How Kodak Missed The Turn…

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Steven Sasson

The first and second previous articles were the beginning of a series about Innovation Waves. This article is the third of the series, and is taking the example of Kodak to illustrate the threat that innovation waves can pose to established companies.

In the mid-1970s, Steven Sasson, a young electrical engineer, was hired by Eastman Kodak, at that time the world leader in silver-based photography. He was a member of a team that was incorporating electronic commands into film cameras. He was asked to evaluate a new CCD chip from Fairchild Imaging (containing ten thousand pixels!) and took the concept so far that he actually invented the first portable digital camera. The prototype was a proof of concept but was very clumsy compared to a film camera. Steven’s prototype camera weighed four kilograms and took 23 seconds to transfer the ten thousand black and white pixels. At that time, in part due to Steven’s invention, a small entity within Eastman Kodak was at the forefront of the future digital photography wave. Unfortunately, on that day, Steven’s invention made everybody in the room at Eastman Kodak smile but then was rapidly forgotten. For his own pride, Steven patented the digital camera—that patent is a testimony of the sad ending to Eastman Kodak’s potential early entry into digital photography. Instead of pursuing digital photograph, the company launched a clone of Polaroid’s instant camera, which led to a historical case of patent infringement.

Eastman Kodak was a chemical company, and all strategic decisions were made based on its deep knowledge of photochemistry. Despite all the efforts of this junior electrical engineer, nobody in the company had appreciated the rapid, significant innovation wave that was heading for the semiconductor industry. In an article in Electronics Magazine in 1965 Gordon Moore had expressed his “law” that the number of transistors in a chip will double approximately every two years, and by 1975 there was enough data to support Moore’s speculations.

In the aftermath of the Polaroid v. Eastman Kodak patent-infringement lawsuit, Eastman Kodak did make a strong move toward digital photography. In 1986, the company hurried to catch the innovation wave and managed to design the best digital imager of that time (1.4 megapixels). Again, however, due to the company’s poor understanding of electronics, it focused on the professional market. Eastman Kodak had failed to recognize what consumer-electronics experts already knew—that the mass market was the key driver of technology. Semiconductor experts knew it, but chemists did not.

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This article was initially published in the book Innovation Intelligence (2015). It is the fourth section of the third chapter.

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