Allied Academies International Conference page 9 SITUATION Losing sight of its core business of cameras and film, Kodak became unproductive when it began developing other products. It became inefficient and ineffective, allowing its Japanese rival and major competitor, Fuji Photo Film Co., Ltd., to make market-share inroads in 1997. Furthermore, digital technologies and competition from Internet-based startups were challenging Kodak. These problems were indicative of a need for a radical change. To achieve strategic advantage, managers can focus on four broad areas of change: Products and services, strategy and structure, people and culture, and technology. A radical change for Kodak would involve changes in all four of these areas. The company needed to be transformed by top management with leadership vision. DISCUSSION In the mid-1990s, George Fisher, Kodak's Chief Executive Officer (CEO) since 1993 recognized that if the company was to remain competitive it must be transformed via innovative changes in the organizational structure, processes, systems, facilities, and products. His vision. included a large-scale reshaping of the organization as they changed their focus from developing diverse products to creating more and better images and broadening market visibility and brand. recognition. Top management's vision should include these basic elements: A set of core values, a mission, and a plan of action. Fisher, along with Kodak's President and Chief Operating Officer, Daniel A. Carp, announced specific actions that were underway to reduce the company's total cost structure by at least $1 billion over a two-year period. They expected to use the savings to extend the company's growth strategies, provide competitive flexibility, and to continuously increase profitability. Fisher said that "Kodak plans to achieve top-line growth of 8-12% by 2004." Growth reflects increases in sales or profits over time. Kodak's new corporate structure enabled the business to be run more by its worldwide business units than its corporate functions, which facilitated company strategies. Cost reduction activities would include each company unit streamlining its organization, which eventually resulted in laying off about 20,000 employees. In corporate downsizing and restructuring, a top-down approach is usually used. According to Carp, their strategy also emphasized retaining the flexibility to support the Kodak brand with aggressive investment in marketing and promotions, and to keep focused on opportunities. Having leaders who clearly communicate a vision that includes flexibility and openness to new ideas, methods, and styles promotes a change-oriented organization and helps employees cope with cultural changes. " Fisher and Carp also made plans to consider more outsourcing, partnerships, and consolidation of vertical production activities. Carp said this would "add value to our company. To add value to assets, leaders need a vision of where they are taking an organization and a strategy for getting there. Carp used Kodak's recent joint venture with Sun Chemical as an example of how management was willing to do whatever was necessary to ensure that its strategy and goals were Proceedings of the International Academy for Case Studies, Volume 7, Number 2 Maui, Hawaii, 2000 Allied Academies International Conference page 10 met. When two or more organizations can benefit each other in some way, they often form strategic alliances through contracts and joint ventures. The company also expected to double the cost benefits of quality improvements from about $100 million per year to $200 million per year over the next few years in its existing factories. Kodak is constantly benchmarking, which is a process whereby small teams of workers conduct research on other company's products, services, and business practices; and then either imitate or improve upon them. Quality programs such as benchmarking usually involve a significant people and culture change. Addressing the fact that Kodak's principal competitor, Fuji Photo Film Co., Ltd., had gained market share in the U.S., Carp outlined the company's major strategies for responding: "We are narrowing the value gap with our principal competitor to levels consistent with our brand equity." Beyond pricing strategy, Kodak would deliver value to consumers through advertising, merchandising, distribution, and other efforts. Fisher announced in May 1998 that they were beginning to see the benefits of the large-scale reshaping. Kodak had increased and made more effective its advertising and simplified its marketing approach. They reduced their product offerings and this new brand architecture aligned Kodak products more precisely with primary consumer segments' needs. Fisher said, "We have refocused our company on what we do best, reduced our debt, improved return on net assets, strengthened Kodak's overall performance, and aggressively pursued growth." According to Fisher, Kodak would exit 1998 with overall costs reduced by $500 million, and predicted at least a $1 billion cost reduction by the end of 1999; and had plans to achieve top-line growth of 8-12% by 2004. He acknowledged, however, that there was still plenty to be accomplished: "Our goal is to methodically change and restructure Kodak to be more competitive and accommodate periods of slower top-line growth while generating attractive returns." The ongoing goals cited by Fisher included: Support high yield products and services; improve quality and cycle times; bring the digital business to profitability; reduce overhead costs without sacrificing advertising; and stimulate growth. Carp predicted that digitization initiatives would become a huge source of growth. Organizations find it necessary in a rapidly changing environment to make continuous improvements, set new goals, and assess the results of their goals. Fisher announced a strategic alliance with Intel Corporation that would allow both organizations to leverage their unique strengths. He also announced that the company was pursuing considerable growth in emerging markets such as China. Also, in established markets, Kodak had set the stage for growth through innovation, product differentiation, and digital imaging. Organizations develop a differentiation strategy in an attempt to distinguish their products or services from those of industry rivals. As the organizational transformation continued, about one-third of the senior management team changed; and Dan Carp succeeded George Fisher as CEO in January 2000. Organizations often bring in new leaders when making large-scale changes to revitalize the organization and the culture. Top management turnover provides new perspectives for organizational leadership and may symbolize a new organizational direction. In his keynote address at a digital photography forum in April 2000, Carp said that Kodak "won't be happy until the mass consumer market signs up for digital, in much larger numbers than today." However, he challenged the entire industry to consider that "digital" might not be a magic word for consumers. This idea is known as an organizational innovation because it was new to the Proceedings of the International Academy for Case Studies, Volume 7, Number 2 Maui, Hawaii, 2000
Allied Academies International Conference page 9 SITUATION Losing sight of its core business of cameras and film, Kodak became unproductive when it began developing other products. It became inefficient and ineffective, allowing its Japanese rival and major competitor, Fuji Photo Film Co., Ltd., to make market-share inroads in 1997. Furthermore, digital technologies and competition from Internet-based startups were challenging Kodak. These problems were indicative of a need for a radical change. To achieve strategic advantage, managers can focus on four broad areas of change: Products and services, strategy and structure, people and culture, and technology. A radical change for Kodak would involve changes in all four of these areas. The company needed to be transformed by top management with leadership vision. DISCUSSION In the mid-1990s, George Fisher, Kodak's Chief Executive Officer (CEO) since 1993 recognized that if the company was to remain competitive it must be transformed via innovative changes in the organizational structure, processes, systems, facilities, and products. His vision. included a large-scale reshaping of the organization as they changed their focus from developing diverse products to creating more and better images and broadening market visibility and brand. recognition. Top management's vision should include these basic elements: A set of core values, a mission, and a plan of action. Fisher, along with Kodak's President and Chief Operating Officer, Daniel A. Carp, announced specific actions that were underway to reduce the company's total cost structure by at least $1 billion over a two-year period. They expected to use the savings to extend the company's growth strategies, provide competitive flexibility, and to continuously increase profitability. Fisher said that "Kodak plans to achieve top-line growth of 8-12% by 2004." Growth reflects increases in sales or profits over time. Kodak's new corporate structure enabled the business to be run more by its worldwide business units than its corporate functions, which facilitated company strategies. Cost reduction activities would include each company unit streamlining its organization, which eventually resulted in laying off about 20,000 employees. In corporate downsizing and restructuring, a top-down approach is usually used. According to Carp, their strategy also emphasized retaining the flexibility to support the Kodak brand with aggressive investment in marketing and promotions, and to keep focused on opportunities. Having leaders who clearly communicate a vision that includes flexibility and openness to new ideas, methods, and styles promotes a change-oriented organization and helps employees cope with cultural changes. " Fisher and Carp also made plans to consider more outsourcing, partnerships, and consolidation of vertical production activities. Carp said this would "add value to our company. To add value to assets, leaders need a vision of where they are taking an organization and a strategy for getting there. Carp used Kodak's recent joint venture with Sun Chemical as an example of how management was willing to do whatever was necessary to ensure that its strategy and goals were Proceedings of the International Academy for Case Studies, Volume 7, Number 2 Maui, Hawaii, 2000 Allied Academies International Conference page 10 met. When two or more organizations can benefit each other in some way, they often form strategic alliances through contracts and joint ventures. The company also expected to double the cost benefits of quality improvements from about $100 million per year to $200 million per year over the next few years in its existing factories. Kodak is constantly benchmarking, which is a process whereby small teams of workers conduct research on other company's products, services, and business practices; and then either imitate or improve upon them. Quality programs such as benchmarking usually involve a significant people and culture change. Addressing the fact that Kodak's principal competitor, Fuji Photo Film Co., Ltd., had gained market share in the U.S., Carp outlined the company's major strategies for responding: "We are narrowing the value gap with our principal competitor to levels consistent with our brand equity." Beyond pricing strategy, Kodak would deliver value to consumers through advertising, merchandising, distribution, and other efforts. Fisher announced in May 1998 that they were beginning to see the benefits of the large-scale reshaping. Kodak had increased and made more effective its advertising and simplified its marketing approach. They reduced their product offerings and this new brand architecture aligned Kodak products more precisely with primary consumer segments' needs. Fisher said, "We have refocused our company on what we do best, reduced our debt, improved return on net assets, strengthened Kodak's overall performance, and aggressively pursued growth." According to Fisher, Kodak would exit 1998 with overall costs reduced by $500 million, and predicted at least a $1 billion cost reduction by the end of 1999; and had plans to achieve top-line growth of 8-12% by 2004. He acknowledged, however, that there was still plenty to be accomplished: "Our goal is to methodically change and restructure Kodak to be more competitive and accommodate periods of slower top-line growth while generating attractive returns." The ongoing goals cited by Fisher included: Support high yield products and services; improve quality and cycle times; bring the digital business to profitability; reduce overhead costs without sacrificing advertising; and stimulate growth. Carp predicted that digitization initiatives would become a huge source of growth. Organizations find it necessary in a rapidly changing environment to make continuous improvements, set new goals, and assess the results of their goals. Fisher announced a strategic alliance with Intel Corporation that would allow both organizations to leverage their unique strengths. He also announced that the company was pursuing considerable growth in emerging markets such as China. Also, in established markets, Kodak had set the stage for growth through innovation, product differentiation, and digital imaging. Organizations develop a differentiation strategy in an attempt to distinguish their products or services from those of industry rivals. As the organizational transformation continued, about one-third of the senior management team changed; and Dan Carp succeeded George Fisher as CEO in January 2000. Organizations often bring in new leaders when making large-scale changes to revitalize the organization and the culture. Top management turnover provides new perspectives for organizational leadership and may symbolize a new organizational direction. In his keynote address at a digital photography forum in April 2000, Carp said that Kodak "won't be happy until the mass consumer market signs up for digital, in much larger numbers than today." However, he challenged the entire industry to consider that "digital" might not be a magic word for consumers. This idea is known as an organizational innovation because it was new to the Proceedings of the International Academy for Case Studies, Volume 7, Number 2 Maui, Hawaii, 2000
Chapter13: Leadership
Section13.8: Transformational, Visionary, And Charismatic Leadership
Problem 3DQ: Despite Ubers apparent success in launching in multiple markets, it continues to post quarterly...
Related questions
Question
Critically discuss TWO (2) internal and/or external factors that gave rise to the
organizational change made by Kodak. Relevant information from the case should be
included. Provide relevant scholarly references to the key theories and practices to
support the discussion.
Transcribed Image Text:Allied Academies International Conference
page 9
SITUATION
Losing sight of its core business of cameras and film, Kodak became unproductive when it
began developing other products. It became inefficient and ineffective, allowing its Japanese rival
and major competitor, Fuji Photo Film Co., Ltd., to make market-share inroads in 1997.
Furthermore, digital technologies and competition from Internet-based startups were challenging
Kodak.
These problems were indicative of a need for a radical change. To achieve strategic
advantage, managers can focus on four broad areas of change: Products and services, strategy and
structure, people and culture, and technology. A radical change for Kodak would involve changes
in all four of these areas. The company needed to be transformed by top management with
leadership vision.
DISCUSSION
In the mid-1990s, George Fisher, Kodak's Chief Executive Officer (CEO) since 1993
recognized that if the company was to remain competitive it must be transformed via innovative
changes in the organizational structure, processes, systems, facilities, and products. His vision.
included a large-scale reshaping of the organization as they changed their focus from developing
diverse products to creating more and better images and broadening market visibility and brand.
recognition. Top management's vision should include these basic elements: A set of core values,
a mission, and a plan of action.
Fisher, along with Kodak's President and Chief Operating Officer, Daniel A. Carp,
announced specific actions that were underway to reduce the company's total cost structure by at
least $1 billion over a two-year period. They expected to use the savings to extend the company's
growth strategies, provide competitive flexibility, and to continuously increase profitability. Fisher
said that "Kodak plans to achieve top-line growth of 8-12% by 2004." Growth reflects increases in
sales or profits over time.
Kodak's new corporate structure enabled the business to be run more by its worldwide
business units than its corporate functions, which facilitated company strategies. Cost reduction
activities would include each company unit streamlining its organization, which eventually resulted
in laying off about 20,000 employees. In corporate downsizing and restructuring, a top-down
approach is usually used.
According to Carp, their strategy also emphasized retaining the flexibility to support the
Kodak brand with aggressive investment in marketing and promotions, and to keep focused on
opportunities. Having leaders who clearly communicate a vision that includes flexibility and
openness to new ideas, methods, and styles promotes a change-oriented organization and helps
employees cope with cultural changes.
"
Fisher and Carp also made plans to consider more outsourcing, partnerships, and
consolidation of vertical production activities. Carp said this would "add value to our company.
To add value to assets, leaders need a vision of where they are taking an organization and a strategy
for getting there.
Carp used Kodak's recent joint venture with Sun Chemical as an example of how
management was willing to do whatever was necessary to ensure that its strategy and goals were
Proceedings of the International Academy for Case Studies, Volume 7, Number 2
Maui, Hawaii, 2000
Transcribed Image Text:Allied Academies International Conference
page
10
met. When two or more organizations can benefit each other in some way, they often form strategic
alliances through contracts and joint ventures.
The company also expected to double the cost benefits of quality improvements from about
$100 million per year to $200 million per year over the next few years in its existing factories.
Kodak is constantly benchmarking, which is a process whereby small teams of workers conduct
research on other company's products, services, and business practices; and then either imitate or
improve upon them. Quality programs such as benchmarking usually involve a significant people
and culture change.
Addressing the fact that Kodak's principal competitor, Fuji Photo Film Co., Ltd., had gained
market share in the U.S., Carp outlined the company's major strategies for responding: "We are
narrowing the value gap with our principal competitor to levels consistent with our brand equity."
Beyond pricing strategy, Kodak would deliver value to consumers through advertising,
merchandising, distribution, and other efforts.
Fisher announced in May 1998 that they were beginning to see the benefits of the large-scale
reshaping. Kodak had increased and made more effective its advertising and simplified its
marketing approach. They reduced their product offerings and this new brand architecture aligned
Kodak products more precisely with primary consumer segments' needs. Fisher said, "We have
refocused our company on what we do best, reduced our debt, improved return on net assets,
strengthened Kodak's overall performance, and aggressively pursued growth."
According to Fisher, Kodak would exit 1998 with overall costs reduced by $500 million, and
predicted at least a $1 billion cost reduction by the end of 1999; and had plans to achieve top-line
growth of 8-12% by 2004. He acknowledged, however, that there was still plenty to be
accomplished: "Our goal is to methodically change and restructure Kodak to be more competitive
and accommodate periods of slower top-line growth while generating attractive returns."
The ongoing goals cited by Fisher included: Support high yield products and services;
improve quality and cycle times; bring the digital business to profitability; reduce overhead costs
without sacrificing advertising; and stimulate growth. Carp predicted that digitization initiatives
would become a huge source of growth. Organizations find it necessary in a rapidly changing
environment to make continuous improvements, set new goals, and assess the results of their goals.
Fisher announced a strategic alliance with Intel Corporation that would allow both
organizations to leverage their unique strengths. He also announced that the company was pursuing
considerable growth in emerging markets such as China. Also, in established markets, Kodak had
set the stage for growth through innovation, product differentiation, and digital imaging.
Organizations develop a differentiation strategy in an attempt to distinguish their products or
services from those of industry rivals.
As the organizational transformation continued, about one-third of the senior management
team changed; and Dan Carp succeeded George Fisher as CEO in January 2000. Organizations
often bring in new leaders when making large-scale changes to revitalize the organization and the
culture. Top management turnover provides new perspectives for organizational leadership and may
symbolize a new organizational direction.
In his keynote address at a digital photography forum in April 2000, Carp said that Kodak
"won't be happy until the mass consumer market signs up for digital, in much larger numbers than
today." However, he challenged the entire industry to consider that "digital" might not be a magic
word for consumers. This idea is known as an organizational innovation because it was new to the
Proceedings of the International Academy for Case Studies, Volume 7, Number 2
Maui, Hawaii, 2000
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