Cultural School of Strategy on Kodak Case

Executive Summary

Kodak is an American imaging technology company founded by George Eastman in 1888. He invented and marketed the Kodak camera, a simple box with 100 exposure rolls of film. The company enjoyed excellent market success until the 1980s, when photography technology began to advance faster. The cultural school of strategy and the Entrepreneurial School of Strategy, all part of Mintzberg’s 10 Schools of Strategic Thought, help explain why Kodak failed. The cultural school of strategy highlights the importance of organisational culture in shaping the approach adopted by the business. The Entrepreneurial School holds that strategy formation is a product of vision. The VRIO Analysis helps to identify the unique strength that Kodak may have used to have a sustainable competitive advantage.

Introduction

Kodak is a pioneer company in the photography industry. The company dominated the market until the rise of digital technology, which disrupted Kodak’s market share and strategies. The cultural and entrepreneurial schools of strategy help to understand why Kodak failed in the market it had Dominated. The technical advances and Eastman’s marketing genius allowed the company to grow and expand, making photography accessible to millions of amateur photographers, which had not been seen before.

Kodak Case Study

Kodak is an American imaging technology company founded by George Eastman in 1888. He invented and marketed the Kodak camera, a simple box with 100 exposure rolls of film. The company’s packages include packaging, functional printing, professional business services, and geographic communication (Gavetti et al., 2005). The technical advances and Eastman’s marketing genius allowed the company to grow and expand, making photography accessible to millions of amateur photographers, which had not been seen before. By 1972, Kodak dominated the film industry and had a presence in over 150 countries with around 26000 stores (Gavetti et al., 2005). The company enjoyed excellent market success until the 1980s, when photography technology began to advance faster. Still, Kodak needed to respond equally to the technological changes but failed, leading to the company losing its market value in digital photography (Gavetti et al., 2005). The market challenge for Kodak continued as the company faced more competitors and digital technology.

Daniel A. Carp, Kodak’s CEO and chairman, had a meeting in 2003 to review 2002 sales, which had dropped by 5%, and still, the predicted sales in 2003 did not look brighter (Gavetti et al., 2005). Consumers were beginning to turn to digital cameras, thus reducing the demand for traditional photography, which had been a sales revenue for Kodak for the longest time. Daniel Carp believed this was the toughest challenge for Kodak because he had a long history with the company and understood the dynamics in the industry. Since the company was invented in 1880 by George Eastman, it has long regarded marketing as essential to its success (Gavetti et al., 2005). Through effective marketing strategies, Kodak has formed a good relationship with customers and retailers for many years. Over time, the company diversified by entering other photography-related businesses and faced competitors such as Fuji Film (Gavetti et al., 2005). Between 1993 and 2003, Kodak returned to the core imaging business. During the George Fisher era as head of Kodak, he attempted to introduce digital imaging and the introduction of Digital print stations. Fisher also wanted to introduce new models of digital cameras, thermal printers, and paper to make prints from the cameras (Gavetti et al., 2005). Fisher wanted to bring all the digital programs that had languished in Kodak’s labs to market but faced resistance from Kodak insiders who saw him as an outsider. The culture within the company could not allow him to introduce the changes. Fisher attempted to raise the Motorola leadership style and open discussion management, which was impossible at Kodak. He suggested that Kodak become a horizontal company in the networked markets that were on the rise and considering the competition from Fuji film, which would limit profits in Kodak’s old chemical-based photography business model (Gavetti et al., 2005). From the late 1990s to 2002, as the digital imaging industry expanded, Kodak faced more competition with falling profitability and staff layoffs despite being a competitive market player in the previous years (Gavetti et al., 2005).

Analysis of why Kodak Failed using The Cultural School of Strategy and The Entrepreneurial School strategy

The cultural school of strategy is comparable to the Entrepreneurial School of Strategy in the analysis of Kodak. They are all part of Mintzberg’s 10 Schools of Strategic Thought. They help explain why Kodak failed by understanding the implementation of strategies by different CEOs at Kodak as technology advanced and more competition in the market (Johnson et al., 2020).

The Cultural School of Strategy

The cultural school of strategy highlights the importance of organisational culture in shaping the approach adopted by the business. It is based on the recognition that the development and implementation of strategy are influenced by the values, behaviours, beliefs, and norms within the organisation (Johnson et al., 2020). The cultural school of strategy has several components that help explain and analyse the Kodak case effectively. The organisational culture component focuses on the shared norms, beliefs and values that shape behaviour and the decision-making process within the organisation (Tovstiga, 2023). The strategy formation component is a collective focus on developing strategy due to interaction and negotiation between organisational members with shared beliefs and cultural values. The cultural alignment component of the cultural school of strategy focuses on the need for the strategy to be aligned with the organisational culture, which helps ensure corporate members’ acceptance (Johnson et al., 2020). The cultural change component focuses on the potential for strategic initiatives to influence change within the organisation. The central focus of the cultural school of strategy is the critical role played by the organisational culture in informing and shaping the business strategy (Johnson et al., 2020).

The cultural school of strategy effectively explains Kodak’s failure by involving various groups and departments within the company. Kodak had different departments tasked with different roles to make the company more competitive. In the 1980s, Fuji Film was becoming more competitive in the market, and there was a need for Kodak to embrace change and become more competitive by adopting the new technologies that were emerging (Gavetti et al., 2005). According to the cultural school of strategy, to embrace change, all departments need to change their approach and culture (Janes and Sutton, 2017). The Kodak managers kept ignoring the internal analysis that indicated that Kodak was losing part of the market share, thus affecting its profitability. The managers ignored data from the departments within Kodak and, therefore, kept losing the market share to Fuji Film (Gavetti et al., 2005). According to the cultural school of strategy, the adopted strategy by the organisation is a product of the corporate culture. The corporate culture at Kodak at the time digital technology was taking over did not promote collective decision-making; instead, the culture embraced a culture where top managers make decisions without consideration for the mid-level managers and employees (Gavetti et al., 2005). The lack of collective decision-making led to delays in the company’s ability to move into the digital world fast enough, and thus, the company lost out to the competition (Janes and Sutton, 2017). The culture of the organisation at the time did not embrace change because Kodak managers needed to see a situation where other competitors would have a huge share of the Kodak photography market, leading to losses for the company (Gavetti et al., 2005). However, the cultural strategy school must explain why Kodak dominated the market before digital technology. The Entrepreneurial School of Strategy helps explain how the vision of the company leadership led to success.

The Entrepreneurial School

According to the Entrepreneurial School, strategy formation is a product of vision. It is a visionary process by the CEO where the vision becomes a strategy for the company, and the CEO closely monitors the progress. The leader’s experience is the key determiner of the strategy and its success (Janes and Sutton, 2017). It is different from the cultural school of strategy, which puts more emphasis on organisational culture (Tovstiga, 2023).

Initially, Kodak had largely depended on the marketing strategies of the founder and CEO, George Eastman. The company expanded in the market and became a major player in the photography industry. The other company leaders who came after George Eastman have continued with the same vision by the founder, which formed part of the company strategy. The leader’s experience plays a critical role in the success of the company strategy, which explains why the company has been successful for many years. According to the Entrepreneurial School, strategy formation is a product of vision, and the previous leaders had successfully driven the company to great success in the American and global markets (Tovstiga, 2023). However, in the 1980s, new players such as Fuji Film brought technological advancement and competition. Kodak had been a leader in photography for many years with no major competition, so no leader had the experience of dealing with major changes in the photography industry (Schweitzer and Welker,2019). Despite the many competent CEOs and leaders such as Colby Chandler, Whitmore, and George Fisher, Kodak still failed (Gavetti et al., 2005).

Comparison between Cultural School of Strategy and Entrepreneurial School of Strategy

The cultural school of strategy effectively explains Kodak’s success compared to the entrepreneurial school. The failure was thus more than the leader’s failure to have a great vision and strategy; therefore, the entrepreneurial school of strategy fails to explain Kodak’s failure effectively. Kodak still needs to improve despite the different strategies to retain the market leadership position (Tovstiga, 2023). The cultural school of strategy effectively explains Kodak’s success over the years. It helps to understand the failure when the organizational culture did not align with the competition and technological dynamics faced by the company from the 1980s to early 2000. It is the most influential school of strategy to analyse Kodak’s successes and failures compared to the Entrepreneurial School of Strategy (Johnson et al., 2020).

The competitive advantage of Kodak was its market dominance before digital technology (Schweitzer and Welker,2019). According to the Entrepreneurial School of Strategy, the CEO’s vision influences the company strategy, and the strategy for market dominance has been affected by the founder, George Eastman, and other CEOs following the plan. The organizational culture is equally formed around market dominance and the belief that no other company can rival Kodak in the industry (Tovstiga, 2023). According to the cultural school of strategy, the culture of the organization influences the belief and commitment of the Kodak employees towards market leadership and dominance. Kodak started to face challenges with the arrival of digital technology (Gavetti et al., 2005). The organisational culture still needs to improve the company’s ability to innovate and embrace technology change, which hurts the company’s market share. The Entrepreneurial School of Strategy needs to explain why the vision of the Kodak leadership failed to help the company retain the leadership position after digital technology.

VRIO Analysis of Kodak

VRIO stands for value, reliability, imitability, and organised analysis, providing a detailed understanding of Kodak’s market position and the competitive opportunity the company had in the market (Johnson et al., 2020). The analysis helps to identify the unique strength that Kodak may have used to have a sustainable competitive advantage. VRIO analysis aims to determine the exceptional strength of the company, if the strength provides value to the customers, if the strength is rare and provides a competitive advantage, if the strength can be imitated, and if the company is ready to put the strength which gives the company a competitive advantage to use (Tovstiga, 2023). Kodak VRIO Analysis indicates that despite the advantage of brand awareness and financial resources, the market is currently dominated by other digital players, which means low market share and low profits for Kodak.

Kodak VRIO Analysis Table

Conclusion and Recommendation

The competitive advantage for Kodak before the digital technology was market dominance. Kodak made profits from the market domination, and thus, the financial resources gave the company gave the company a better advantage as well. However, the digital technology brought in other players who now dominate the market. Kodak is a classic case of failure to embrace change in the market largely due to organisational culture.

The photography market is still growing, and thus, Kodak has room for reinvention. Changing organisational culture and a leadership that embraces digital technology and competition will help Kodak grow again to a major player in the photography market.

Reference List

Gavetti, G., Henderson, R. and Giorgi, S., 2005. Kodak and the digital revolution (A). Cambridge, MA: Harvard Business School Publishing.

Janes, A. and Sutton, C., 2017. Ebook: Crafting and Executing Strategy: The Quest for Competitive Advantage. McGraw Hill.

Johnson, J., Whittington, R., Regnér, P., Angwin, D., Johnson, G. and Scholes, K., 2020. Exploring strategy. Pearson UK.

Schweitzer, H. and Welker, R., 2019. Competition policy for the digital era. The Antitrust Chronicle, 3(2), pp.16-24.

Tovstiga, G., 2023. Strategy Praxis: Insight-Driven, First Principles-Based Strategic Thinking, Analysis, and Decision-Making. Springer Nature.