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284 CHAPTER 8 • PRoduCT And sERviCE dEvEloPmEnT And oRgAnisATion
standardised for manufacturing ability. The product did not have to start with a blank sheet
of paper and be designed from scratch.’ 8
The second was drastically reduced production costs because standardised parts ena-
bled standardised production processes.

Example The sad tale of Kodak and its digital camera 9

The once-mighty Eastman Kodak Company dominated the photographic and film markets for
decades. But no longer. Thirty years ago it employed over 140,000 people and made substantial
profits; by 2010 it had shrunk to around 19,000, with regular quarterly losses. This dramatic
fall from grace is usually put down to the company’s failure to see the approach of digital pho-
tography or fully appreciate how it would totally undermine Kodak’s traditional products. Yet,
ironically, Kodak was far more than ahead of its competitors than most people outside the
company realised. It actually invented the digital camera. Sadly, though, it lacked the foresight
to make the most of it. For years the company had, as one insider put it, ‘too much technology in
its labs rather than in the market’.
It was back in 1975 when a newly hired scientist at Kodak, Steve Sasson, was given the task
of researching how to build a camera using a comparatively new type of electronic sensor –
the charged-couple device (CCD). He found little previous research so he used the lens from
a Kodak motion-picture camera, an analogue-to-digital convertor, some CCD chips and some
digital circuitry that he made himself. By December 1975 he had an operational prototype. Yet
the advance was largely, although not completely, ignored inside the company. ‘Some people
talked about reasons it would never happen, while others looked at it and realised it was important’,
he says. He also decided not to use the word ‘digital’ to describe his trial product. ‘I proposed
it as filmless photography, an electronic stills camera. Calling it “digital” would not have been an
advantage. Back then “digital” was not a good term. It meant new, esoteric technology.’ Some resist-
ance came from genuine, if mistaken, technical reservations. But others feared the magnitude
of the changes that digital photography could bring. Objections … ‘were coming from the gut:
a realisation that [digital] would change everything – and threaten the company’s entire film-based
business model’. Some see Kodak’s reluctance to abandon its traditional product range as under-
standable. It was making vast profits and as late as 1999 it was making over three billion dollars
from film sales. Todd Gustavson, curator of technology at the George Eastman House Museum,
says that, ‘Kodak was almost recession-proof until the rise of digital. A film-coating machine was like
a device that printed money.’ So Kodak’s first digital camera, the Quicktake, was licensed to and
sold by Apple in 1994.
In 2012, Kodak filed for Chapter 11 bankruptcy protection. It did emerge from bankruptcy
the following year, but only having sold many of its businesses and patents (including its pho-
tography film business) for a fraction of what they were once worth.

Product and service development as a process

There are two views of how to characterise product and service development. One sees
it as essentially a creative process, where a technical understanding of the mechanisms
involved in the service or product is brought together with ingenuity and flair. The
emphasis should be on creativity, novelty and innovation. For all this to happen, the
people involved must be given the space and time to be creative. Of course, the activity

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