Friday, May 26, 2006

Technological change and the Almighty Corporation

John Kenneth Galbraith, recently deceased after a long and full life, was the most potent popularizer of the Almighty Corporation. Galbraith argued that the "new industrial state" is fundamentally a planned economy - driven not by decentralized competition, but consciously directed by a business oligarchy. A linchpin of his thinking was the manipulative power of advertising, which brought consumers in line with the planning objectives of the Almighty Corporations.

Now go sell this theory to Eastman Kodak. How the big bosses there wish this were true. Digital cameras? Make it disappear with a savvy advertising campaign. That will save the company's core business, now 125 years old - the manufacture of films, to catch those "precious moments".

From Galbraith's fantasies, let us look at the facts: Kodak has been in travails over the last five years. Its prospects for 2006 are negative (bad pun intended). Its only hope is that its recent transformation into a digital camera company would succeed - and fast, before skittish stockholders start dumping, big time.

Ahh, suddenly these all-powerful corporations look helpless against technological change. It all started when a couple of Bell Lab scientsts invented the Charge-Coupled Device (CCD), essentially an instrument for converting light into information. The rest is techno-history. Now the camera film industry is in a total meldown. How the Almighty have fallen!

When you walk around malls and supermarkets and convenience stores, take a good look at these camera films. Store your film cameras in a safe place. They'll be memories and museum pieces. Sooner than you think.

1 comment:

Robert D Feinman said...

Corporations have a life cycle just as people do, when they are in their ascendancy they are capable of all the bad things that people point out.

When they get old and complacent they lose out to younger more innovative firms.

I have a theory that monopolies can never recover after they lose their monopoly status. Their corporate culture was formed by an environment of making money without having to work for it and they can't adjust.

Kodak was one of the earliest monopolies and was forced to change their sales model. They have been losing ground ever since (1960's). The same is true of AT&T and the big three auto firms.