Will Australia have its own Kodak moment? | RenewEconomy

Will Australia have its own Kodak moment?

The collapse of Eastman Kodak has been one of the most sadly predictable corporate demises in recent memory: A company that had the key to its own future but refused to turn the lock. How many Australian companies will follow the same path?


The collapse of Eastman Kodak has been one of the most sadly predictable corporate demises in recent memory. It was a classic case of a company failing to seize the moment and the opportunity because it was too obsessed with protecting the past.

The company that became synonymous with photography thanks to its invention of the hand-held camera and its dominance of the global market, more or less sealed its own fate when it refused to invest in new technology that it had also invented – the digital camera. Simply put, it was too scared to cannibalise its own product – so others eventually did it for them.

It’s a classis tale to be told about any period of great technological change. Apple founder Steve Jobs talked about it in his biography as he rolled out the iphone over the top of the ipod. And it is one that is facing many corporate boards in Australia and across the globe. Australia does not have a company with the same iconic brand of an Eastman Kodak, but it does have billions invested in energy and transport infrastructure, and they are being presented with the same fateful decision: invest in the future or seek to protect the past.

This was a point highlighted 18 months by Michael Fraser, the CEO of one of Australia’s largest energy groups, when he said that Australia’s energy sector and policy makers faced their own Kodak moment. He told business leaders in a speech that Australia might end up as the “Kodak story of the future” unless it responded to changes in global energy consumption patterns, and the rapid technology changes that were taking place across the world. “We don’t have much time,” he said. “We cannot assume that the world of today will continue. We cannot afford to wake up one day and find the world no longer wants to keep consuming our biggest export.”

Fraser’s comments were delivered in the context of the Federal government’s then reluctance to go ahead with a carbon price and the country’s reliance on coal as the world moved towards a low carbon future. “We need to think about that, because otherwise we’re going to wake up one day and the technology will have changed,” he said later.

Of course, the coal industry has had special insight into the future that wasn’t available to Eastman Kodak – given the emerging mega themes of climate change, energy security and energy costs – but it has still chosen to largely ignore it, investing little in the one technology that could guarantee its future – carbon capture and storage. As I’ve written elsewhere, rarely has an industry had such advanced warning of its impending demise and done so little about it. As Kodak found, the short term benefits of business as usual are simply too attractive to think of what might happen next.

Australia does now have the carbon price legislation that Fraser called for, and it will come into force in July, but will it save Australia’s exposed industries from their own Kodak moments? Not of itself. The carbon price is just one small step along that path – dealing with a carbon liability on the balance sheet through offsets or other means won’t deliver the sort of transformation that is being called for.

But leading corporate thinkers such as Fraser are alive to the extraordinary developments that are taking place overseas – the rapid technology developments, both in energy source and delivery, the dramatic changes in cost structure and business models, and the massive retooling of heavy industry led by the world’s biggest industry groups such as GE, Siemens, Alstom, Hyundai, Samsung, Hyundai, Sony, and numerous large entities in China.

Still, many powerful people in the world are still basing their business models and projections on the assumption that little will change. The International Energy Agency’s World Energy Outlook released late last year highlighted this perfectly – outlining scenarios of business as usual, a modest change in policy stances, and radical moves driven by climate change and energy security issues. BP released its own version last week. Its central forecast was that nothing much will change. Australia’s own energy draft Energy White Paper is largely based on a similar premise.

As the IEA outlook highlights, these are trillion-dollar bets on the future, that the status quo will be protected by policy and regulation. History, though, tells us something different. And as David Crane, the head of NRG – one of the largest energy utilities in the US, put it late last year: the dramatic slump in the cost of new technologies such as solar and the changing consumption patterns are already poised to revolutionize the hub-and-spoke power system, which has been the basis of the global energy industry for decades.

The Europeans have experienced this, and it is starting to be felt in Australia too. As Macquarie Generation, the largest coal generator in NSW, revealed recently – the rising cost of coal, changing consumption patterns and the rising costs of electricity are changing the nature of its business – even without a carbon price. These trends, along with the increasing use of efficiency measures, and the greater incursion of low marginal cost fuels such as renewables, are already having an impact on the business models of generators and network providers.

In short, the energy industry can expect as profound and rapid a transformation as that experienced in the telco industry little more than a decade ago with the arrival of the mobile phone and the internet. The car industry, as Australia is finding out to its pain, is similarly challenged. And other sectors are not immune. Little wonder that the central theme for this year’s  World Economic Forum in Davos is “The Great Transformation: Shaping New Models.” For Australia, it is not merely a matter of competitiveness in manufacturing, it’s about embracing a new business paradigm – something that established business models struggle to cope with. Australia cannot afford to let innovation occur only in other economies.

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  1. Dermot Duncan 9 years ago

    Good article Giles: site looks good – congrats and good luck on new venture.


  2. paddy 9 years ago

    Great to see you up and running Giles.
    Site looks good and the Kodak article is bang on.

  3. Ben 9 years ago

    Well said Giles and good luck with your new venture. Sheik Yamani wisely said the end of the Stone Age did not occur due to a lack of stones!

  4. warwick 9 years ago

    Good article Giles, and welcome back.

    Would love to catch on camera the faces of our Energy Minister when the penny drops that fossil fuels have cannibalised Australia’s future while cheap zero-carbon alternatives were hovering in the sky above their head. That would be a kodak moment

  5. Yasir Assam 9 years ago

    Good article, and congrats on the new site.

    Related to this is a story that appeared in the Guardian last week:


    A group of high-profile politicians, investors & scientists wrote an open letter to warn the Bank of England governor of the huge reserves of coal, gas & oil held by companies listed in the City of London, comparing these to sub prime assets posing a systemic risk to the UK economy (some of these companies have large reserves of coal in Australia).

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