Kodak has made it official. Another once great American post World War II manufacturer is officially and completely out of the manufacturing business. From now on they are a "high-level system design and advanced research and development" company. They join IBM, NCR, GE, GM, Ford and a host of other once dominating manufacturing companies who are gone, dying or rapidly bailing out of manufacturing.
The official academic and financial sector explanation is that Kodak was unable to master the technology switch in the photo business from film to digital. In fact, Kodak had been hammered by Nikon, Canon and others in the film manufacturing business long before digital photography became the standard. The beginning of the end for Kodak probably dates all the way back to the 70’s.
Their story is the same as the rest of the dinosaurs of American manufacturing. They made so much money for so many years under the traditional American management system that they fooled themselves into believing they were well managed. With their functional hierarchical organization, strong financial functions whose mission was to control manufacturing, management systems focused on direct labor cost and efficiency, MRP systems, a quality approach focused on minimizing the ‘cost of quality’, and all of the rest … Alfred Sloan’s whole ROI package designed to thrill Wall Street. It all came unglued as soon as the Japanese showed up with their different management scheme.
The American management system only succeeded as long as the rest of the world was digging out of the rubble of a world war. Kodak and the rest of the American manufacturers never outperformed anyone except other American companies managed by the same system, under which it is fundamentally impossible to optimize manufacturing. Just like GM was able to best Ford and Chrysler, but has been consistently outgunned – and outmanaged – by Toyota and Honda, Kodak was great so long as they only had to compete against Polaroid and other companies managed just like them.
It is hard to watch American manufacturing stubbornly hanging onto the old management scheme that has never shown itself able to compete against a lean management system. The problem is attributed to high labor costs, excessive regulation,lack of worker skills … everything except management. The business schools still teach the old management principles, and traditionally managed American companies can only outsource manufacturing to survive.
How many times does this story have to be told before we get it? As pessimistic as it sounds, I am becoming convinced that it will never change, and that all of the Fortune 500 manufacturers from the 1970’s have to fail, and be replaced with a new generation of lean manufacturers before the message gets through. The mulish arrogance with which the professional management community rationalizes the loss of another 27,000 American manufacturing jobs at Kodak is nothing short of maddening, but it is very predictable.
In the immortal words of Queen in 1980 …
Another one bites the dust
Another one bites the dust
And another one gone, and another one gone
Another one bites the dust ……