When innovation in technology is not enough

"It was the holy grail of inkjet printing", Antonio Perez, the new CEO of Kodak told BusinessWeek in an interview last year. Ever since the lab produced specialist inks that promised archival vivid inkjet prints, Kodak had been working on a top-secret project to make a grand entrance into the inkjet business. The distant echoes of Kodak's founding by finding the mechanisms to switch from wet- to dry-plate technology is muted. This is not revolutionary, but merely incremental; improving on a theme.

"You press the button and we do the rest", is the famous catch phrase coined by George Eastman in 1888. At the age of 24, Eastman was about to go on holiday and a friend suggested that he record his trip on his wet-plate camera. While he never made it to his holiday, he became obsessed with simplifying the process of making pictures. This effort culminated in the Eastman Kodak Company, which has been around for close to 130 years.

The switch to digital away from film is a classic example of a "disruptive technology", where a slow-start, fringe technology is taken up and eventually threatens the existence of the major players.

Kodak's mainstream business of consumer and professional film and the associated ecosystem of processing and print shops seemed too big and stable to take any significant interest in the growing field of digital photography. However, the trend reached the point in the early 2000's that simply couldn't be ignored. In 2003, Kodak slashed its dividend to provide R&D funds to refocus its imaging business, which made up 70% of its revenue, on the digital market.

Now Antonio Perez, who hails from HP, is attempting to complete the turn-around. Besides the increased range and capabilities of the consumer level cameras and the retooling the processing shops to be more digital and self-service friendly, he has taken a huge bet on innovating the home printing business model.

He argues that people don't print at home because the costs of the inks are too high. Working with a team of ex-HP staff he has tried to rewrite the inkjet printer business model. Three years of R&D and some $300 million later, the new range of Kodak printers was launched in February 2007.

A year later the jury is still out on these printers, with Kodak selling only 520,000 units of their multi-function printer against global sales of 61 million.

Here we have an example of a systematic and strategic attempt at innovation in the hope of turning a company, if not an industry, around. Looking at Perez's background at HP it is not at all surprising that he is focused on the inkjet printer market. The dangling question is whether the market is appropriate for a late, but innovative, entrant who is using innovation to drive a low running cost, higher initial cost model.