Fujifilm: A Century of Innovation and Survival

Fujifilm, a giant of the photographic world, respected not only in Japan but around the globe. By the 1980s, their expertise in photographic film surpassed even Kodak's. However, as the new century dawned, the way we photograph would change forever. Throughout human existence, we have always had change. But change is happening faster. What happens when the foundation of your entire business suddenly disappears? This is the untold story of the digital age, forcing Fujifilm to undertake a complete business transformation, venturing into unknown territories to survive. Photography. Globally, we take over 20,000 photos every second. While the equipment may change slightly year by year, our love for photography only deepens. It is how we record and preserve our memories. And for decades, Fujifilm and their trademark green box dominated the Japanese photographic market. Fujifilm's advanced technology was the fastest developed, the most light-sensitive color print film in the world. But times would change. The turn of the 2000s heralded the dawn of the digital age. A technological revolution sweeping across the globe, changing everything it touched. Photographic film was no longer essential to photography. The very foundation of Fujifilm disappeared in an instant. To survive, Fujifilm would have to venture boldly into unknown territories. Rethinking and reapplying everything they had built their empire upon. To know how they did it, we are given a rare opportunity into the inner workings of the company. And thanks to those who inspired their revival. Located in the heart of Tokyo, Fujifilm's headquarters is a sleek, modern company. Yet, the centerpiece of the ground floor is an exhibition. Not of the company's future, but of its history. That is why, as a corporation, we protect photographic culture. Fujifilm's role as the guardian of photography is something that is important to Mr. Shigetaka Komori, but it is a principle the company has gambled its reputation on since its founding in 1934. Mr. Yuzo Toda, now Komori's right-hand man, joined the company over 40 years ago. He knew no one was asking the simple question, but no one knew the answer. At that time, he wrote on a large piece of paper. That said, trust. Trust. Fujifilm began producing film for the amateur consumer market in the 1950s. And from there, Fujifilm's history has been characterized by competition with a much larger company. The great American photographic giant, Kodak. This is old technology, but this is technology that has been used to grow the photographic industry. And it is not just business. Kodak grew the photographic industry into a 10 billion dollar behemoth. On average, they sold more film in six weeks than Fujifilm sold in a year. Within Fuji, I believe the rivalry was a huge driving force. They always felt like they were competing, trying to catch up to Kodak. Fuji was the top company in Japan and parts of Asia, but in America, you know, Kodak had 90% market share. Kodak's iconic Kodak moment added... to people the opportunity to capture not just photographic film, but the memories of their lives. And throughout the 80s, Kodak seemed to monopolize memory. Fujifilm had to find another way to compete. Kodak had a huge brand name, and it was very difficult to beat Kodak on brand reputation or people's image of the company. It was much easier to establish good quality. Eventually, it became comparable, and otherwise, the quality improved. And compete at a slightly cheaper price. This is where Fujifilm came in, able to take true-to-life color photographs. It was truly groundbreaking. Unable to compete with the Kodak brand, Fujifilm focused on beating them with superior technology. In 1976, they released the groundbreaking high-speed 400 film. Users could capture the world with unprecedented detail and color. Get astonishingly high-resolution film and get true images. Color film is a feat of science. It is a very complex process. Chemical knowledge, a great deal of expertise is required to produce film. It is not easy. It took, considering Fujifilm's history, 40 years for them to catch up to the market leader. And those 40 years are not something that a new entrant can easily replicate. Through decades of experience, Fujifilm scientists achieved astonishing technological feats. Each negative contains over 100 light-sensitive chemicals, finely balanced to accurately capture images. The underdog finally matched Kodak. We are proud of the people who are involved in manufacturing and operations. We are making the best products in the world. Despite its excellent products, Fujifilm still lagged far behind Kodak in terms of market share. But in 1984, everything was about to change. Welcome to the opening ceremony of the Olympic Games. The 23rd Los Angeles Olympic Games. A big change was the 1984 Los Angeles Olympic Games. When Kodak was at its peak, rather complacent. And they turned down an offer to sponsor the Olympic organizers. And Fuji quickly jumped at the opportunity. Introducing a great new performer. Fujicolor HR. The official film of the 1984 Los Angeles Olympic Games. Fujifilm attacked Kodak's core consumer base and achieved great success. And film. Fuji achieved its goal with Fujicolor HR. Color film champion. ... In terms of knowledge... By sponsoring the Olympics, calls from retailers were immediately forwarded. They quickly gained 50,000 distributors, and their distribution network grew dramatically. Their reputation, their position in the market, rose dramatically, virtually overnight. But as Fujifilm and Kodak became locked in a marketing war, an even greater threat loomed. Throughout human existence, we have always had change. But change is happening faster. 20 years ago, 25 years ago, people had mobile phones that were the size of a small briefcase and weighed a ton. Among the fastest evolving technologies, it moves at a terrifying pace. And we see it all around us. The digital photography revolution was about to arrive. It would disrupt the industry just as surely as CDs replaced records, or email replaced handwritten letters. Relying on photographic film for 70% of their profits, Fujifilm was certainly targeted. It doesn't matter the size of the organization. How long it has been established, unless you have a complete monopoly and no one can enter the market. You will be subject to market pressure. You need to make quick changes and updates according to the trends of the market you belong to. Fujifilm and Kodak both recognized the coming of the digital age. The question is, how would these film companies survive? There were tough times. In 2003 and 2004, the Lehman Shock occurred. In times like these, in the early 20th century, when the film industry was in decline and the number of paintings was decreasing, in an era when analog was being transmitted digitally, we knew we had to do everything at once, using a certain amount of money. But we were able to continue to evolve in each of our business agreements. Excuse me, Santa, could you move to a brighter spot? Film emerged, designed to virtually improve the performance of cameras... For decades, Fujifilm pushed the boundaries of photographic film, becoming one of the dominant forces in the photographic industry. But everything was about to change. The digital world was rapidly approaching. But in the late 1980s, Fujifilm seemed to be ahead of its time. While it had not yet impacted the general consumer, the first wave of digitization was felt in the B2B market. Fujifilm was providing cutting-edge digital X-ray equipment to hospitals. I was used to digital in my field. And in Fujifilm's laboratories, there were already plans for a fully digitized camera. Despite building their business empire on film, they were trying to develop cameras that did not use film. When digital technology emerged, we did not reject it. We decided to do it ourselves. We wanted to do it ourselves. It is cannibalism. You can eat your own analog. But even if you don't, someone else will. So I'll be a digital player. In 1988, Fujifilm released the world's first full digital camera, the Fujix DS-1P. This memory card could store five to ten photos. It boasted a resolution of 1.1 megapixels. The camera was sold for thousands of dollars to professionals. US dollars. With the release of further digital camera models, Fujifilm showed a remarkable willingness for creative destruction. Its biggest rival, Kodak, did not seem to share that willingness. It was not a full-scale. It was a big difference. But Fujifilm was facing the dawn of the digital age head-on. It did not reach. Digital cameras were only for professionals, and incredibly, the photographic film market continued to grow. Fujifilm was investing heavily in digital technology, and in the 1980s, the transition seemed to stall for about a decade, perhaps longer than anyone expected. The film photography business was still... very profitable, with sales peaking around 2000-2001. It had been growing steadily until then. Distracted by the resurgence of the film market, Fujifilm abandoned new ventures. And despite being a pioneer of digital cameras over a decade earlier, by 2001, two-thirds of the company's profits still came from photographic film. After all, if it's not broken, why fix it? Digital cameras were not very popular until then. Price and resolution were issues. It was hard to catch up with hip-hop photography. At Fujifilm, printed pictures, as they had been for decades, would survive. Driven by this belief, they poured millions of dollars into the development and marketing of the Instax Mini. I don't know what you're saying. A 100% analog camera, whose main selling point was that it could print photos in seconds. And who could blame them? In 2002, the camera sold over a million units a year. I thought I could save it. Even if you take photos digitally, you don't need a film camera, but you can print photos. But they were wrong. In 2003, the long-awaited digital age became a reality. Photographic film sales plummeted, falling by a third in less than a year. And then, Instax Mini sales, a reliable source of profit, dropped to 10% of their peak. With digital cameras, you can view and discard photos on a built-in digital screen, so why bother printing all your photos? At first, I didn't think color film would decline so easily. But then it suddenly became digital cameras. In the following months, the decline in film demand was devastating. The number of films began to decrease rapidly. Digitization began to accelerate. 25% a year. 30%. Demand for color film was increasing. And then digital cameras arrived. In just six months, film shops went from processing about 5,000 films a day to less than 1,000. The market that accounted for two-thirds of Fujifilm's profits disappeared in an instant. At this time, Mr. Komori became CEO of Fujifilm. His mission to save the company was immense. At that time, I made many important predictions about the use of analog color film. But I thought the company would not have enough people. So I thought. If it continues for 10 years, 7 years, 8 years, 10 years, there is nothing. That is a big problem. So I thought. How can I do it? At the lowest point, Fujifilm called one of its longest-serving employees. Mr. Komori joined the company in 1963. He rose through the ranks, from project manager to president and CEO. And to this day, the only company he has worked for is Fujifilm. Now, its future was in his hands. To survive in a company with sales of 2 trillion, 3 trillion yen, finding a way to rebuild the company was a big challenge for me as CEO. I was thinking about how to solve that problem. In 2004, Fujifilm's imaging division's net profit decreased by approximately $85 million. And the world was about to change again. Another disruptive technology would completely rewrite the rules of photography. Mobile phones. Mobile phones brought a complete revolution to digital photography. They have more advantages than carrying a camera. You carry your mobile phone almost all the time. But you don't always carry a camera. In the late 2000s, smartphone sales surpassed even the most ambitious predictions. Digital photography was instant, cheaper, simpler, and cooler. Facebook, Instagram, and Twitter would become the new pioneers of photography. The old giants, Fujifilm and Kodak, fell further and further behind. Radical change was needed. That New Year's message from Mr. Komori to his staff in 2006 was particularly ominous. We can't wait any longer. Now is the time to ruthlessly cut production and manufacturing. Leave only what is necessary. Desperately trying to survive, Fujifilm cut costs by over $5 billion. Photographic film manufacturing plants were closed, and 5,000 jobs were lost. Shigetaka Komori, CEO of Fujifilm, implemented ruthless cuts to the company to survive. As the photographic film market collapsed at a rate of 30% per year, he now faced a major battle to generate new revenue. It is a game that a 60-year-old enjoyed. And fight your weaknesses. It is a game that fights against walls and addictions. That's how life is. What can we do with the technology we have? It is not enough. The technology we have alone is not enough. We need to add more. We need to start two or three companies. We need to grow. Even if a product has a lifespan, as long as the technology supports it, it cannot live forever. Therefore, we need to extract the essence of the technology that supports the product. That means you... But where did this idea come from? Komori's early experience at Fujifilm over 40 years ago may hold the answer. His first job was as a project manager. But it didn't seem to suit his personality. I hated calculating and doing other things. I wondered why I came here. I was not selling conventional color film, photographic paper, or cameras. I made film and camera technology. I was assigned to this department, and it was very rewarding. Since my seniors and superiors knew nothing, I had to learn and study on my own. Fujifilm had always recognized that its technology could be applied to fields other than photography. But now, the photographic film crisis made diversification a pressing necessity. In 2006, Komori announced new business areas that Fujifilm would focus on. All completely separate from photography, but all supported by the science of photographic film. One of those areas was healthcare. So I can't believe in the future that we will work on medicine and regenerative medicine. But I think there is a way to achieve it. After nearly a century of research, Fujifilm has accumulated a library of over 20,000 compounds, all developed for photographic film, with various uses, but we have a library of 200,000 chemical libraries. These are all original chemical libraries, for colorful film. But from a pharmaceutical company's perspective, it's just a matter of luck. In 2006, while Fujifilm was still cutting manufacturing costs, Komori built a new research facility for $400 million. It was a big statement. A product symbolizing the new Fujifilm and a future beyond photography. Crucially, these laboratories were not for photographic film research. They were facilities dedicated to new business development. Fujifilm's first healthcare product was a vitamin supplement. A relatively simple product, but Komori encouraged his team of scientists to innovate further. We had a positive discussion about this. We are developing drugs. How do we do this? All of this clearly promotes a cultural change within the company, a change to act more proactively. To be more entrepreneurial. People have to change their way of thinking. They have to change their behavior. The way they understand the company, their own view within the company. And this is what I believe, Mr. Komori has done very well. But the speed at which Komori put this plan into action was impressive. In times of crisis like this, management first makes decisions, and then they take action. These things are not done quickly. I think this is called transformation. When you have to start a new business, you have to do it slowly. This... This was made possible by Mr. Komori's strong leadership. He had the ability to ensure his strategy was executed to the end and expected his staff to follow his orders without question. Only I can do that. It takes time. It's late. So, what is interesting about Mr. Komori? Mr. Komori seemed to be the right person at the right time for the company. He is a strong leader, very ambitious, very decisive, and takes strong action. Komori's courageous message resonated with those who entered the research facility, words that prompted change, and words related to combat. Business is not democracy. It is dictatorship. It is not wise dictatorship. It is the same as war. In battle, leaders gather and hold meetings. One of the men, or women too, who accompanied Komori into battle was Tomoko Fujishiro. She joined Fujifilm in 2001. She spent her first five years of her career developing technology to prevent color photographic paper from fading. But when she returned from maternity leave, she would be surprised. In 2005, she was a third-year university student and started a side business. At that time, I was just about to start a life sciences course, and cosmetics and supplements, and I decided to do cosmetics. They told me. I was surprised to see them actually do it. They have their own technology, but I think everyone has concerns about how to use it in cosmetics and supplements. Fujifilm's next venture would literally give the company a makeover. In 2007, Fujifilm launched Astalift. A line of premium skincare products. And believe it or not, there are many similarities between skin cream and photographic film. Collagen, a protein used in the production of photographic film. It also naturally exists in the skin. In fact, in our skin, when exposed to light, collagen breaks down. The mechanism is very similar. The same technology that Toshiro used to prevent fading of photographic paper can also protect human skin from sunlight. When I started, I was very confident. I was very confident when I started. A prime example is the cosmetics industry. The same chemicals, the same processes that prevent color fading in photographs, are also applied to the skin, helping to prevent sagging and fading of the skin. And to be able to leverage this idea, to be able to... Applying the same chemical expertise to a completely different industry is a very interesting insight. Fujifilm applied its expertise in producing water-soluble chemicals to develop creams that penetrate the skin smoothly. Mr. Tashiro will show you now. The orange liquid is astaxanthin, the main ingredient in Fujifilm's skin cream. But the astaxanthin in the second beaker has been microscopically modified to make it easily soluble. This is expertise from 10 years ago. Developed in the analog photography era, it is still applied today. And Fujifilm was able to get a head start in the cosmetics industry. Komori transformed Fujifilm from a photographic company into a diversified science company. It now produces LCD TV screens, computer storage devices, and printing hardware. However, healthcare and cosmetics are the company's most profitable divisions, contributing over $3.3 billion in revenue annually. In the past, photographic film generated 70% of the company's profits. Now it is less than 1%. So one question remains. If photographic film is only a small part of Fujifilm, then why do they continue to make it? Under the strong leadership of Shigetaka Komori, Fujifilm had become a cutting-edge and diversified company. It is now more likely to produce cream for your face than film for your camera. However, Fujifilm has never completely turned its back on the product that gave it its name. Although photographic film accounts for less than 1% of its profits. It is small, but it can scale down and protect its production facilities. It's also beautiful in the photo scene. As I mentioned earlier, photographic culture is one of the things humanity needs. So we no longer make color film. But we still continue to make it. I have already declared. No matter what happens, I will not stop taking pictures. This belief has become more evident than ever after one of Japan's worst natural disasters in recent years. On March 11, 2011, an earthquake occurred, causing a tsunami, waves of 30 feet along the coast of Eastern Japan. Entire villages were destroyed. Approximately 22,000 deaths or missing persons were confirmed. We used to leave ruins for people. And they dug up the remains. But people dig up ruins and look for important things. They look for money, documents, and safety. What they valued most were photographs. Fujifilm dispatched 1,500 volunteers to the most affected areas. Their sole purpose? To find, clean, restore photographs, and return them to their owners. They collected photos from the mud, and copied them, rather, repaired them, and displayed them in public squares. They showed photos and asked, Do you have your photo? I think they did it millions of times. They collected them again, and washed them clean. This is one way of protecting photographic culture. Fujifilm has a strong belief in printed images, and in 2012, they re-released one of their analog cameras. The Instax Mini, and this is where photographic film is produced. The final packaging process for instant film. The technology used to produce this film... Fujifilm is an independent company, and therefore, does not handle any information processing. As consumers rushed to buy digital cameras, the Instax instant camera became a victim of the digital age. But now that it has been re-released, people are buying film faster than Fujifilm can produce it. Now, demand for urban film is increasing. The cameras have been greatly improved. This time they are brighter, cooler, and sold as the world's cutest cameras. And of course, its popularity is not diminished even if Prince Harry is seen using it. Fujifilm established photo print specialty stores in Japan's trendsetting districts. And the managers have witnessed this growth firsthand. Cheki is very popular now. Young people these days have no experience with taking photos. They don't know how to take photos. Young people these days are not used to this. With walls covered in photos, these stores are a tribute to the printed image. And surprisingly, Fujifilm sells 5 million Cheki cameras a year. Exceeding the sales of digital models. More than four times over. Mobile phones have come to occupy a very large part of the camera business. The compact camera market, once a large market, has virtually disappeared entirely, leaving only the high-end cameras and cool hipster products outside of mobile phones. The resurgence of old film technology, such as the car model of Fuji's very popular instant camera, Cheki. Just as vinyl records suddenly became cool and retro, it is like a true moment, a real moment, a real moment. And one customer, Sayaka, is doing just that. She was going to give me a photo as a gift, and she is selecting photos. She will give me a gift of memories taken with friends over a year. Sometimes I don't take many photos, but I want to make them cute. For birthdays, weddings, I think there is something to give as a gift. Good, many people print first, and when they receive the first print, they are very happy. Seeing that, I was excited to give it as a gift, but I shared the feeling that I had no choice but to do so. It is a very rewarding time. In 2012, Fujifilm's total revenue exceeded $18 billion. But in the same year, their old rival, Kodak, met a very different fate. They filed for bankruptcy. The company, once more than ten times Fujifilm's sales, could not adapt to the digital age. But what kind of digital company could they become? An image-based digital company. An image-focused company. A digital company that other countries cannot do. It knew that. It must not be just a digital company. It must be a multi-purpose company with multiple classes. Kodak's failure, heavily reliant on photo processing until just before its collapse, was due to its hesitation to diversify. But diversification on this scale is never an easy task for a company of Kodak's size. Dramatically changing a company's focus is very, very difficult. You cannot succeed unless you do something well. And to do something well, you have to make it a habit. You have to do it efficiently. And inevitably, inertia. To do something well, you have to effectively organize specialized activities for it, and then it becomes very difficult to change to do something else. But under Komori's leadership, Fujifilm achieved it. They now boast a broad portfolio of businesses, including not only cosmetics and healthcare, but also LCD screens, computer storage devices, and printing hardware. For example, you can use a car like a car shop, or you can use a car like a car shop. But it is not like that. When there was a photo studio, it was okay to use only photos. But we were still very expensive. We also had cameras and other usable items. Our company has a lot of technology. There are many things we can do. At the company's Tokyo headquarters, there is a Fujifilm exhibition space, and importantly, to develop, their future innovations. Innovations that will allow them to stay one step ahead of the next technological shock. This is the Fujifilm Open Innovation Hub. Please come in. The Open Innovation Hub is based on Fujifilm's photographic and tourism materials. The core technologies we have developed. This place was created to commemorate Fujifilm's 80th anniversary and to accelerate its second founding. And their innovation network has grown far beyond Tokyo. This relentless focus on innovation has allowed Fujifilm to push the boundaries of medicine. The company has developed stem cells that can regenerate human tissue, and is also testing treatments for Ebola. We are focusing on cancer. Myeloma, and cancer. In that, we are offering only one drug. That is, unmet medical needs. All of this is a very different situation from the photographic film company that Mr. Komori joined half a century ago. And with plans to spend over $1 billion on research, in 2017, Fujifilm's future seems to be in his hands. In the meantime, while I was away, I was part of that team.