Download - Kodak and Facit
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There are many striking similarities betweenKodak and Facit, a former Swedish
manufacturer of mechanical calculators.
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This presentation will put the two
companies next to each other,
illustrate and seekto explain those
similarities.
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Facit prospered in a kingdom called Sweden.
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The company wasfounded in a small
town calledÅtvidaberg.
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Kodak was founded in Rochester, NY.
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Along the Genesee river in Rochester…
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… The visionary George Eastman built the Eastman Kodak company.
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Along the ’river’ in Åtvidaberg…
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… A man namedElof Ericsson
foundedÅtvidaberg
Industries (whichwas named Facit
later on).
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The successes of these companies were basedupon two major product innovations.
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In the Kodak case it was the
Roll film…
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… a product that empowered people to take pictures on their own.
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In the Facit case it was the world’s
first ten-digitcalculatingmachine…
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… A masterpiece of mechanical engineering.
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Both companies grew rapidly…
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… And became sources of national pride.
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As Kodak grew, Rochester grew. More and morepeople moved here from the countryside in order
to get a job at the company.
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In Sweden, people moved to the small town Åtvidaberg. Here, there were
plenty of jobs at Facit.
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”A lot of peopletravel to Facit for
work.”
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Basically, these two cities wouldn’t have grown intowhat they were without Kodak and Facit.
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The two companies provided theirpopulations with well paid jobs…
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… from the cradle…
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… to the grave…
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A job was a job for life…
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… And it gave a stable income for a good family life.
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Those who didn’t work for the company, eitherworked for suppliers, or the local government, which
obtained its tax revenues from the firm.
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”Willing to cross party boundaries for the company.”
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Mr. Eastman made a huge fortunefrom his success with Kodak…
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… He lived here…
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… Mr. Ericsson lived here…
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… down by the lake…
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… ministers and directors came from all over the world in order to meet here and build networks.
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These two men alsomade sure to takecare of the local
community.
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Elof renovated the soccer stadium and donated vastamounts of money to the local team.
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Mr. Ericsson also re-built the local churchwhere he currently rests in peace.
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There are at least 30 organizations that wereeither created or partly funded by Eastman.
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The University of Rochester…
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… The Eastman School of Music Student Living Center…
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… The Eastman Dental Center…
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In Rochester, people refer to Kodak as ’The Great Yellow Father’…
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Both men are remembered morethan half a century after their death.
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This statue of Elof Ericsson was raised by the company and its employees in 1963.
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When Elof’s son Gunnar took over as CEO, hemanaged the company in a similar way…
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To sum it up: Rochester became a Kodak town…
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… And Åtvidaberg
became a Facit town.
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But the companies had much more in common…
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… They both enjoyed a considerableglobal expansion.
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Both companies were very vertically integrated –owning and controlling the entire value chain…
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Kodak signs can still be foundeverywhere throughout the world.
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Just like Kodak, Facit controlled the entire value chain…
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… From the production of special components that were needed in the products…
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… To the close relationship with the end customer.
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Both these companies were turned upside down by the electronic revolution…
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In 1971-72, Facit’s coggwheels were
substituted by integrated circuits…
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The same thing happened to Kodak about 30 years later.
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… Both companies lost theirtechnological leadership…
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… for the simple reason that the technology wasnow all about electronics.
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The value of producingspecializedparts wasrendered
obsolete…
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… Since those parts weren’t needed anymore.
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Controlling the end of the valuechain was also
an asset that lostits value for both
companies.
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People were not consuming film anymore…
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And they stopped buying calculators from a special company with a huge sales organization.
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Both companies went through some tough times…
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… And so did their respective societies.
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Rochester and Åtvidaberg had become verydependent upon their respective companies…
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… and this started to become painfully obvious.
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A job at Kodak or Facit used to be a job for life. Not anymore.
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Tax revenues decreased at a furious pacewhen all those jobs were lost.
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While both cities have undergone some major changes, they haven’t ended up as ghost towns.
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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?
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Industries tend to grow and prosper in certain ways.
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They’re founded around a product innovation, which is then further developed and introduced throughout the world…
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This is often done by an entrepreneur who spots the new opportunity.
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As industries grow and prosper they becomeincreasingly vulnerable to technological change.
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The vertical integration was necessary in order to handle a complex product.
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When the technology changed and the productbecame much simpler, it did not require the same
dominance of the value chain.
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… And since the companies once upon a time made their cities grow, those towns will go through some
structural changes when the firm declines.
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Thanks to ’Brukskultur Åtvidaberg’ och the municipal government of Åtvidaberg. The Facit
archive is a fantastic source.
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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