Kodak Eastman Kodak: What Factors

Kodak

Eastman Kodak: What factors motivated Kodak to change its organizational architecture?

Unfortunately, finding a formula for corporate success is not like finding the right chemistry formula -- what works in one market environment, may not work if environmental factors shift and change. Because of changes in technology, Eastman Kodak's dominance over its competitors was lost. Fuji's improved product development upset Kodak's previous dominance of its competitors. By decentralizing the company, Kodak's management hoped to make the company more responsive to changing customer demands and market conditions.

What mistakes did Kodak make in changing its architecture?

One mistake Kodak made was reducing base salaries, and replacing these with bonuses, in an attempt to make the company's staff more creative and industrious. However, this did not translate into improved innovation or sales -- the pay cut and vaguely defined standards of improvement-based bonuses only made the affected personnel angry, rather than more loyal.

What might it have done differently?

Since delayed release of new technology was one reason the company lagged behind Fuji, simply making a benchmark regarding product innovation and trying to motivate managers to speed up the release of new products to create a new, first mover advantages in the market might have been a more positive and concrete way to motivate its staff. Investing in new research and development and trying to outshine Fuji should have been the main objective. This could be accomplished through more R&D funds, more canny market assessment of consumer needs, and providing bonuses for innovation, not cutting back salaries and making staff member's dependant upon bonuses for their livelihood.

How does this example relate to the concept of economic Darwinism?