Kodak

Eastman Kodak: A Company in Transition

When Eastman Kodak Company appointed a new CEO in October 1993, the company's top management expected him or her to turn the 113-year-old company around. Morale among employees and managers was low. The company's core business - photographic products - was potentially threatened by digital imaging, but no one seemed sure how to deal with this new competition. Further, the company had borrowed heavily to finance the purchase of Sterling Drug, Inc., in 1988, which it had not yet fully integrated. One of the biggest challenges facing new CEO George Fisher, however, was how to turn around the company's attitude to make it as innovative and cost competitive as it had been until the 1970s.

Kodak in Transition

The hiring of a new CEO, the first from outside the company, was not the first attempt top management had made to change Kodak's direction; there had been no less than five major restructuring programs in the previous decade. In 1990 top managers had developed a strategic direction plan to determine how Kodak could make the transition to the new digital technologies. The strategy had never been implemented, however, because, as a former manager described it, “People thought that it was too big a risk, that we didn't have the skills to succeed.” Instead, Kay Whitmore, CEO at the time, concentrated on restructuring and trying to solve short-term problems.

New CEO Fisher praised the company's brand and products. “Kodak has a great franchise, and my hope is to build on that to get exciting growth,” he said. Fisher started not with extensive cost cutting but by emphasizing the opportunities facing the company. In his previous position as CEO of Motorola, Fisher had managed this mix of efficiency and technology-based growth and had understood that concentrating on lower costs by eliminating expenses or jobs could actually make Kodak's problems worse. He quickly sold Sterling Drug and the household products division and...