Posts Tagged ‘Kodak Bankruptcy’

Kodak and the Rochester mentality

January 21, 2012

Rich Karlgaard of Forbes wote in the Wall Street Journal that Eastman Kodak Co. might not have failed if it hadn’t happened to be located here in Rochester, N.Y.

He said Kodak needed to be in a place where “success is the norm and innovation is built into the ecology.”  And he said Kodak CEOs did not make the bold and drastic decisions that were necessary because of excessive concern for the welfare of their employees and the community.

I heard stuff like this a lot when I was reporting on Kodak for the Democrat and Chronicle in the 1980s.  When Kodak started to falter, Wall Street analysts called for layoffs – the bigger, the better, in their view – and they complained about Kodak’s generous employee benefits and separation packages, which took money they thought rightfully belonged the stockholders.

It is true that Kodak’s operations were much more concentrated in a single city than almost every other major manufacturing employees.  I no longer have the figures on hand, but my recollection is that 40 percent of Kodak’s employees worked in the Rochester area.  Kodak accounted for one out of every eight jobs in the Rochester area, and one out of every three manufacturing jobs.  All of Kodak’s CEOs, from the death of George Eastman in 1932 to the hiring of George Fisher from Motorola in 1993, were promoted through the ranks and spent most of their careers in Rochester.  Kodak and Rochester were very much identified with each other.

During the 1980s, Kodak management was well aware, as Karlgaard noted, that the days of film photography were noted.  CEO Colby H. Chandler tried to incubate new enterprises within the corporate framework, but fostering start-ups within the framework of a larger corporation proved hard to do.  The new enterprises were neither self-reliant nor free of corporate independence.

Perhaps – who can say? – it would have been better for Kodak to launch its digital imaging business in a new location as a separate corporation, far from Rochester corporate headquarters.  Another Rochester-based company, Xerox Corp., did just that, and it didn’t work out.

In a deliberate effort to escape the Rochester mentality.  Xerox relocated its headquarters to Stamford, Conn., and its research laboratories to Palo Alto, Calif., so as not to be limited by the mentality of any one place.  Douglas K. Smith and Robert C. Alexander in their book, Fumbling the Future, wrote that scientists at Palo Alto Research Laboratories in effect invented the personal computer, but Xerox never capitalized on their invention.  Perhaps — who can say? —  if Xerox factories, research laboratories and headquarters had all been in the same place, the divisions of Xerox might have been able to work together to turn research innovations into marketable products.

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