Back in the 19th century, Kodak disrupted photography. About 100 years later, the company became lost ground due to the same forces when digital imaging started to prosper.

2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.

6. Kodak has been through some really tough times
since the rise of digital imaging.

8. In the late 1980s the company employed
about 140 000 people, today this figure has
gone down to less than 20 000.

9. The rise and decline of Kodak can to a large
extent be explained by using a framework
developed by Clayton Christensen at Harvard.

10. Christensen studied technological shifts, how
they happen and why established firms tend
to be overthrown when they occur.

11. He made a distinction between disruptive and
sustaining technologies.

12. A sustaining technology is one that improves the
performance of a product according to the attributes
that the established customer base appreciates.

13. It doesn’t matter if it is radical or incremental.

14. A disruptive technology on the other hand offers an
initially worse performance according to what
customers have appreciated.

15. At the same time it brings new performance
attributes such as simplicity or portability to the
marketplace.

16. Therefore it tends to prosper in new customer
segments and as it improves along the mainstream
dimensions, it eventually displaces the former
technology.

17. Established firms therefore miss the boat by
listening to their existing customers and by keep
moving up into increasingly sophisticated
segments.

18. It looks like this.

19. It attacks from below, becomes ’good enough’
and overthrows the established firms,
who’ve been listening to their customers.

20. This framework can help us to explain
both the rise and the fall of Kodak.

21. Kodak’s
introduction of
the roll film in
1888 is an
excellent
example of a
disruptive
innovation.

22. It fundamentally changed the role of
photos and the way they were used.

23. Prior to this,
people went to a
studio and had
their photo taken
by a professional
photographer.

24. The roll film
did not
compete
along the
image quality
dimension.

25. Instead, it
brought new
performance
attributes to the
marketplace.

26. Portability.

27. Simplicity.

28. Affordability.

29. This value
proposition
was very
different
from the one
that the
leading
photography
companies
offered back
then.

30. The leading photographic companies in the
U.S. were Anthony and Scovill (who merged
into Anthony & Scovill in 1901, later shortened
to Ansco). Their very successful businesses
were focused on meeting the needs of portrait
studios and serious amateurs.

31. Kodak prospered
by targeting non-
photographers.

32. People who had
not been taking
pictures before
could suddenly
do so.

33. As the performance of roll films improved it
eventually displaced dry plate photography.

34. A schoolbook example…

35. … of a disruptive
innovation that
toppled the dominant
firms and put Kodak
in the leading
position.

36. From this point and on, Kodak kept developing
sustaining innovations successfully.

37. Colour film was introduced in the 1930s…

38. … profits kept rising and Kodak continued to launch
products that sustained the dominant film
technology and strengthened its position.

39. About a century after the disruption of dry
plates by the roll film, another disruptive
storm was about to change the industry.

40. Digital imaging
was on the rise.

41. If Kodak and the roll film had simplified
photography, digital imaging made it cheaper
and simpler than ever before.

42. The image quality was significantly worse, but
digital imaging offered new performance attributes
that were valued by non-photographers.

43. The image could be viewed instantly, it did not
cost anything to capture a picture and they
could be shared easily with the help from
computers and the internet…

44. Once the digital cameras had reached the
point of being ‘good enough’, sales exploded.
30
25
20
15
10
5
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Number of film and digital cameras
sold in the United States.

45. Just like the roll film, digital imaging
attacked from below and brought new
performance attributes to the market.

46. Once digital camera sales
exploded, film sales imploded...

47. … And 100 years after Kodak had disrupted
the industry, it was Kodak’s turn to be put in
trouble by a new technology.

48. Kodak had seen it coming:

49. 6 million pixel resolution is
good enough for most
applications. The
perception of colour is
more important than the
perception of sharpness.
Kodak, 1996

50. But more than a century of high
profits related to film were still
going to be removed…

51. … And Kodak was now in deep trouble.

52. Over the last 150 years photography has
been popularized in a way that no one
could have imagined back then.

53. The roll film was
the first
disruptive wave
and it catapulted
Kodak into
industrial
leadership.

54. Digital imaging
was the second
wave of
popularization
and it disrupted
Kodak’s
profitable film
business.

55. Image attributions

56. Thanks to:
Terry Faulkner, former Director and Vice
President of Strategic Initiatives at Kodak.

57. Find out more:
www.christiansandstrom.org