Kodak’s Surprisingly Long Journey Towards Strategic Renewal : A Half Century of Exploring Digital Transformation that Culminated in Failure

Kodak’s failure to transition from film to digital technology has become a canonical example of a dominant incumbent failing in the face of an industry transition. In this paper, we undertake a systematic study of Kodak’s decision-making from its earliest efforts in digital technology in the 1960s through its bankruptcy in 2012. Our analysis of Kodak’s decision-making over the half-century leading up to its bankruptcy finds limited evidence of inertia and extensive evidence of strategic renewal efforts. Kodak committed substantial resources to R&D, commercialized multiple digital products through dedicated business units, incubated start-ups, acquired firms with promising imaging technologies, diversified into adjacent fields, and undertook senior leadership changes, yet it still failed. In investigating why, we observe a pattern of costly exploratory search under conditions of high aspirations and persistent uncertainty surrounding the emergence of digital technology. This uncertainty contributed to Kodak’s efforts falling short of aspirations and limited learning to inform future attempts. These shortfalls led to the search narrowing over time under changing leadership regimes. Our findings highlight the value of viewing the problem of incumbency not only as one of inertia, but also as one of costly exploratory search under conditions of high aspirations and environmental uncertainty