Jim Continenza is the son of Italian immigrants who moved to the US after the second world war. He is also executive chairman of Kodak, the most American of companies. He is the man who holds the reins of the business that is in the process of rebirth after several traumatic years of wandering in the wilderness.
“Kodak has struggled for 10-15 years, going through bankruptcy in that period. I happened to be in the offices at Blackstone, one of the major investors, when someone said: ‘We would like you to join their board’.”
Continenza, however, was no accidental choice. He held leadership positions at AT&T and Lucent and was CEO of Teligent. Over the past 20 years he has notched positions on 30 boards in both private and public arenas, including forest products group Tembec and print businesses Cenveo and Merrill Corp. He has been CEO of a number of others, including Vivial, a reputation management and social media company whose services are much in demand in the era of social media and absolute transparency of information.
He joined the Kodak board in 2013, becoming chairman five months later. And then in 2019, with the defenestration of the previous CEO, became executive chairman and, he makes clear, the man who makes the decisions.
“The core of this business is print. It’s advanced materials and films, it’s applied chemistry. But in recent years we did anything but: working in Hollywood, producing T-shirts, a Super8 cine camera,” he says. There were also licences for others to use the Kodak brand on cameras for drones and mobile phones and announcements that Kodak was going into the blockchain business. “We were spending a lot of time trying to find the next home run,” he says.
At the same time Kodak tried to sell its inkjet business, to the dismay of many in the printing industry aware that Kodak has a unique technology in a sector that was sure to be expanding rapidly. But Kodak needed the cash to pay off debts incurred during the bankruptcy process.
Continenza stepped in. “We were getting too far away from our DNA: we know about print, about film, about chemistry. We had spent hundreds of millions of dollars on things that don’t make sense.”
As chairman, he headed a board that was rarely in agreement. “Everyone was right but didn’t listen,” he says. “It was like being chairman of a herd of cats. We had lost our way.”
His achievement has been to strip that back, to dismantle the divisional structure and the silo approach that this had engendered. He brought in trusted people that he had worked with over the years, and has led a return to a One Kodak approach, to bring activities under one roof, with one reporting structure and delivering one face to customers. At its worst, the previous strategy meant that customers asking a rep about digital printing, would be told “Don’t ask me, I sell plates”. The Prinergy group could stage conferences without inviting people from the Nexpress, inkjet or plates operations. It made no sense.
Under the One Kodak strategy this is no longer thinkable. Nor is the structure where there might be as many managers as sales reps. Customers suffered and consequently Kodak missed out on sales opportunities. The One Kodak reforms will put feet back on the street. “I spoke to customers and the universal message was ‘I love the products, I love the quality. But Kodak is the hardest company in the world to do business with’,” says Continenza.
“Now we are putting customers first, not our employees as some recommend, but our customers. Every customer wants Kodak to win.”
He calls himself a tech guy and his experience in social media makes him aware that “today the customer is in charge and he can ruin your reputation online”.
The five or more distinct divisions were stripped away and directors given functional responsibility. Thus Randy Vandagriff, who was head of the enterprise inkjet division which had been on notice of being sold off, now heads the digital product arm of Kodak. He has set about creating a single showcase for Kodak’s digital equipment in Ohio, which for the first time outside an exhibition, will bring together Nexpress, Prosper and Ultrastream and Sonora plates. Jeff Zelmer has joined the business from Konica Minolta US as VP global sales and strategy and Denisse Goldbarg, having worked with Continenza previously, is chief marketing officer. Dave Bullwinkle remains CFO.
But Continenza remained constrained. Kodak was still encumbered by debt from its flirtation with bankruptcy. And with debt he could not do what he wanted. The flexo plates business was sold, even though in Flexcel it possessed a market leading product and flexo print is growing with demand for packaging. “It was my decision to sell that business, mine alone,” he says.
Apart from the need to raise revenue, Kodak would have found itself in conflict with its own digital printing technology that is pushing into packaging. The first Uteco machines with Kodak technology are in operation, a single sided Prosper is printing outer packaging for drinks customers. More applications can be expected thanks to the inherent benefit of printing with water based inks. A large format machine is under development by its Italian partner.
Part of Kodak heritage is polyester, used with a suitable coating as the stock for all manner of silver halide films. It is now using those skills to create precoated films suited to flexible packaging with different characteristics using matched ink types to accelerate up take of digital print in packaging, by making the decisions easier and barriers to entry lower.
The sale left debt of $100 million which was fixed by attracting further money from one of the investors, the deal secured over an informal lunch. Once you have proved to be a safe pair of hands for those looking to invest money, some of the formality drops away, it seems.
The cost base has been addressed, in part by listening to the experiences of Kodak staff at the lowest level tasked with processes that someone has imposed a while ago and which no longer make sense. “We have to stop doing stupid things,” Continenza says. “And we have taken out the waste that tends to happen in big companies.” On the way, he stages round tables and town hall meetings to encounter staff at all levels.
As a result Kodak's cash reserve at the end of 2019 was $233 million, about the same as a year earlier. Kodak had reduced costs by about $100 million to lower its cash burn to about $40-60 million, not the $140 million to $160 million it had been spending.
Again this was a deliberate move. Challenging an indigenous supplier in China will never be allowed to be successful, Continenza says. “I want Sonora to be the standard for process free plates and if the Chinese market will not buy, it can never become a standard, but if the Chinese own the technology there’s a much greater opportunity for Sonora to become a standard.” Lucky Huaguang Graphics will now be paying a licence fee to Kodak.
And the chairman has bought 1% of the shares and insisted that the rest of the board invest to have skin in the game and to ensure that they will feel the pain in the worst case. Any risk of that appears to be receding. Kodak would appear to be back on a sound financial footing, or at least in control of its own destiny.
Investment has continued throughout this process. There is a new Sonora plate to come which will address some of the issues that prevented it becoming a universal plate. Now it can be used on 90% of presses and applications, which in this industry is as universal as it gets. The Nexfinity digital press, a product line that seemed to be left to drift, has been given a future.
The 2020 version of Nexfinity has increased throughput to 150ppm with the addition of fifth colours that span silver and gold, complementary high intensity colours, and clear and white toners. The life of ORCs has been extended with increased durability. Changing from one additional colour to the next takes two and a half minutes. “It’s about reducing the running costs for customers,” says Continenza, with Zelmer adding: “We have customers producing 150 jobs a day. This is still the most reliable digital toner press on the market. We have lowered the cost per page in quite a significant manner. There is certainly a place in the market for it.”
However, speed and cost is needed to convert the trillions of pages that are printed on offset presses each year and that means inkjet too has a strong place in the market.
The Prinergy workflow is no longer expected to generate a profit of its own accord. Instead it is positioned as the glue that supports the platesetters and the digital presses and also third party products. “It’s purpose is to support service and inks revenue,” he says.
It is hosted on the Microsoft Azur platform for stability and flexibility. It will also spit out all the data that a customer could wish for in a dashboard view that is more useful than, say, the 99 columns of spreadsheet that can be extracted from the Nexpress. Making this data available through Prinergy in a more digestible form will help users use analytics to understand their business and its costs.
“I am contemplating giving Prinergy, or a limited version of Prinergy away as freemium product for smaller printers. It has to be an open source product hosted in the cloud,” he says. The tech guy knows that artificial intelligence requires as much data as possible, and free is great way to get that data.
There has also been a rethink about Prosper. At first Kodak was keen to get machines placed, resulting in machines placed with unsuitable customers. Both sides have learned plenty since then. There will be new implementations of Prosper, perhaps challenging Nexfinity as Kodak tries to fill the gaps between its products. Continenza adds: “I want to be a little more confusing by bringing the products closer to each other.” A project looking at sheetfed applications for the Prosper and Ultrastream inkjet technology is underway, though probably will not be one of the products that will be launched this year.
“A year ago, all this activity had been turned off, everything was headed in different directions. It is not easy to ramp it back up. We are doubling down on digital. I love this industry and it’s not going away.
“And I’m not going away either. If anyone here thinks that they can outlast this CEO, they are wrong. I will step down when I find my right replacement.”