It's simply amazing that ten years into the digital revolution, Eastman Kodak is trying to figure out what business they are in. For decades Kodak dominated the chemically based photographic process. You shoot a roll of film, and then you physically took the roll to a developer, and made a second trip to pick up the finished prints. Their only competition in the industry was the Japanese company, Fuji. The upstart would just eat away each year at Kodak's market, but never becoming a real threat to Kodak's dominance.

Meanwhile from outside the industry, Polaroid back in the late 1950's invented a camera where the chemical based development of the pictures took place inside the camera. The picture was ready in about 60 seconds. Polaroid developed a wonderful business and made a fortune for both its shareholders and its genius creator, Dr. Edwin Land.

What happened next was a business disaster, and Kodak should have learned from Polaroid's mistakes. Dr. Land came up with a moving picture development system. They poured hundreds of millions of dollars into a chemically based system. It would allow users to take moving pictures. The movies would be developed chemically inside the camera system, the same as the still picture system then utilized.

What Polaroid not only didn't plan for, but couldn't even imagine was that a disruptive technology would be created from another industry that would basically destroy Polaroid's business model. Japan would create digital photography. The first Japanese VHS and Betamax camera systems became available. The electronic based technology made so much more sense than Polaroid chemically based system. It forced Polaroid to shut down its movie system products. It also resulted in the immediate write off of hundreds of millions of dollars (equivalent to billions today) that it would never recoup.

Now I ask you, Kodak was in the business, we know that. They saw what this new technology did to Polaroid OVERNIGHT. Couldn't they imagine that it could happen to them? The answer is apparently not. The management team at Eastman Kodak has been brain dead for at least 20 years. The management team and the Board of Directors should have been dismissed more than a decade ago for gross incompetence. They took a magnificent cash generating machine, and allowed it to turn into a boring, mundane second class company.

They simply chose to ignore what was coming, and what was coming was a TIDAL WAVE, that would sweep away Kodak's traditional business. Kodak could have chosen to lead the digital revolution. They could have chosen to take the billions of dollars of cash generated by their traditional chemically based systems, and redeploy in other high end technology driven businesses like digital imaging in the medical industry. No, neither choice happened. The company chose instead, to DO NOTHING. Try to maintain the status quo was the order of the day.

Now Kodak is faced with a "what do we do now" decision? It is just a question of how many years it takes before the Kodak way of doing business (chemical processing) completely evaporates. There are a number of lessons to be taken from this example of a formerly world class company going belly up because of an inappropriate business model. Among them are:

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