kodak and facit

There are many striking similarities betweenKodak and Facit, a former Swedish

manufacturer of mechanical calculators.

This presentation will put the two

companies next to each other,

illustrate and seekto explain those

similarities.

Facit prospered in a kingdom called Sweden.

The company wasfounded in a small

town calledÅtvidaberg.

Kodak was founded in Rochester, NY.

Along the Genesee river in Rochester…

… The visionary George Eastman built the Eastman Kodak company.

Along the ’river’ in Åtvidaberg…

… A man namedElof Ericsson

foundedÅtvidaberg

Industries (whichwas named Facit

later on).

The successes of these companies were basedupon two major product innovations.

In the Kodak case it was the

Roll film…

… a product that empowered people to take pictures on their own.

In the Facit case it was the world’s

first ten-digitcalculatingmachine…

… A masterpiece of mechanical engineering.

Both companies grew rapidly…

… And became sources of national pride.

As Kodak grew, Rochester grew. More and morepeople moved here from the countryside in order

to get a job at the company.

In Sweden, people moved to the small town Åtvidaberg. Here, there were

plenty of jobs at Facit.

”A lot of peopletravel to Facit for

work.”

Basically, these two cities wouldn’t have grown intowhat they were without Kodak and Facit.

The two companies provided theirpopulations with well paid jobs…

… from the cradle…

… to the grave…

A job was a job for life…

… And it gave a stable income for a good family life.

Those who didn’t work for the company, eitherworked for suppliers, or the local government, which

obtained its tax revenues from the firm.

”Willing to cross party boundaries for the company.”

Mr. Eastman made a huge fortunefrom his success with Kodak…

… He lived here…

… Mr. Ericsson lived here…

… down by the lake…

… ministers and directors came from all over the world in order to meet here and build networks.

These two men alsomade sure to takecare of the local

community.

Elof renovated the soccer stadium and donated vastamounts of money to the local team.

Mr. Ericsson also re-built the local churchwhere he currently rests in peace.

There are at least 30 organizations that wereeither created or partly funded by Eastman.

The University of Rochester…

… The Eastman School of Music Student Living Center…

… The Eastman Dental Center…

In Rochester, people refer to Kodak as ’The Great Yellow Father’…

Both men are remembered morethan half a century after their death.

This statue of Elof Ericsson was raised by the company and its employees in 1963.

When Elof’s son Gunnar took over as CEO, hemanaged the company in a similar way…

To sum it up: Rochester became a Kodak town…

… And Åtvidaberg

became a Facit town.

But the companies had much more in common…

… They both enjoyed a considerableglobal expansion.

Both companies were very vertically integrated –owning and controlling the entire value chain…

Kodak signs can still be foundeverywhere throughout the world.

Just like Kodak, Facit controlled the entire value chain…

… From the production of special components that were needed in the products…

… To the close relationship with the end customer.

Both these companies were turned upside down by the electronic revolution…

In 1971-72, Facit’s coggwheels were

substituted by integrated circuits…

The same thing happened to Kodak about 30 years later.

… Both companies lost theirtechnological leadership…

… for the simple reason that the technology wasnow all about electronics.

The value of producingspecializedparts wasrendered

obsolete…

… Since those parts weren’t needed anymore.

Controlling the end of the valuechain was also

an asset that lostits value for both

companies.

People were not consuming film anymore…

And they stopped buying calculators from a special company with a huge sales organization.

Both companies went through some tough times…

… And so did their respective societies.

Rochester and Åtvidaberg had become verydependent upon their respective companies…

… and this started to become painfully obvious.

A job at Kodak or Facit used to be a job for life. Not anymore.

Tax revenues decreased at a furious pacewhen all those jobs were lost.

While both cities have undergone some major changes, they haven’t ended up as ghost towns.

Summing up once again, the Kodak and Facit stories are strikingly similar, even though the companies were in different industries, in different countries

and at different points in time. Why?

Industries tend to grow and prosper in certain ways.

They’re founded around a product innovation, which is then further developed and introduced throughout the world…

This is often done by an entrepreneur who spots the new opportunity.

As industries grow and prosper they becomeincreasingly vulnerable to technological change.

The vertical integration was necessary in order to handle a complex product.

When the technology changed and the productbecame much simpler, it did not require the same

dominance of the value chain.

… And since the companies once upon a time made their cities grow, those towns will go through some

structural changes when the firm declines.

Image attributions

Thanks to ’Brukskultur Åtvidaberg’ och the municipal government of Åtvidaberg. The Facit

archive is a fantastic source.

Christian Sandström is a PhD student at Chalmers

University of Technology in Gothenburg, Sweden. He writes and speaks about disruptive innovation and

technological change.

www.christiansandstrom.orgchristian.sandstrom at chalmers.se