Anyone who visited Rochester, New York up until the 1980s would have to acknowledge that it was for all intents and purposes a company town. Just like Hershey, Pennsylvania will forever be linked to chocolate and Ybor City, Florida is synonymous with cigars, Rochester was Kodak. Priding itself as being the World’s Image Center and with many major landmarks named Eastman or Kodak, the city on the shores of Lake Ontario crafted its entire identity on the photographic giant. The news that Kodak had filed for bankruptcy protection after the evaporation of its traditional film business did not really surprise anyone in the city of Rochester or far beyond, but it still does mark a milestone in American history… and it is a story that any marketer can learn from.

Today’s Market Cap = 4 Days of Sales in 1996

Over a decade ago, Kodak was one of America’s brightest business successes. In the 1990s its profits reached $2.5 billion a year on sales of $16 billion. The Rochester corporation employed nearly 150,000 people and boasted a share price of well over $140. The little yellow box of film was a ubiquitous accompaniment to any trip, whether to Grandma’s house for a turkey dinner or across oceans to see the Taj Mahal. With the stunning photographic market takeover of digital photography the house that Eastman built collapsed as if it were made out of cards. Its entire market capitalization today equals four days of sales in 1996.

Kodak Marketed a Digital Camera in 1975

It would be unfair to claim that Kodak was asleep at the switch while the photographic industry went digital. Kodak actually marketed one of the very first digital cameras ever, way back in 1975. The primary problem was that the company had become reliant on what we have come to know today as the inkjet marketing process. You can buy an extremely capable inkjet printer for the inconceivably low price of $20… but then you’re on the hook for buying four ink cartridges at around $30 each! Kodak specialized in flooding the market with very inexpensive film cameras, counting on the sales of film to float the entire company.

The Total Sudden Collapse of Film

Fujifilm posed the very first serious challenge to Kodak’s entire market strategy, as they were able to establish a foothold in the critical American market by the mid-1980s. Kodak went head to head with Fuji, as there wasn’t much point to selling cheap cameras that would be fitted with someone else’s film, and up until the end of the 20th century, Kodak still maintained its photographic market supremacy. It can be stated with some certainty that the total, sudden collapse of the film business was unexpected by both Kodak and Fujifilm, but where the Asian firm was able to leverage its intellectual property and product lines to suit the new realities, Kodak dithered to the point where anything it did was too little too late.

Fuji Adapted, Kodak Withered

Fujifilm was able to branch its existing film processes and patents off into disparate fields, such as pharmaceuticals, cosmetics and LCD TV screen component manufacturing. They also struck a lucrative deal to place digital imaging kiosks in Wal-Marts. Although Kodak had similar technology and a wealth of patents, they failed to capitalize on the cross-industry potentials, and failed to capitalize on digital photofinishing to the extent that Fujifilm did.

How Kodak managed to crash and burn while major competitors like Fujifilm managed to reinvent themselves to suit the new market realities can serve as a lesson in the benefits of any business maintaining the ultimate flexibility. The most vibrant industry sectors today might be dusty memories tomorrow. Any business must be ready to shatter the most resistant mold in order to be responsive to swiftly developing market needs. Purolator was an oil and air filter company before it found success as an overnight courier. Perhaps Kodak would not have had to declare bankruptcy had it launched a chain of hamburger stands. Marketers everywhere must prepare to reimagine their most inviolable core businesses in the roiling market of tomorrow.