The demise of Polaroid Corporation

All good things must eventually come to an end. Polaroid was founded by a brilliant Harvard University dropout in 1937, Polaroid Corp., which filed for bankruptcy protection on October 12th 2001, went from making 3-D glasses, desk lamps and filters for gunsights to become the number 1 maker of instant cameras in the world. Polaroid has proven to be an influential force throughout the decades. Polaroid developed a heat-seeking missile equipped with miniature computers, during the Second World War. Polaroid remained busy with military tasks, making filters for aerial reconnaissance, binoculars and gunsights, as well as inventing infrared filters, dark-adaptation goggles and target finders. The pivotal moment in the company's history came on Feb. 21, 1947, when Land wowed the Optical Society of America meeting in New York City with his demonstration of a single-step photographic process that enabled pictures to be developed in 60 seconds. The next year, Polaroid sold the first instant camera and film to the public at the Jordan Marsh department store in Boston. The Polaroid Model 95 Land Camera sold for $89.50. Over the years, Polaroid became a household name as actors Mariette Hartley and James Garner introduced Americans to Polaroid's One-Step camera in TV commercials. Polaroid's sales surged to $1.4 billion in 1978. Unfortunately, as Polaroid matured as a company and household name, it over estimated its influence as an American icon; it was unable to keep up with evolving technology and implemented poor business management strategies.

Polaroid had the reputation of being one of the most prosperous Nifty Fifty companies. A Nifty Fifty designation ranks a company as a very desirable one to invest in because the company displays innovative ideas and effective managerial practices. Executives at Polaroid always felt that there would be a niche market for instant photo imaging because “professionals like police officers, insurance salesman, adjusters and real estate agents would exclusively use Polaroid cameras at work” (Edwards). Sadly, Digital imaging replaced the need for instant photo imaging, which resulted in the elimination of instant imaging as a valuable tool. The prominence that Polaroid once enjoyed in the instant imaging niche market was shattered because “they overestimated the value of their core business” (McLaughlin). The development of inexpensive one-hour photo developing also affected the market for instant imaging. People could now go to the local grocery store and have a roll of film processed with increased quality in less than 1 hour and at a better value. Polaroid also relied too much on investor support. The tradition of innovation that Polaroid was famous for exhibiting decreased year by year as the company failed to achieve its yearly objectives. Over the years investors had moved on to digital imaging companies, which resulted in “the stock, which reached an all-time high of $60.31 in July of 1997, to close at .28 cents” (Edwards). Polaroid for the last decade has not had less than $600 million debt. “In an effort to regain profitability, Polaroid offered more bonds and shares to investors” (McLaughlin). This only resulted in the devaluing of the stock and indebted Polaroid to even more creditors. Over confidence caused Polaroid’s demise because it instilled a false sense of stability.

Technology is constantly evolving. The companies that choose to adopt new technology are the ones that succeed. Historically, Polaroid revolutionized the picture taking industry with its instant imaging technology. As Digital imaging was developed in the nineties,

Polaroid missed the boat on the digital camera evolution. Around the late 90’s when digital cameras were really becoming popular, and companies were making their forays into that area, Polaroid decided to stick with its proprietary technology, instant photography…(Knox).

Polaroid eventually did develop digital imaging technology, but introduced it into the market late, which caused more of a loss then a profit for the company. Additionally, Polaroid failed to improve its base technology. The introduction of the I-Zone portable camera was meant to stimulate consumer loyalty in adolescents. The sales of the I-Zone generated $200 million in revenue in the year 1999. Many comment that the I-Zone camera was“too faddish and sales would eventually wane” (McLaughlin). The trendy I-Zone camera used film that was considered expensive by adolescents and the quality of the imaging was inconsistent. The inconsistency of the I-Zone product caused a decrease in sales to $100 million in the year 2000. Lastly, Polaroid developed Opal and Onyx, which were printing technologies designed to deliver high-resolution digital images at competitive prices. Unfortunately, Polaroid developed this technology but did not have enough money to advertise and further develop it. Polaroid could have been a competitor if it had introduced this innovative technology, instead of allowing other companies to capitalize on the Digital imaging market. The unwillingness to remain on the cutting edge played a main role in the bankruptcy.

Poor management strategies were the main drawback in the failure of Polaroid. A large problem was defection. At least nine top sales or product development executives chairman Gary DiCamillo hired stayed only three years or less. Among them was Clifford Hall, who was key to developing the idea for the I-Zone Instant Pocket Camera. With the defection of product development and sales executives, Polaroid lost years of experience and faced mass restructuring at an unfavorable time. Gary DiCamillo also hired many outsiders, those familiar with the situation say that many executives left because DiCamillo named Judith Boynton of Aaoco executive vice president in 1999. She had been with Polaroid for only a year as chief financial officer before her promotion. Many top executives, who had been with Polaroid for most of their careers felt betrayed because an outsider was given so much influence. DiCamillo also refused to take responsibility for the company's downward spiral. In December 1999, ten months before DiCamillo's employment contract was set to expire, Polaroid's board handed him an extension to the end of 2002. DiCamillo received a $795,000 bonus even though for the last decade Polaroid had lost revenues and cut almost half of their labor force. Many employees of Polaroid felt easily dispensable creating unsure and unsatisfied employees. The inability of Polaroid to remain structured ultimately lead to the fall of Edwin Land’s once powerful empire.

Polaroid over estimated its influence as an American icon; was unable to keep up with evolving technology and implemented poor business management strategies. Polaroid got too comfortable with their Nifty Fifty status; the company thought that instant imaging would always be a part of the lives of people all around the world. Polaroid also felt that investors would always remain faithful to the company, supporting them in their time of need. For a while, investors did support them, but Polaroid never proved to be a worthy investment and investors quickly lost interest. The desperate attempt to issue more stock and bonds only caused Polaroid more problems as the company went further into debt. Furthermore Polaroid, which was once a leader in the photo imaging industry, became a follower as the company underestimated the affect of Digital imaging technology. The I-Zone camera was successful, but did not produce enough revenue and consumer loyalty to sustain Polaroid as a forerunner in imaging technology. The sluggishness in remaining on the cutting edge caused even more debt for Polaroid. Finally, the restructuring of Polaroid proved to be ineffective because of the defection of many executives due to the establishment of outsiders in important positions. In the years that lead to the bankruptcy of Polaroid, management failed to address employees needs and concerns and only considered their own requirements. Polaroid On October 12th 2001 came to an end.

Works Consulted

• Chernoff, Allan. “Street Sweep” CNNFn 11 August 2001.
• Edwards, Bob. “Financial troubles at Polaroid” Morning Edition 11 Oct 2001.
• Franklin, Paul. “Future of Polaroid digital products up in the air” Reuters Business Report 11 Oct 2001.
• Knox, Noelle. “Rivals push Polaroid toward Chapter 11” USA Today 11 Oct 2001.
• McLaughlin, Tim. “Harvard dropout made Polaroid an icon” Toronto Star 15 Oct 2001.
• McLaughlin, Tim. “Polaroid seeks protection from creditors” Reuters Business Report 12 Oct 2001.
• Ozanian, Michael K. “Out of Focus” Forbes Magazine 22 January 2001.

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