy?
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Why has the company been so successful
throughout the history of the film industry, up
until the Digital Revolution?
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
7
Pre-Fisher Era
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It’s 1981. Chandler’s team have just discovered that
Sony is introducing Mavica, a filmless camera.
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They are concerned and invite you to assess the future
prospects of the film business.
How would you respond to the question: is film dead?
See exhibit 5 in the case. After the Sony
announcement, Kodak invested $5B in digital
imaging (approx 50% of budget).
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Was this the right response?
What would the NPV model look like?
What proportion should be allocated to digital?
At the beginning of the foray to digital, Kodak began to lose
market share to Fuji. Is Fuji stoppable?
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
8
Pre-Fisher Era
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Imaging being part of Kodak’s management
team during the dearly 1980s. Chandler asks
you and a colleague to predict the evolution of
film and digital imaging. If you and your
colleague each draw the curve below, what
determines the difference in these curves?
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
9
Fisher Era
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Fisher arrives from Motorola in 1993. What
kind of company did he find?
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What is the logic of the strategic transition he
initiated?
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Fisher stepped down in 1997. What was his
fatal flaw?
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
10
Fisher Era
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Kodak had developed excellent digital
imaging technology, yet it introduced
products only in peripheral areas of digital
imaging (e.g. Photo CD).
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How can we explain this disconnect between
Kodak’s product market strategy and R&D output?
Why did a company with leading edge technology
become fixated on Photo CD?
How did Kodak’s culture play a role here?
Cultural Exercise
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
11
Kodak Today
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Which of the following segments of Image
Capture and Printing are most attractive and
why?
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Home printing
Online
Retail
Looking back at Kodak’s history in digital
imaging, where has Kodak missed the boat?
Has it made any major strategic mistake?
Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note
12
Kodak Today
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Compare
2009
revenue to
the revenue
information
in the case.
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What has
happened to
total net
income and
why?
Source: Hoovers.com
13
Next Week
Globalization of Wyeth