From this basic notion, various traditions have developed about the Golem in diverse geographical settings. Indeed, anyone who visited Prague will have encountered the legend of the Golem as one of the cultural centerpieces of that enchanting city. I have thought about the legend of the Golem often in connection with the recent Eastman Kodak Chapter 11 bankruptcy in the United States. In particular, I have pondered the question of why Kodak's IP and technology bulk seems to have served it poorly in its fight to succeed in a post-camera and film world. One wonders whether, at the end of the day, all of Kodak's substantial technology and IP were akin to the legendary figure -- shapeless and without a wise master to fashion it in into successful competitive form.
An edifying window into Kodak's IP Golem can be found in the January 14, 2012 issue of The Economist. The article, entitled "Technological Change: The Last Kodak Moment", compellingly chronicled the managerial missteps that brought about the company's bankruptcy only a few days after the article's publication here. Using Fujifilm as the point of comparison, the article asks why did Fujifilm succeed and Kodak fail in responding to the disruptive technological challenges to the camera and film business, whereby Fujifilm now has a market capitalization of $12.6 billion to Kodak's $220 million valuation (keep in mind, in 1976, 90% of sales of film and 85% of camera sales, in the U.S., were made by Kodak; in 1996, Kodak had revenues of $16 billion.)
The article points to a number of managerial errors that led to the company's decline. Notable among them are a complacent corporate culture, addled by the company's dominant position; the relative inability of the company to adjust to changing market circumstances flowing from technological changes; the company's preoccupation with perfect, rather than good-enough products; the insularity bred by the fact that the company's management was lodged in a one-company town in upstate New York (Rochester); a failure to successfully diversify; and an unhealthy dose of bad luck. These failings are all well and good in their heuristic power to help explain Kodak's decline. But if all that the article recounts is true, then what do we make of the fact that the company purports to be IP rich (as described in the article--the company is blessed "with a huge of intellectual property")?
1. As reported in wired.com_ here, "[b]ack in the summer of 2011, some analysts were of the view that Kodak had $3 billion in IP assets alone." In particular, the company had approximately 1100 patents in the digital field. Even if the estimation of the portfolio may have exaggerated the value of the portfolio, these are substantial numbers. [The company did not succeed in selling its patent portfolio before it filed for bankruptcy, but that might have been due in part to provisions of the U.S. Bankruptcy Code, which provides for the voiding of transactions within a certain time before the filing.]
2. The wired.com article further notes that "Kodak CEO Antonio Perez is still counting on patents to pull Kodak through bankruptcy. 'Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio,' Perez writes: 'our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.'"
3. The Kodak brand, including the iconic "Kodak yellow", was once one of the world's five most valuable brands. Even if that it is no longer the case, the Kodak brand still enjoys widespread trust, so why not a "Kodak Inside" campaign for products such as the smartphone camera? The question -- not really addressed in the article in The Economist -- is why Kodak needed to resort to bankruptcy, if its IP and technology was so substantial. The answer seems to be that Kodak's IP was essentially Golem-like in nature. Despite the sheer bulk and magnitude of the company's IP, the company's IP position was unable on its own to fashion the company's development, products and strategy in a manner than enabled the company to succeed in the marketplace.Like the Golem of legend, Kodak's IP needed a sagacious master to give it form and shape, but such master was not forthcoming. I find it difficult to believe that Kodak developed IP principally to generate licensing revenues and enable it to make a distress sale of such assets against the shadow of a bankruptcy proceeding. However, what exactly the company hoped to achieve through the creation of its IP portfolio remains unclear. More generally, this Kat wonders how many companies are busily creating large portfolios of Golem-like IP rights--impressive in their size and scope, but ultimately ineffectual in serving the company's competitive interests.