Kodak, a Company That Lost It’s Way

Eastman Kodak 4Q Profits for 2010 fell 95%. This is the company that started the age of hobbyist photography.

Camera’s date back to 1817 but it was George Eastman who developed a simple box camera with a fixed-focus lens and single shutter speed, which along with its relatively low price appealed to the average consumer.

No matter what brand of film camera you owned most of the film was produced by Eastman Kodak. Most people simply referred to the film as Kodak Film.

Way back in 1975 — when Kodachrome color slides and Kodak Instamatics were all the rage — Kodak researcher Steve Sasson built the first digicam, cobbled together from spare parts and leading edge digital technology. More details here.

The management at Kodak foolishly did not see the future. Other companies did see the future in digital photography. Kodak clung to film cameras too long and relied on the income the film provided too long and was left behind.

This is not the first famous company to disappear. Remember RCA, Zenith, Montgomery Ward, and Woolworth’s? Someone has compiled a list at http://www.walletpop.com/photos/companies-that-have-vanished/.

Inspiration versus Perspiration

Success has been defined as 5% inspiration and 95% perspiration. Without that inspiration no amount of perspiration can make a significant success.

Apple’s Steve Jobs announced today that he will be taking medical leave to address health concerns but will stay on as the company’s CEO . Jobs has been the inspiration for Apple’s success. Although the company is not likely to immediately fall on hard times, everyone can wonder who will be the person to lead the company in its quest for leading edge technology?

Other companies have faced the same dilemma. Microsoft has not been a leader after it developed Windows and the office programs that interface with that operating system. Bill Gates is no longer actively involved in the company. AIG was a worldwide success when it was lead by Maurice Greenberg. The first recorded attempt at building a digital camera was in 1975 by Steven Sasson, an engineer at Eastman Kodak. Kodak is not the leading digital camera manufacturer today.

There have been companies that lost their inspiring leaders and went through difficult times only to re-emerge once they found a new strong leader. The Walt Disney Company is a good example. That company languished for years until Michael Eisner became CEO.

There are many books written about leadership. One of my favorites is Stephen Covey’s The 7 Habits of Highly Effective People. While it may be well written and easy to read it does not discuss inspiration.

Inspiration cannot be taught and cannot be learned. It is the mystical stuff that differentiates effective people from the really extraordinary.

State of American Business

There was a festive atmosphere at U.S. Chamber of Commerce headquarters Tuesday morning as the corporate lobby delivered its annual “State of American Business” address.

Margaret Spellings, the former Bush Cabinet officer who cashed out and joined the business group, made the introductions, telling members that despite “the worst economic climate since the Great Depression,” the chamber had scored a “number of legislative victories, tremendous success in the elections and another strong year of fundraising.”

Thanks to the chamber, Spellings boasted, “the American business community always has a seat at the table.”

A seat? Business has just about all the seats at the table – and more on back order.

Fifteen million Americans are out of work, thanks in part to reckless Wall Street activities. Yet corporate profits are at record highs, companies are sitting on vast amounts of cash, and, after a tough two years, business interests are again atop the Washington power structure.

This return of corporate power comes in part because the revolving door between government influence and corporate paydays has begun to turn anew. Even President Obama has submitted to its centrifugal force. His new White House chief of staff, William Daley, comes directly from J.P. Morgan Chase. Daley scored that lucrative gig after serving as commerce secretary during Bill Clinton’s second term.

As Daley came in through the revolving door, OMB Director Peter Orszag had just gone out. He cashed out to become a vice chairman of Citigroup, where his government expertise should be worth seven figures annually. One of Orszag’s partners on Obama’s economics team, Larry Summers, is returning to Harvard – but that won’t stop him from delivering the keynote address to the Global Hedge Fund Summit in Bermuda.

The thrill of cashing out has been endorsed by Obama himself. Explaining press secretary Robert Gibbs’s decision to depart, the president told the New York Times: “He’s had a six-year stretch now where basically he’s been going 24/7 with relatively modest pay.” The poor Gibbs, who had been earning a “modest” $172,200 a year, is now contemplating making much more than that representing corporate clients.

At the other end of Pennsylvania Avenue, corporate interests are becoming increasingly brazen. Lobbyists have snagged key staff jobs in the new GOP House leadership and chief-of-staff positions in many new lawmakers’ offices. On the day John Boehner was elected speaker last week, lobbyists were literally strutting their stuff on the House floor.

Bob Livingston, the former Republican congressman, was buttonholing members; he’s the head of a lobbying firm that advertises Livingston as “the only practicing former chairman of the House Appropriations Committee.” Also on the floor, Marty Russo, the longtime Democratic congressman who had just stepped down as head of the lobbying giant Cassidy and Associates, shook Boehner’s hand.

A House Republican source says Livingston left when informed that, as a registered lobbyist, he was not allowed to be on the House floor.

Such behavior by lobbyists – both registered lobbyists and unregistered corporate “advisers” – has become more common. At last year’s State of the Union address, Post congressional correspondent Paul Kane observed, on the House floor, former members Mike Ferguson, who runs a lobbying firm, and Jim Greenwood, CEO of the biotech lobby. Kane has also spotted former senator Bill Cohen, who runs a big lobbying and consulting firm, on the Senate floor; former representative Sherry Boehlert, now a lobbyist, in the Speaker’s Lobby off the House floor; and lawmaker-turned-lobbyist Al Wynn entertaining clients in the members’ dining room.

The Center for Responsive Politics has identified more than 340 former members of Congress, and 3,665 former staffers, in lobbying or related fields. The few rules to slow the revolving door do little, both because of the routine granting of waivers and because of loose registration requirements for lobbying.

All of this gave the business lobby much to celebrate as chamber members discussed the State of American Business over mini-muffins and banana bread Tuesday morning. Tom Donohue, the chamber’s white-maned CEO, hailed the “new tone coming from the White House” since the elections – which the chamber influenced by spending tens of millions of dollars from donors kept anonymous, Donohue explained, so opponents couldn’t “demagogue them.” Donohue said he’s “absolutely convinced” that the new business-friendly White House will move his way on regulation and trade.

A reporter asked Donohue for a suggestion of what corporate America, with its record profits, should do to put people back to work. “I got to think about this for a minute,” Donohue said, then added: “I think the most important thing to tell a company is to return a reasonable return to their investors.”

danamilbank@washpost.com

Military Industrial Complex

Robert Gates, Secretary of Defense, flies to China to discuss China’s growing military size with the Chinese. Is he likely to convince them that they should not build an ever larger military organization? Obviously the answer is no. As he travels there he warns America by way of releases to the press of China’s growing military strength. Those releases telling all of us that the Chinese could become a threat to America.

The six largest military contractors earned $222 Billion in 2009. Those companies employ lots of people and are spread throughout the country. What’s the likelihood we will reduce defense spending? Not likely given the income and jobs that are at stake.

		Billions of Dollar Revenue in 2009
Lockheed Martin		45
Boeing		34
Northrop Grumman		34
Raytheon		24
General Dynamics		32
United Technologies		53
TOTAL REVENUE		222

Unemployed, and Likely to Stay That Way

The official unemployment rate has been above 9% starting in May 2009. This last month’s rate was at 9.8%. Most people say that the real unemployment rate is 18%.

The longer people stay out of work, the more trouble they have finding new work. Recently 60 Minutes featured a story of people in Silicon Valley (that is the San Jose California area) that have been out of work for 99 weeks or are approaching that number. All had at least a Bachelors degree and many had advanced degrees. They were at least 40 years old. Over 40 percent of the unemployed — more than 6 million Americans — have been out of work for than six months or longer, according to the Bureau of Labor Statistics.

At the age of 60 I landed the best job of my life. The president of the company asked me in an interview if I had any grandchildren. I thought hum what kind of question is this. I answered “NO”, which is still an accurate answer, but in my mind I thought this is one job I am not going to get.

I was fortunate that time but obtaining that job occurred after 15 months of unemployment. The fact is that there is age discrimination. Many older people will either take a much lower paying job or they will remain unemployed indefinitely. The United States has now created a new class of people and no one knows how to prevent them from standing in bread lines. This is a sad tale for what was the world’s economic power house.

Based upon what I have heard and read, no one knows how to fix this problem.

Perhaps the Republicans do know how to solve this problem. Clearly the Democrats do not. If the economy does not improve significantly by November 2012, I will not be voting for Barack Obama and it is a good bet that most of America won’t either.

The U.S.A. Needs a Mission!

This United States needs a focus on something that will make our country thrive in the 21^st century. We need a mission. We need to be focused on the future. That is what companies do and this nation’s leaders should adopt that philosophy from private enterprise. Defeating Al-Qaeda should not be our national mission. That course would be surrendering to terrorism.

I am prompted to this idea by two occurrences and one interview. First the mass NASA layoffs at Cape Canaveral in Florida that Businessweek recently described as amounting to an astonishing 9,000 people. That layoff will disperse the people who can help this country go to new heights that only the likes of Gene Roddenberry and Ray Bradbury could imagine. Second an article in today’s Los Angeles Times titled “Astronauts send home a whole new worldview” describing “Earthlings are seeing their planet in a whole new light…”

The interview was presented by Diane Sawyer of ABC News on her trip to China this past week. She interviewed Jack Ma, the founder of Alibaba, China’s largest e-commerce website. Ma said he believes that American ingenuity is a model for the Chinese. “Innovation is a culture. When I see the American culture, the American culture is very innovative,” Ma said. “To have a culture of innovation takes about two or three generations.” Further in the interview Ma said “Always think about the mission, and the mission drives you.”

The rest of the world is advancing while the United States is arguing about budget cuts, high unemployment, airport security, and other less important issues. We need a vision. We cannot afford the loss of two or three generations. Remember it was President John F. Kennedy who enunciated the goal of putting a man on the Moon within ten years. We did it and we opened new technologies that were only dreams back on May 25, 1961.

We can and must do it again!

Consumers Cut Back Credit Card Borrowing

Associated Press report dated October 8, 2010

Consumer borrowing fell again in August as consumers cut back on credit card use for the 24th consecutive month, the Federal Reserve said Thursday.

Borrowing by consumers declined by $3.3 billion that month. It was the 18th drop for overall consumer borrowing in the past 19 months.

Americans are borrowing and spending less as they face widespread unemployment and uncertainty about their financial futures. The reduced use of credit by consumers is a drag on the recovery, which has yet to show a sustained rebound.

Another cause of the decline in credit is banks’ slow recognition that many debts will not be repaid. Banks gave up on $42.5 billion in credit card debt in the first half of 2010, according an analysis by the website CardHub.com. The annual rate is more than twice what it was in 2007.

Households are expected to continue cutting back on borrowing as long as incomes stay flat and jobs remain scarce.

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My prediction: No matter what the politicians, economic gurus, and other so-called experts say or do, America is in for a period of slow growth. Unemployment has been stuck in the 9% plus range since May 2009. There is nothing on the horizon that indicates a change. We will just have to learn to live with this reality for the next few years.