VIEWPOINTS : Kodak, College Teach Student From Japan a Harsh Business Lesson

Eastman Kodak Co. confirmed that it persuaded the University of Rochester to exclude a Japanese student employed by its biggest competitor, Fuji Photo Film Co.

Wall Street Journal, 8/31/87 Once upon a time, a young inventor from Waterville, N.Y., equipped only with brains and imagination, devised a simple photographic process using dry plates. Subsequently, he invented roll film and a hand camera, and in 1892 he set up one of this country’s first mass-production operations. His name was George Eastman.

By 1917, his company, Eastman Kodak, in Rochester, N.Y., ranked among America’s top 100 companies. Today, it is the nation’s 16th largest company in terms of market value, according to Forbes magazine. Eastman Kodak is not only one of the nation’s few industrial giants to survive intact from 1917 until now, but one of the handful to enjoy continuing prosperity. One thousand dollars invested in Eastman Kodak in 1917 would be worth $183,515 now.

But in addition to being an inventor and industrialist, Eastman was also an innovator and philanthropist. The benefits programs he devised at Kodak were unusually progressive and included profit sharing for employees. Eastman also gave away more than $100 million during his lifetime to such institutions as the University of Rochester, the Eastman School of Music, the Massachusetts Institute of Technology and the Tuskegee and Hampton institutes.

Eastman committed suicide in 1932, after a long illness, but his enterprises, being solidly made, continued to flourish. Kodak has, from its founding, remained first in its field, not only dominating it technologically, but turning generations of us into amateur photographers. Furthermore, Kodak has entered the vernacular and, to many people, is synonymous with photography.

Its lead has been so long and its position so secure that Kodak has been challenged only occasionally. Edwin Land’s remarkable Polaroid camera that produced instant photos was one such challenge, but Kodak’s domination of the market never was threatened seriously. In 1984, Japan’s Fuji Photo Film was named the official Olympics film, and a Fuji blimp was aloft in the skies of Los Angeles for the duration of the games. Somehow its presence suggested that in this land of the free market, the skies were still friendly and accessible to anyone with gumption, brains and imagination.

Now the green and silver Fuji film boxes are almost as ubiquitous as the familiar orange Kodak film boxes. Still, Kodak continues to prosper and, in the best Eastman tradition, to share its largess. Earlier this year, for example, it pledged $10 million over five years to the William E. Simon School of Business at the University of Rochester, including an annual grant for a program to teach executives to take “creative risks.” No business school in America is more committed to free market principles and minimal regulatory restraints. Given his signal achievements, Eastman probably would applaud both the school’s advocacy of an open marketplace and its interest in creative risks.

In every respect, Eastman, his various enterprises and his successors exemplify America at its very best. Undoubtedly, it has been sagas such as Eastman’s that have inspired businessmen from other countries to send their employees here to study. This year, Japanese corporations sent a contingent of employees to U.S. business schools to learn more about American business principles and practices.

Decision Reversed

A Fuji employee, Tsuneo Sakai, was admitted to the Simon School’s two-year master’s degree program, beginning this fall. But, without even an hour of instruction, Sakai had been packed off to the Sloan School of Management at the Massachusetts Institute of Technology. It seems that, at the request of Eastman Kodak, the university rescinded Sakai’s acceptance--a decision reversed only last Thursday after intense controversy.

One must marvel at Sakai’s powers. By merely enrolling in a master’s program, he turned a corporate giant and a major university to jelly. The mere appearance of this Japanese David on the horizon sent these American Goliaths scurrying for cover.

After Sakai was safely stashed away in Cambridge, both Kodak and the university attempted to explain their behavior.

Henry Kaska, Kodak’s director of public affairs, said that Kodak made no threats or demands to the university, but merely said that the thought of Sakai’s potential presence in classes with Kodak personnel “increased our discomfort level” as, in the course of “free and wide-open discussion,” it was possible that proprietary information might be disclosed to a competitor. Kaska would not discuss how Kodak learned of Sakai’s enrollment or how the decision to express its concern was made, but he did say that Kodak, whose three top officers were Sloan School fellows, assisted in placing Sakai at MIT.

Kaska added that Kodak did not mean, by any of this, to suggest that Sakai’s motives in enrolling at Rochester were suspect. But earlier, Kaska was quoted as saying that had Sakai been permitted to stay on at the University of Rochester, Kodak would have considered pulling some of its managers out of the program.

Despite all of this, University of Rochester President Dennis O’Brien insisted that the Simon School is “an open institution--open not only to all races, faiths and ideological persuasions, but to business rivals.” He went on to say that while the decision to rescind Sakai’s admittance was “very troubling,” it was “so very peculiar to Kodak, the university and the business school that I don’t think it’s a national issue, nor is it likely to happen again,” as it arose out of the university’s special relation to Kodak.

Too Close for Comfort

Thus, Sakai came to study American business at its best, and instead has had a rude lesson in American business at its worst: Practices at odds with principles, actions speaking infinitely louder and clearer than words, along with particularly piquant examples of both the Simon School’s dedication to free market theories, and Kodak’s devotion to the notion of creative risks.

The relationship between American businesses and American universities has sometimes been too close for comfort, but the relationship between Kodak and the University of Rochester has become downright incestuous, and both have been compromised by it.

Moral: Today, as in George Eastman’s time, giants are recognized by their deeds, not their size.

And it’s a moral that applies to Simon School Dean Paul W. McAvoy whose courageous actions helped turn around the university’s decision on Sakai. He also acknowledged the need to diversify the student body so that “no company can call policy so far as our operations.”