In January 2012, Kodak filed for bankruptcy with $6.75 billion in debt. That same year, Fujifilm posted record revenues exceeding $21 billion. Two photography giants faced identical digital disruption. One thrived. One died.
This isn't just another story about Kodak "missing digital." They invented the digital camera in 1975. They invested billions in digital R&D. They achieved the #1 U.S. digital camera market share by 2005. Yet they still failed catastrophically.
What made the difference? Through the lens of the Decision Stack—my framework for understanding how organisations align decisions from vision through execution—the answer becomes crystal clear. While Fujifilm never referred to it as such, they executed nearly perfect alignment across every level of decision-making. Kodak, despite having many of the right pieces, failed to connect these decisions into a coherent whole.
As we face today's AI revolution, every organisation needs to understand not just what happened, but why—and how to apply these lessons before it's too late.
The Decision Stack: A Framework for Organisational Alignment
The Decision Stack reveals how organisations make and align decisions across interconnected levels:
- Vision: The long-term aspiration and purpose
- Strategy: How you'll achieve that vision
- Product Strategy: What you'll build to execute that strategy
- Principles: The actionable values that guide trade-off decisions
- Discovery: How you'll validate and learn what to build
- Delivery: How you'll execute and ship
Success requires more than good decisions at each level—these decisions must reinforce each other. A brilliant vision without coherent strategy fails. Great strategy without effective delivery fails. And as Kodak learned, having the right pieces means nothing if they don't align.
Let's see how this played out.
Vision: The Courage to Reimagine Identity
When Shigetaka Komori became Fujifilm's CEO in 2003, he fundamentally reimagined the company. His vision wasn't to "survive the digital transition" or "compete in digital photography." It was to transform Fujifilm from a photography company into something entirely new.
"Along with announcing VISION 75, I rallied them with the reality of what it meant to do nothing," Komori wrote in Innovating Out of Crisis. This was existential transformation, not incremental change.
Kodak's vision, through multiple CEOs, remained anchored to photography. They saw themselves as a photography company transitioning from analogue to digital. Logical, even obvious—but fatally limited.
The difference is profound. Fujifilm's vision acknowledged that photography itself might not remain viable. Kodak's assumed photography would stay central; only the technology would change. One vision opened infinite possibilities; the other created a trap.
Strategy: Leveraging Capabilities vs. Protecting Position
Vision must translate into strategy. Here, the contrast sharpens.
Fujifilm's VISION 75 plan was breathtaking: audit all technologies, identify transferable capabilities, and systematically diversify where those capabilities created competitive advantage. They found over 70 transferable technologies from film manufacturing and committed to aggressive R&D investment.
This wasn't random diversification. Healthcare built on decades of X-ray film expertise. Cosmetics applied 70 years of collagen and anti-oxidation research. LCD protective films leveraged precision coating technology to capture dominant market share.
Kodak's strategy was scattered. The $5.1 billion Sterling Drug acquisition in 1988 failed and was divested by 1994. They invested heavily in digital photography but couldn't monetise it. Most fatally, they sold their profitable Healthcare Imaging division in 2007—just as ageing demographics drove medical imaging demand—to fund their failing consumer camera business.
The strategic difference? Fujifilm asked, "What can we do with what we know?" Kodak asked, "How can we protect what we have?"
Product Strategy: Creating New Categories vs. Translating Old Ones
Product strategy reveals whether vision and strategy are real or just rhetoric.
Fujifilm created entirely new product categories. In healthcare, they built a portfolio spanning diagnostic imaging, pharmaceuticals, regenerative medicine, and contract manufacturing. By 2023, healthcare generated nearly half their revenue with double-digit growth. Each market entry was sophisticated—they didn't just sell film-adjacent products, they became critical suppliers for industries they'd never served.
Kodak tried to force digital into analogue business models. They installed 10,000 digital photo kiosks, attempting to replicate film processing. They acquired Ofoto but used it to drive print sales rather than embrace social sharing. Even when successful with digital cameras, they were selling commodity hardware with no sustainable differentiation.
The tragedy: Kodak had over 1,000 digital imaging patents but never connected those assets to sustainable business models. They were so focused on protecting the film experience that they couldn't imagine genuinely new products.
Principles: The Hidden Layer That Shapes Everything
Here we reach a critical but often invisible element of the Decision Stack: Principles. As I've written in "Why Your Values Are Useless", values are just words unless they become principles—actionable guides for making hard trade-offs.
Neither company explicitly defined these principles, but their implicit principles—revealed through consistent actions and decisions—determined their fates.
Kodak's Fatal Principles
Kodak's unstated principles included:
"Protect existing revenue streams." Every decision ladder traced back to this. When digital threatened film, they slowed digital development. When online sharing threatened printing, they focused Ofoto on print sales.
"Optimise for quarterly earnings." Wall Street's relentless pressure created a principle that made transformation nearly impossible. Why cannibalise profitable products for uncertain experiments?
"Choose incremental over transformational." Kodak consistently took the less disruptive path. Improve film a little longer. Enhance cameras marginally. Add features to existing products. Never fundamentally reimagine.
Fujifilm's Survival Principles
Fujifilm's implicit principles, embedded in Japanese corporate culture and Komori's leadership, were radically different:
"Think in generations, not quarters." This allowed decisions that would hurt for years before paying off. Short-term pain was acceptable for long-term survival.
"Innovation must create customer value." They didn't develop technology for its own sake. Every capability had to solve real problems, whether in healthcare, materials, or cosmetics.
"Embrace creative destruction." Most critically, they accepted destroying their own business to create a new one. They actively shrank film while building alternatives.
These principles cascaded through every decision. Kodak's revenue protection constrained their vision, shaped defensive strategy, limited products, biased discovery, and paralysed delivery. Fujifilm's long-term thinking liberated their vision, enabled bold strategy, expanded products, opened discovery, and empowered decisive execution.
The Lesson: Make Your Principles Explicit
The most dangerous principles are the ones you don't acknowledge. Kodak never explicitly chose to prioritise quarterly earnings over transformation—but that principle, embedded in their culture and reinforced by market pressures, drove every decision. Fujifilm never formally declared their commitment to creative destruction—but that principle, flowing from Japanese corporate philosophy and Komori's leadership, enabled their survival.
When implicit principles remain unexamined, they become invisible chains. Culture and existing behaviour patterns drive decisions without conscious choice. The quarterly earnings you're protecting become the transformation you can't achieve. The stability you're maintaining becomes the innovation you're missing.
This is why making principles explicit and actionable is crucial. It's not enough to have values like "innovation" or "customer focus"—every company claims those. Your principles must define the trade-offs you'll make when those values conflict with other pressures. Will you sacrifice quarterly earnings for transformation? Will you cannibalise profitable products for uncertain futures? Will you destroy your identity to ensure your survival?
These aren't comfortable questions. But as Kodak learned too late, avoiding them doesn't make them go away. It just means your implicit principles—shaped by culture, market pressure, and organisational inertia—will answer them for you.
Discovery: Learning Forward vs. Defending Backwards
Great discovery isn't just user research—it's how organisations learn and adapt.
Fujifilm's discovery was systematic and humble. Entering new markets, they didn't assume expertise would translate; they validated it. Before launching Astalift cosmetics, they spent years understanding skincare. Before acquiring Toyama Chemical, they carefully assessed how their capabilities could enhance drug development.
Crucially, Fujifilm's discovery was forward-looking. They asked, "What problems can we uniquely solve?" not "How can we preserve relationships?" This led to insights like using dispersion technology for drug delivery or imaging expertise for early disease detection.
Kodak's discovery was defensive. They commissioned research in 1981 that accurately predicted film's decline and digital's rise. But instead of exploring new opportunities, they calculated how long they could milk film.
When Kodak did explore digital markets, they assumed digital customers wanted what film customers wanted. Hence, the focus on print quality while missing social sharing entirely. They sold Ofoto for under $25 million; Facebook bought Instagram for $1 billion months after Kodak's bankruptcy.
Delivery: Alignment vs. Resistance
The best strategies fail without effective delivery.
Fujifilm's execution was swift and decisive:
- 40 companies acquired
- Film operations reduced from majority to minority of revenue
- Thousands of employees retrained
- New facilities built while old ones closed
This wasn't painless. But because vision and strategy were clear, because principles were aligned, even difficult decisions could be executed.
Kodak's delivery was paralysed by internal resistance. Despite CEO mandates, the film division resisted changes that would cannibalise their business. By 2011, film operations generated just $34 million in operating income while digital cameras lost $349 million. They were simultaneously destroying their old business and failing to build a new one.
The Compound Effect of Misalignment
The Decision Stack framework makes clear: Kodak didn't fail because they missed digital photography. They saw it, invested in it, and even led in it. They failed because of compounding misalignment across every level.
Limited vision constrained strategy. Defensive strategy shaped derivative products. Implicit principles of protecting revenue undermined every initiative. Backwards-looking discovery missed new opportunities. Organisational resistance paralysed execution.
Each misaligned decision constrained the next level, creating a downward spiral.
Fujifilm achieved the opposite: compounding alignment. Transformational vision enabled bold strategy. Clear principles guided difficult trade-offs. Forward-looking discovery identified opportunities. Decisive delivery made it real.
Each level reinforced the next, creating an upward spiral.
The AI Parallel: Why This Matters Now
Today, we face AI disruption - an even more fundamental disruption than digital photography - and every organisation faces their own "Kodak moment."
Like digital photography in the 1990s, AI is simultaneously obvious and underestimated. Companies are adding AI features to existing products—like Kodak adding digital to cameras—without asking whether their fundamental business model remains viable.
The Decision Stack questions you must answer:
Vision: Will you be a "traditional company using AI" or fundamentally reimagine what you could become?
Strategy: Will you use AI to defend existing business or create new ones?
Product Strategy: Are you adding AI features or creating entirely new categories?
Principles: What will you sacrifice for transformation? Will you accept short-term pain for long-term gain? Will you cannibalise yourself before someone else does?
Discovery: Are you learning what AI makes possible or just what customers currently request?
Delivery: Is your organisation aligned to execute radical changes at AI speed?
The Meta-Lesson: Technology Doesn't Disrupt Companies, Misalignment Does
The deepest lesson isn't about film or sensors or chemistry. It's that technological disruption is actually organisational disruption. Technology is just the catalyst that reveals whether an organisation can transform itself.
Kodak had better digital technology than Fujifilm. More patents, more investment, more market share. But technology without organisational alignment is worthless.
Success isn't about one big decision—it's about connected, aligned decisions at every level. It's about ensuring your vision enables strategy, strategy informs products, principles guide trade-offs, discovery looks forward, and delivery makes it real.
The Choice Before You
As you face AI—or any transformation—you're choosing between two approaches:
The Kodak path: Protect what you have. Adapt incrementally. Force new technology into old models. Hope for a slow transition. Make decisions that preserve.
The Fujifilm path: Reimagine what you could become. Transform decisively. Leverage capabilities for new purposes. Accept that your current business might disappear. Make decisions that create.
The choice seems obvious in hindsight. But when you're profitable, when you're the market leader, when transformation seems risky—it's the hardest choice in the world.
That's why the Decision Stack matters. It forces explicit choices at every level. It reveals misalignments before they compound. Most importantly, it helps bring your entire organisation along.
Fujifilm didn't call it the Decision Stack. But their success demonstrates what happens when decisions align into a coherent whole. They faced the disruption that killed Kodak and emerged stronger.
The question isn't whether AI will disrupt your industry—it will. The question is whether you'll have the clarity, alignment, and courage to make the required decisions. Not just at the top, not just in strategy sessions, but throughout your entire Decision Stack.
The time is now. Unlike film's 20-year decline, AI transformation will happen in years, not decades. By the time disruption is obvious, it's too late.
What decisions is your organisation making about AI? Are they aligned across your stack? I'd love to hear your thoughts and experiences as we navigate this transformation together.
Sources & Further Reading
- Oliver Kimia, Why Kodak Died and Fujifilm Thrived: A Tale of Two Film Companies, PetaPixel, 2018
- Shigetaka Komomori, Innovating Out of Crisis: How Fujifilm Survived (and Thrived) As Its Core Business Was Vanishing, Stone Bridge Press, 2015
- Marcus Guest, Chapter 5. Innovating Out of a Crisis, Medium
- Willy Shih, The Real Lessons From Kodak's Decline, MIT Sloan Management Review, 2016
- Multiple Authors, What’s Wrong with This Picture: Kodak’s 30-year Slide into Bankruptcy, Knowledge at Wharton, 2012