Eastman the Entrepreneur
by Reese Jenkins
George Eastman's major historical importance was as a business entrepreneur. He built a new and rapidly growing multinational corporation that transformed the photographic industry in his time and that provided world-wide leadership for more than a century. Eastman was to the photographic industry what John D. Rockefeller was to the oil industry and James Duke was to the tobacco industry, a determined American entrepreneur of international significance.
Using his introduction of the popular Kodak camera, Eastman remade the small, sleepy American photographic industry that he had entered in 1880. Dominated by a couple of national supply houses and a relatively small number of professional studio photographers the old industry faced a young persistent businessman. He quickly recast the industry into a highly innovative and rapidly growing one, where one massive company came to world prominence.
The Rochester entrepreneur seized the initiative at a time when other American business innovators were likewise facing the new national market that had emerged with the completion of the network of American railroads. Like Eastman, these businessmen confronted profit-shrinking price competition. The most visionary built large corporations, often by acquiring or merging with competitors or by building companies with integrated marketing, production, and raw material supply facilities. Eastman did both.
By the middle 1890s Eastman's earlier experience in the business convinced him that amateur and professional photographers alike were willing to pay a premium price to ensure quality and absolute reliability of photosensitive materials such as roll film, dry plates, and photographic printing paper. Accordingly, Eastman developed an evolving multi-faceted series of business strategies that sought to maintain high profits by competing with product quality, reliability, and improvements instead of competing with lower prices. These strategies involved 1) production of high quality and reliable photosensitive materials; 2) continuous improvements in roll-film cameras; 3) acquisition of competing companies; 4) integration of marketing, production, and raw material supply in one company; 5) research superiority in photographic science and technology; and 6) development of key personnel to optimize profits and to inherit eventually the top management positions in the company.
Already in the mid-1890s Eastman had articulated strategies of continuous improvements in roll-film cameras that included development of new camera features within the company and purchase of the patents for them from others. Between 1895 and 1898 Eastman even purchased three small camera companies in order to acquire patents.
From 1885 when he had begun to produce photographic printing paper, Eastman fought hard to maintain a significant market share. In order to obtain a competitive advantage, he and Charles Abbott, president of a competing photographic paper company, negotiated in 1898 an exclusive contract for North America for purchase of raw paper from the major international supplier, the General Paper Company. Located in Brussels, Belgium, this company produced the world's best raw paper for photographic manufacturers. Eastman and Abbott then used their control of raw paper to combine the photographic paper division of Eastman Kodak with Abbott's company and two other major photographic paper companies. Within three years Eastman Kodak then acquired this combine and dominated the sector.
Between 1902 and 1904 Eastman turned attention to dry plates, acquiring one English and three major American producers. He not only obtained dominance in that sector but also acquired vital emulsion-making trade secrets that strengthened the quality of roll film and helped maintain world-wide dominance among amateur photographers and cinematographers.
Within a decade George Eastman had consolidated into Eastman Kodak most of the leading American companies scattered in the various production sectors of the industry. Moreover he had shaped his firm into a major multinational corporation with production and distribution facilities around the world. Significantly, Eastman accomplished this consolidation without the "benefit" of powerful J. P. Morgan-like investment bankers.
Meanwhile, like Rockefeller, Duke, Ford and others, Eastman had begun to bring together within Eastman Kodak the functions previously performed by separate marketing houses, production companies, and material supply businesses. Initially his small enterprise was a manufacturing company but already by the mid-1880s he had begun developing his own sales department, even establishing an outlet in London. In the first decade of the 20th century, he expanded worldwide and bought twenty major photographic retail stores in large cities across the U.S. and in Canada. Meanwhile he had began to control basic raw materials through long-term contracts like that with the General Paper Company. He then gradually built the capacity to produce vitally needed materials such as raw paper, gelatin, chemicals, and lenses. He even bought a coal mine for the company's fuel needs.
Bringing together in one firm the manufacturing, sales, and production of raw materials achieved coordinated, reliable operations that contributed to the growth and increased profitability of the Eastman Kodak Company. In 1912 Eastman hired English photoscientist, Dr. C.E. Kenneth Mees, to create and direct the Eastman Kodak Research Laboratory in Rochester, New York. Eastman offered Mees that his new lab need not produce a practical product for a decade but commanded him with the responsibility for "the future of photography." Mees and other members of Eastman's carefully selected management team indeed ensured the future of the company. It was Eastman's only child, nurtured for half a century by the photographic industry's most visionary entrepreneur.