Question

Fisher Era: Fisher arrives from Motorola in 1993 and stays until 1997. How would you assess Fisher’s attempt to transform Kodak? What did he do? Why did it fail?

Answer 1

As it states in “The Dynamic Capabilities of Firms: an Introduction”, by David Teece and Gary Pisano: “Change is costly… The ability to calibrate the requirements for change and to effectuate the necessary adjustments would appear to depend on the ability… to quickly accomplish reconfiguration and transformation ahead of competition.” Fisher attempted to quickly transform Kodak, from a chemical based company into a technological based company, he believed that investing in equipment development was the best strategy to increase Kodak’s profitability. Hence, he fragmented and scattered Kodak over many division, he wanted to change the vertical structure of Kodak into a horizontal company that outsourced most of its equipment. But he did not consider all difficulties coming from a systems-level change, architectural innovations require time to be learnt, new routines have to be integrated and coordinated. Fisher was facing a company, where routines were a very important part of the system, Kodak seemed to have developed the personality of an “old man”, set in his ways. Decisional and operating processes were really rooted in Kodak.As matter of fact of Fisher’s failure, Business Week, in an article “Can George Fisher fix Kodak today?”, states: “Fisher has been able to change the culture at the very top. But he has

not been able to change the huge mass of middle managers, they just don’t understand this world” .Unfortunately, productive systems display high interdependence, and that it may not be possible to change one level without changing others and Fisher’s restructuring of Kodak was too quick, too radical and too wide. Kodak managers were not able to understand how to deal with this new idea of doing business, and so there was poor communication between Kodak divisions. Hence, one of the most important mistake of Fisher was not understand how depth of the razor-blade culture and how Kodak was stuck in its routines, underestimating the learning process of an architectural innovation in terms of timing.Moreover, Fisher was not able to understand the dynamics of the photography market. He did not realize how tough it was the completion of the digital sector, and on the other hand he was too naïve towards the film market that should have been protected more, increasing constantly the gap with the competitors. In the film market Fuji was feeling very quickly the gap with Kodak, gaining year by year, market shares and consequently decreasing Kodak’s margins. In fact, as the Worldwide film market share shows, in Fisher’s era Kodak’s market shares passed from more than 50% to less than 40% and Fuji passed from 20% to 30% market shares.