What was Kodak thinking?

The PIVOT: a move made more famous by Digital/Internet startups than by sports stars. The agility, openness, hunger and passion to succeed (read: passion to make money) gave these tech entrepreneurs the impetus to switch direction and focus quickly…and most importantly, without ever looking back.

Think about the companies who said they were ‘pure digital retailers,’ out to disrupt industries. They swore they would never again open something as Stone Age-old as a store. Warby Parker comes to mind, as they continue to open brick and mortar, with more than 60 stores already and at least three in 2018 so far. And as far as I can tell, they haven’t disrupted anything.

How about Snap? At first, they focused on disappearing photos that were clearly targeting sexual innuendo, until both backlash and insight gave them impetus to pivot. Backlash, related to the advertising they swore was evil and would never sell, but that they need to survive. And insight being that even Millennials and younger liked to savor key memories. Snap is one of my all-time Oscar nominee favorites for best pivot (see definition above).

Apple, Google, Facebook: all have pivoted. And all are following and building on the innovations of the smaller, more agile pivoters of today, as they find that kind of innovation harder to achieve. Why? Because the Pivot favors the smaller, less self-conscious players...and of course, the ones not enslaved to the quarterly report.

Enter Kodak.

Once one of the most beloved Brands in the world. A company of firsts and innovations. A name that represented our memories as expressed and captured in photos. The democratizers of cameras who made the magic accessible to all with the Brownie, much like Henry Ford did with the Model T. Now a mere footnote to the history of photography—and worse, a cautionary tale to all companies who get complacent.

I recommend reading one of my favorite business books, written in 1989 and still relevant and interesting, When Giants Learn to Dance:

“Once Kodak was so powerful that it controlled its markets rather than the other way around. But now the market is in control and Kodak is floundering. (Forbes, November 5, 1984)”

And two years later:

“During the late seventies and early eighties, a complacent Kodak drifted while others produced the innovations it used to be known for. (Fortune, March 3, 1986)”

So how did they embrace change? Not with a pivot:

"Kodak’s new leaders acted decisively and were willing to embrace changes, no matter how painful they might be. By year’s end Kodak eliminated eleven thousand jobs; by 1986, Kodak thinned top management ranks by 25 percent, and reduced the domestic workforce by 8 percent—moves that symbolized the end of Kodak’s century-old reputation as a bastion of lifetime employment."

What’s fascinating (and a story for another time) is that Kodak and Apple hit a wall at the same time, in much the same way.

In examining Kodak and Apple, author Rosabeth Moss Kanter wrote:

"The traditional large, hierarchical corporation is not innovative or responsive enough; it becomes set in its ways, riddled with pecking-order politics, and closed to new ideas or outside influences. But the pure entrepreneurial firm—the fast-growing start-up—is not the answer either; it is not always disciplined or cooperative enough to move from heady, spend-anything invention to cost-effective production, and it can become closed in its own way, too confident and too dependent on the magic of individual stars. Something new is required, something that marries the entrepreneurial spirit to discipline and teamwork, something that helps loosely managed companies get a little tighter and tightly controlled companies loosen up—a post-entrepreneurial response."

Fast forward to today. Kodak’s stock, trading at under $10 for the better part of two years, is way down from a historical high of $106 in its halcyon days back in 1976. But its value has held fairly steady as they “pivoted.” And in the words of one of their project consultants, Cameron Chell, in The New York Times:

“The real story is that it’s about to be a renaissance.”

What is this pivot driving a renaissance? Have they found a new way to delight our memories? Save our personal history? Enhance our lives?

[ANNOYING BUZZER SOUND]…No! It’s a bet on cryptocurrency.

The New York Times piece continues:

"It’s a bold gamble that has excited some investors, perplexed others and raised questions about how closely Kodak vetted its cryptocurrency business partners, who now include a paparazzi photo agency, a penny-stock promoter and a company offering what has been called a ‘magic money making machine.’”

But wait! Before you think their pivot is baseless:

“This month, Kodak lent its name to a digital currency called KodakCoin, which is billed as ‘a photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management.’ The basic idea behind KodakCoin is to use the blockchain to help photographers manage their collections by creating permanent, immutable records of ownership. The company also struck a licensing deal for a Bitcoin-mining computer called the Kodak KashMiner, which allows users to generate their own cryptocurrency.”

Brilliant? Core to their heritage? Is it, as Kanter advises:

“Something that marries the entrepreneurial spirit to discipline and teamwork, something that helps loosely managed companies get a little tighter and tightly controlled companies loosen up—a post-entrepreneurial response.”

I will leave it to you to decide if this is a smart, strategic move or not, and I will not comment on Bitcoin beyond sharing the following from Business Insider on February 5th:

“The crypto market has been on the back foot since the start of the year, hit by fears of a regulatory crackdown and slipping Asian volumes. Bitcoin is now at less than half its December peak of over $19,000…Monday's drop comes amid announcements from numerous major banks prohibiting the use of their credit cards to buy bitcoin and other cryptocurrencies. In the US, JPMorgan Chase, Bank of America, and Citigroup have announced bans, while Lloyds Banking Group is expected to do the same in the UK on Monday.”

Think on this. Listen:

“ Pivoting is not the end of the disruption process, but the beginning of the next.”

Jay Samit

Meaning that you need a point to pivot from, and a vision of where that pivot might lead.

P.S. – Bloomberg reported:

“The 130-year-old company said last week that verifying the “accredited” status of potential investors for the digital KodakCoin token could take several weeks, sending its shares down 13 percent. Over 40,000 investors expressed interest in the offering, the Rochester, New York-based company said last week.”

What do you think?