Sunday, June 24, 2012

I.B.M. Should be Model for Rochester Companies

This week’s article “Lessons in Longevity, From I.B.M.” reminded me of two companies that have, like I.B.M., survived for over 100 years in operation: Xerox and Kodak.  These two companies were both founded in Rochester, NY and Kodak is still headquartered there.  I lived in Rochester for three years of undergrad at Rochester Institute of Technology, so my academic experience there was heavily influenced by those two companies.  As the article states, “I.B.M. faced the challenge that all great companies do sooner or later – they dominate, they lose it, and then they re-create themselves or not.”  These two Rochester-based companies have faced similar challenges as I.B.M but with disparate outcomes.

Xerox made a name for itself with photocopying, printing, and faxing products, paving the way for the industry so much so that ‘photocopying’ became synonymous with ‘Xerox.’  For a long time, Xerox dominated the copying and printing industry, until younger companies were able to catch up and utilize the same technology in their products.  Companies like Canon and Hewlett-Packard have been making printers for years in an attempt to rival Xerox and steal the juggernaut’s market share, with varying degrees of success.  However, what makes Xerox a great company is its ability and willingness to change in order to survive.   The Reuters article linked below, states that Xerox has been studying I.B.M.’s expansion into territories other than selling mainframes as an example for how Xerox can “shed its stodgy image as a printer and copier company.”  Xerox is a perfect example of a company that has used I.B.M. as a role model for longevity, and like I.B.M., it is also making a push to include a services segment for its business.

As we have discussed in class, Kodak is a company that made the mistake of resisting change as the photography industry shifted from film-based imaging to digital imaging.  In retrospect, this was a huge blunder as the company lost a major chunk of its market share to rivals who embraced the advancement in photographic technology.  What separates Kodak from Xerox and I.B.M. is that it no longer appears to be a profitable company.  Kodak’s hesitation—or stubbornness—to quickly jump into the digital photography realm looks like it may have put the company at a permanent disadvantage to the companies that made the transition immediately and are now thriving as leaders in photography.  In January 2012, Kodak filed for Chapter 11 bankruptcy, and one of its main strategies for recovery has been to sell the company’s patents and sue major companies, like Samsung and Apple, for infringement (Bloomberg).  Needless to say, Kodak is fighting an uphill battle and surely could have used I.B.M.’s enthusiasm for change as a basis for its own recreation.

Do you think Xerox will be able to reshape its image so that it is recognized exclusively for its copying and printing machines?  Will Kodak be able to rebound from its extremely costly initial resistance to digital photography, or will that mistake result in the company’s failure to survive in photography any longer?

Lohr, Steve. “Lessons in Longevity, From I.B.M.” 

Reuters article:

Bloomberg article:

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