New Kodak Unit Taking Shape: A Conversation with Jeff Jacobson Part 2

By Cary Sherburne, Senior WTT Editor

See Part 1

April 14, 2005 -- On Tuesday, April 12th, Kodak’s Graphic Communications Group, headed by Jim Langley, announced the next stage of its organizational structure designed to accommodate its rapid growth through acquisition and to meet its stated objectives of becoming a premier industry player. The completion of the acquisition of Kodak’s 50% interest in the Kodak/Sun joint venture, Kodak Polychrome Graphics (KPG), was the driver for this announcement. The company’s acquisition of Creo is still pending regulatory approvals.

Kodak had previously announced that Jeff Jacobson, formerly the CEO of KPG, would lead the Graphic Solutions & Services (GS&S) unit as its President as well as taking on the role of Chief Operating Officer for the Graphic Communications Group (GCG). Jacobson has three strategic product groups reporting to him – Workflow & Prepress, Digital Printing and Consumables. The new leadership team is as follows:

• Judi Hess, currently President, Creo Inc., will be appointed General Manager and Vice President, Workflow & Prepress. Hess will be responsible for a range of product offerings including software and hardware for computer-to-plate, workflow solutions, storage, ink jet proofing and digital halftone equipment. Hess’s appointment will be effective with the completion of the Creo acquisition, anticipated for later this year.
• Venkat Purushotham is named General Manager and Vice President, Digital Printing, with responsibility for developing and marketing digital production printing solutions and related materials including electrophotography and direct imaging presses, publishing services and device controls. Purushotham was President and CEO of NexPress Solutions, Inc., a position he has held since 1999.
• Doug Edwards is named General Manager and Vice President, Consumables. He is responsible for growing Kodak’s leadership position in the core consumables business, including plates, film, halftone proofing media and chemistry. Edwards was previously Vice President of Research & Development for KPG.
• Andrew Copley is named Managing Director and Vice President, Global Sales and Operations. Copley joins the GS&S leadership team from KPG, where he was President of the Americas region. He has played a key role in integrating KPG's prepress and digital solutions strategy internationally.

Kodak indicated that Homi Shamir, leading the company’s Transaction & Industrial Solutions unit (formerly Kodak Versamark), will make an organizational announcement at a later date. Two other Graphic Communications Group executives were also announced:

• Dolores Traxler is appointed General Manager and Vice President, Global Services, reporting to Jacobson. She will lead service for all equipment products within the GCG portfolio, as well as service of other manufacturers’ equipment. Traxler was previously the General Manager and Vice President, Document Products & Services for Kodak.
• John Robinson is named General Manager and Vice President, Global Manufacturing and Supply, reporting to both Langley and Jacobson. Robinson also will integrate, manage and develop best practices across GS&S manufacturing units to ensure streamlined processes, efficient supply chain, six-sigma quality and other lean manufacturing initiatives.

WhatTheyThink checked in with Jacobson to gain more insight into the new organization and Jacobson’s vision and objectives for the future in his new role.

We continue with Part 2 of the interview. View Part 1 here.

WTT: What role, if any, will Judi Hess play prior to the close of the Creo deal and/or who will act in that role in the interim?

JJ: All we can do prior to the close is planning, and Judi will be involved in that planning. Other than planning, it will be hands off until the transaction is completed, which we are hoping will happen soon, sometime this summer.

WTT: Speaking of Creo, we have heard that Kodak had received a second request for information from the Department of Justice, perhaps signaling some concern about antitrust issues in the newspaper CTP and plate business. What are the ramifications of that second request, and what is its impact on the potential for the deal to close?

JJ: This is something that is not all that unusual. As you know, the Creo shareholders approved the transaction overwhelmingly, and it has cleared the regulatory hurdles in Canada. In terms of the antitrust process in the U.S., two agencies have jurisdiction—the Department of Justice and the Federal Trade Commission. In cases of this type, they decide which agency will conduct the review so that they don’t both investigate. When you file Hart Scott Rodino, the agencies have 30 days to complete a review, and if they don’t do anything in the 30 days, you can close. The two agencies were trying to decide who was going to take the deal, and when it got to about 23 to 25 day, it cleared to the Department of Justice, who, of course, didn’t have time in that few days to do a customary professional review. That’s why they issued a second request. We are currently working with them. We expect that once the DOJ has reviewed the facts and understands the market dynamics that are in play, the acquisition will be approved.

WTT: You’re leading an effort to integrate many Kodak businesses – Encad, NexPress, Versamark and KPG and – eventually Creo – into a single business and we have heard a lot of talk about “one face to the customer” for Kodak . How is this effort going? What tangible progress has been made so far in integrating the business as well as making an integrated sales and service operation a reality?

JJ: That gets to the culture question. First of all, Kodak is a tremendous brand within the graphics Industry, as are KPG and Creo, in large part because of the leadership of those companies. What drives everything is the leadership, and it filters down from there to the thousands of people we will have in the Graphic Communications Group . People could say that Kodak has been in and out of the industry, but if you look at the $3 billion investment Kodak has made in its business, approximately $2.3 billion of that went to the Graphic Communications Group. Kodak senior leadership made the determination that they were going to have a very st rong third leg to add to its consumer and health businesses. We will be the second largest group in Kodak once the Creo deal closes.

And in terms of our customers, this team knows these customers and this team has a very st rong background in the graphics industry. Once we complete the Creo deal, we will take the leadership process down to further levels in the organization. Judi, Andrew and I get a lot of calls from customers, and we want them to call us directly. We pride ourselves and differentiate ourselves on our ability to develop st rong customer relationships.

As an outcome of the integration, we will have a synthesized sales and service group. With the exception of Creo, we have already begun to integrate the service group. TSI, which was part of KPG, will fold into Dolores Traxler’s group, and when Creo closes, our plans are to focus service on graphics and scanners, with a bridge between two. It pays to only have one service infrastructure. In terms of sales, there has already been significant work between NexPress and KPG, and we are in the planning stages with Creo, who will add over 200 sales people to the organization. We have already established joint sales incentives, and once Creo comes in, it will take things to a new level.

The way I envision unified sales and service is that when we are done, customers will understand that they are doing business with one company—Kodak. That is the goal we are striving for, and we have leaders who have made that a reality at Creo and KPG.

WTT: KPG, Creo and Encad utilize channels for distribution, with NexPress and Versamark primarily selling direct. First as background, what percent of KPG’s sales were indirect channels versus direct sales? What volume of business goes through the channels? Will this change?

JJ: The issue of channels differs depending on what part of the world you are talking about. I always laugh, because when KPG came together, everyone was worried about what KPG would do to the channel. In the U.S., there is not another company that sells more through the channel than KPG. In fact, the largest part of the business in the U.S. is through the channel. In Europe it depends upon which country; in Southeast Asia, it is almost all dealers, as it is in Japan and Eastern Europe. We probably have more business going through the channel on a global basis than anyone else. I don’t see that changing. I think we have real value to the channel, and it is good for us and good for industry to do business that way.

We will solicit regional recommendations regarding expanding the portfolio for those channel partners. The big challenge with a unified sales and service force for a company like Kodak is being able to sell the full breadth of our portfolio. That is why we are designing the sales organization way we are. It could be a challenge for others to sell that full breadth. With each partner, we will do what makes sense based on geography and skill sets.

WTT: What can we expect to see from Kodak at the upcoming On Demand show in Philadelphia?

JJ: It is very exciting what is going on in trade shows around world in May. Kodak will be at China Print, PacPrint ( Australia) and Grafivak in Amsterdam in addition to On Demand showing the breadth of the portfolio. You will see us going to the market with that one face to the customer at these shows. There will be an integrated look at the show, and a common workflow that will demonstrate the breadth of the portfolio and how it can work together to benefit customers. At On Demand, we will include our entire portfolio of digital printing, including NexPress color and black & white, the DirectPress, Canon and Versamark. You will see new advertising that will bring the Kodak brand back to the graphic communications industry. You will also see a little bit of a different look for Kodak. All of our booths have been combined into one Kodak booth, though we will have a separate booth on the AIIM show floor for scanning. We have a similar plan for the other shows—one cohesive Kodak booth—in which we are participating in May as well.

WTT: Jeff, thanks for taking the time to speak with us today. In closing, perhaps you could share some overall thoughts on your role, the future you see for Kodak in the graphic arts industry, and anything else you would like to convey to our readers.

JJ: I look at the past as a good predictor for the future, but there is no guarantee that the past will repeat itself. When you have done these types of integrations enough times, you have a clear view of where you are starting and where you want to be at the end. For every integration you do, you are almost like a movie producer, making that absolutely great movie and making it into a classic. We want people to feel that Kodak is a great partner 50, 60, even 70 years from now. I think it is a winning strategy and I believe we will build something great here so that in 100 years, we will have a business people will look back on with pride. You get so few opportunities in life where you get to redefine an industry and redefine a company. This is one of those opportunities, and if that doesn’t get you up in the morning, nothing will.

I tell people that when I was nine or ten years old, my greatest thrill was baseball. And there is no greater joy than watching kids on the field with joy and excitement during and after the game. Somehow we forget how to do that as adults. I want to have all the Kodak people on the field thinking this is greatest thing we have ever done. Then we will get back to work and make it even better.

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This Interview was conducted by Cary Sherburne. She can be reached via email at cary@sherburneassociates.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.

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