Week 9: Cumulative Lecture Kodak Case Study MIS5001: Management Information Systems David S. McGettigan

Agenda Prior Lecture Recap Kodak Case Study Next Week

Prior Lecture Recap

Prior Lecture Recap Cost / Benefit Analysis Financial Formulas Tangible vs. Intangible Benefits Total Cost of Ownership Financial Formulas Enables value comparison of projects versus each other Enables value comparison of projects versus a company’s cost of capital Portfolio Management Business Drivers Methodology Portfolio Types

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 The Kodak Case brings together several of the key concepts discussed in the course to date: 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: Foundation / history Pre-Fisher Era Fisher’s Era Today

Foundation / History What was the company’s fundamental product philosophy? 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

Pre-Fisher Era It’s 1981. Chandler’s team have just discovered that Sony is introducing Mavica, a filmless camera. 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). 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

Pre-Fisher Era 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

Fisher Era Fisher arrives from Motorola in 1993. What kind of company did he find? What is the logic of the strategic transition he initiated? Fisher stepped down in 1997. What was his fatal flaw? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

Fisher Era Kodak had developed excellent digital imaging technology, yet it introduced products only in peripheral areas of digital imaging (e.g. Photo CD). 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

Kodak Today Which of the following segments of Image Capture and Printing are most attractive and why? 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

Kodak Today Compare 2009 revenue to the revenue information in the case. What has happened to total net income and why? Source: Hoovers.com

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