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Kodak Company: Implementing Organizational Change

Brief History of the Company

Eastman Kodak was founded in 1888 by George Eastman. The firm experienced massive growth soon after the end of the First World War. The firm expanded quickly to Europe, Asia-Pacific, and finally to Africa. The competition in the market was very minimal and the firm did not struggle much to dominate the global market. Eastman Kodak dominated the global market for the better part of the 20th century. According to Khanh (2013), the firm’s market share in the 1970s was estimated to be 90%, leaving its competitors to share the remaining 10%. However, this impressive performance changed in the 1990s when Kodak was surpassed by Fujifilm as the dominant firm in the market in terms of the market share. Since then, Kodak has experienced numerous challenges in the market that almost saw it declared bankrupt in 2012 (Khanh, 2013).

Organizational Context for Change

In the 1980s, the engineers working at the production plant at Eastman Kodak came up with a new technology that had never been seen in the film industry before. They developed the digital technology that did not require the use of films. This was a new discovery, but the management was concerned about its effects on the current products the firm was offering in the market. The management felt that this new product would cannibalize the current films’ products that this firm was selling in the market. This made the firm ignore this new technology. However, the competitors were able to access this new it. Fujifilm used this new invention to expand its market and after a few years, it emerged the dominant firm in this industry.

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Reasons Why Change was Initiated

At this time, change was very necessary as the emerging technologies were transforming the field of filming. Films had been used for over 50 years and the emerging trends dictated for a change. The market had a desire for a product that offers more than just filming. They needed efficiency in their product. According to Khanh (2013), the majority of the customers in this industry are tourists. Tourists needed a smaller gadget that would not be complicated to carry around. The digital technology offered a solution to this problem. Digital cameras were smaller than the analogue cameras offered by Kodak at that time. competition was also getting stiffer than what Kodak had experienced before. It was time to re-strategize its operations in the market.

Stakeholders Involved and the Implications of Change for Them

A number of stakeholders were involved in this change in various ways. The management of this firm had to approve this new product that customers needed in the market. However, there was fear that this new product will hurt the existing products, hence lower the profitability, which is a negative implication. The employees were also involved directly because they had to learn about the new production methods. Those who could not adopt to the new systems would lose their jobs. Customers were also affected. By introducing this new product in the market, they would be able to get a higher value from their purchases. The market competitors would also be affected. This new technology would make Kodak a stronger competitor in the market.

The Original Culture

At Eastman Kodak, the management embraced hierarchy culture in its operations. The workplace was highly formalized, and the leaders acted as coordinators. Communication passed through strict systems within the hierarchy. This culture was relevant in the earlier parts of the 20th century because the level of competition was low. The major focus of the firm was to ensure that its products were available in the market at the right time. The culture emphasized on the need to consult the top management when coming up with any new strategy in the market. The impact of this culture was disastrous. It lowered the capacity of this firm to adopt to the new changes in the market environment. It was the reason why it lost its dominance in the world market.

Changing the Culture Over the Years

The management structure of Eastman Kodak was very rigid. The market environment was changing very rapidly, but the management did very little to change its organizational culture to reflect these changes. It was evident that customers had become very demanding in the market, but the firm did very little to adjust its operations to address these changes. It based its operations on the same culture over the years despite the changing environmental patterns. According to Moustafa (2006), a culture that worked well in the 1940s soon after the Second World War may not be an appropriate culture today. When the management came to realize this fact, it was a little too late. It had lost over 70% of its market share to its rivals such as Fujifilm.

Effect of the Culture on the Change Effort

The hierarchy culture has serious negative consequences on the ability of various stakeholders to share information. A junior employee cannot approach the top manager with an idea on how to bring change in the firm. He is forced to use a long channel to pass his message, which leads to the dilution of the message if at all it reaches the intended audience. This in effect, will lower the ability of the employees to be innovative. Their creative ideas cannot be put into effective use because of the prohibitive processes which are unnecessary. According to Spector (2010), rigid management structure that limits free communication hinders change efforts. In order to embrace change within an organization, it is necessary to have a free communication system among the stakeholders.

How Robust or Adaptive it Was

This culture was robust soon after the end of the Second World War. The film industry was less competitive because Kodak did not have a major rival in the market. It only needed to have a system that would allow it to monitor the activities of its own employees. The hierarchical culture is very effective at this. However, things started changing in the 20th century when a number of firms entered the market. Kodak needed a change of strategy that would make it manage the new market forces. A culture needed at this time had to embrace consultative forums at all stages of management. In the twenty first century, it was evident that this culture was disruptive and had to be eliminated. Kodak is currently struggling to develop a new organizational culture.

Evaluate of the Change Effort

The first step that the management of Eastman Kodak took in introducing change in the production process was to change its organizational culture. The management realized that the existing culture could not sustain its future operations in the market. The management introduced Adhocracy culture within the workplace. The focus was laid on the flexibility and innovativeness as opposed to the internal factors. The firm allowed employees to participate in the introduction of new production methods. The new approach emphasized on the need to use the emerging technology. The firm also realized the need to introduce digital cameras to replace the analogue cameras which used films. The new strategy has improved the performance of Eastman Kodak.

Task Alignment Theory

Task Alignment Theory may best explain the change effort at Eastman Kodak. The management of this firm started by identifying the performance indicators. This was important to help the firm determine the areas where it was underperforming. According to Moustafa (2006), identifying the performance indicators help the management to determine the areas which need adjustments within the organizational structure. The next step was to determine the requirements for the new behavioral pattern. The management had to define new ways of addressing various tasks at the firm. To do this, it has to build a line management to support change efforts. The new management approach would focus on helping the employees understand their new functions as defined by the new organizational structure.

Positive and Negative Aspects of the Change Effort

The changes introduced in this firm have a number of benefits to the firm. The new management structure that embraces open communication system has improved creativity and innovation at the firm. Employees can now share ideas with their peers and senior managers and this makes it easy to come up with new production strategies. The new production strategies also lower the cost of manufacturing and delivering products to the clients. The customers also stand to benefit from this change effort because they will get high quality products. The firm will offer products that meet the customers’ expectations and this will improve their levels of satisfaction. It is important to appreciate that this new strategy may come with the need for the regular employee training.

How the Change Was Implemented

The management implemented change by introducing a new system that emphasized on the involvement of the employees. Unlike before when the firm relied on the opinion experts, especially at the top management, there was a change in the strategy where employees’ opinions were sought in making important decisions. This was not only meant to reduce resistance to change, but also ensure that the decisions which were made reflected the views of all the stakeholders. To do this, the firm introduced a new communication system. An integrated communication system made it possible for employees to share knowledge at various stages within the supply chain. The firm also realized that it needed to rely on the emerging technologies in its production process.

Lewin’s Change Theory

In order to further understand how change was implemented at this firm, Lewin’s Change Model may be appropriate. As Moustafa (2006) notes, this model is made of three major steps when introducing new factors within an organization. The first step is to unfreeze. The management of Kodak had to make the stakeholders realize that the approaches it was using in its production were not sustainable. Challenging the existing structures entails unfreezing. When the stakeholders have appreciated the need for change, then the system goes to the second stage which involves the actual change. At this stage, the firm has to replace the old systems with new ones that are in line with the environmental factors. The final stage is to embrace the new changes and apply them as appropriately as possible in a process called refreezing.

Assessing The Effectiveness Of Change

In order to assess the effectiveness of change, a number of factors will need to be evaluated. The first factor would be the cost of production. The new system used by Eastman Kodak as helped lower the overall cost of production by reducing the production time and the value chain (Spector, 2010). The second factor that will be used to determine the effectiveness of change is the quality of the products. It has helped the firm develop high quality products which meet the expectations of its clients. This is so because the firm is currently keen on determining the opinions of its customers about their products before making the production. This has ensured that the products delivered to the market are in line with the customers expectations. The third factor is the market penetration. The new products have helped Kodak expand its market share (Khanh, 2013).

Organizational Development Theory

Organizational Development Theory can help in further assessment of the effectiveness of change. In order to determine if the change is effective, it will be necessary to look at the entire organization. According to Khanh (2013), there has been an overall improvement of all the system of Kodak in the recent past. This shows that the changes introduced are effective. This theory also emphasizes on the relevance of an open discussion system where all the stakeholders can share knowledge without facing any barrier. As mentioned previously, Kodak has introduced an integrated communication system to enhance sharing of knowledge. Finally, this theory encourages process consultation, especially when handling new technical tasks. This has been witnessed at this firm.

Leadership of the Change Effort

The change effort at Eastman Kodak started by overhauling the leadership. Antonio Pérez who was the chief executive and chairman of the board of directors at the firm was retired. His position was split into two. Jeff Clarke became the new chief executive while James Continenza holds the position of the chairman. Jeff Clarke used his transformational leadership qualities to bring in major changes at the firm.

He eliminated the bureaucratic communication system and created an environment where employees and managers could interact easily and share views about development strategies. He introduced a change in the organizational culture at Eastman Kodak.

Business Model Reinvention Theory

Business Model Reinvention may help explain how Jeff Clarke has been able to change the focus of the firm since he became the chief executive of the firm. This model emphasizes on the importance of redefining the ways of acquiring and retaining customers. When he became the chief executive, Clarke introduced new policies that affects marketing and production as the major areas that relates to the customer satisfaction. The firm now uses the modern production methods to lower its costs and improve the quality of the products. It is also using both mass and social media to reach out to the new and existing customers with the message about its high quality products. These strategies have helped the firm generate higher profits in the market.

Extent to Which the Leaders Displayed Core Characteristics Of Change Leadership

The new leaders displayed core characteristics of change leadership. One of the main areas where this was demonstrated was in the introduction of an integrated communication system. The leaders realized that to embrace change, it is necessary to introduce a communication system that will allow the stakeholders to communicate freely. The leaders also introduced a new organizational culture that is free from the bureaucratic systems. In this context, senior leaders and junior employees can sit in a forum and develop strategies to help the firm optimize its production capacity. The new leaders have also committed resources to employees’ training so that they can understand the new production and marketing strategies used by this firm.

Process-Driven Change Theory

The process-driven change theory will enhance the understanding of how the leaders have employed core characteristics of change leadership. This theory emphasizes on the need to use the locally developed programs as opposed to the external programs. The new management unit at Kodak has been keen on developing new programs in-house to help it address the local problems. The management has also focused on unique requirements at each unit within the firm. The new system allows each unit to develop programs based on their departmental needs. It is important to ensure that new strategies are supported by proper organizational structures to make them sustainable. The management has been doing this through the training of employees, buying new systems, and embracing research.

Balanced Score Card

Balanced Score Card

The analysis of Eastman Kodak shows that the firm has been slow when it comes to adopting change. This has proven to be very costly because the firm was almost forced out of the market. To avoid such unfortunate situations in future, it is recommended that the management should apply Balanced Score Card in its operations. The management should ensure that it has an impressive financial performance. All its internal business processes should be efficient, and this can be achieved using the emerging technologies. Learning and growth should be another important pillar in human resource management as a way of enhancing knowledge sharing and innovation. All these efforts should be directed towards customer satisfaction to ensure that they remain loyal to the firm.

References

Khanh, G. (2013). Case study: Kodak at a crossroads – the transition from film-based to digital photography. London: McMillan.

Moustafa, S. (2006). Leadership Organizations. New York: Prentice Hall.

Spector, B. (2010). Implementing Organizational Change: Theory into Practice. New York: Prentice Hall.

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