Kodak and Xerox: How High Risk Aversion Kills Companies

Kodak and Xerox remain iconic American industrial companies, both founded in Rochester, New York. George Eastman founded Kodak in 1880, while Xerox, originally named The Haloid Photographic Company, was founded a quarter century later in 1906 as a photographic paper and equipment manufacturer. While Kodak and Xerox were not direct competitors (although Kodak did introduce a copier business in 1976 that briefly competed with Xerox), a comparative case study offers a story of two product-centric companies where one survived and proved able to adapt to the digital age by transitioning its business model to a more services-oriented one, while the other could not. As Figure 13.1 shows, when Xerox is compared to Kodak through the prism of the Service Innovation Triangle, Xerox proved able to differentiate itself from Kodak — particularly with regard to its business model, its customer experiences, its management, and ultimately the value it creates for customers, with the companies at parity on other elements of the Service Innovation Triangle, and Kodak at best leading on one of the elements, intangible assets (due to its once world-renowned brand and enviable stable of patents and other intellectual property).