In 1926, George Eastman said something that the men and women who came after him at Eastman Kodak Co. forgot, for a while. "The world is moving," he told the people working for him back then in Rochester, N.Y., "and a company that contents itself with present accomplishments soon falls behind."
Kodak did just that, becoming an also-ran in the business that Eastman virtually invented. Now the venerable company is trying to boost sales and profit and, more important, regain the untouchable leadership role it once owned in global photography.
The Kodak story is a cliff-hanger, and a cautionary tale. The company not only has to play catch-up with rivals around the world, but it also faces resistance from some of its own shareholders. They are furious at management's decision to slash the dividend by 72% to fund Kodak's shift of direction.
A month ago, the 122-year-old company announced that it was going to concentrate its efforts in digital photography -- on digital cameras for consumers, on digital imaging products for medical care and commercial industry. There was irony in the announcement, because Kodak holds patents for inventing the digital camera in 1976. The company just never got around to developing the technology, because the pot of money to be made from its traditional business of old-fashioned photographic film was so much bigger, it seemed, than the profit that could be wrung from the newfangled products of the time, such as camcorders.
Kodak looked with disdain on camcorders and other items being furiously peddled by the likes of Sony Corp. and Matsushita Electric Industrial Co. of Japan as "consumer electronics." As a Kodak chief executive later said, "We didn't choose to make television sets." What the camera company didn't get was that people were being offered new ways to take pictures of children and loved ones at birthdays and weddings and weekend gatherings -- the very kinds of pictures that built Kodak.
Eastman, a genius and high school dropout, founded the company in 1881 after his invention of the dry photographic plate. He didn't bother with perfecting lenses and trying to rival sophisticated European makers of photo equipment. Instead, he developed the Brownie, a box camera that went on the market in 1900 with an all-American price tag of $1. A roll of film went for 15 cents. Suddenly, anyone could take pictures. The Brownie, quite seriously, changed the world.
