Getting Kodak To Focus

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"One of the best things we hear about Kodak is the quality of their service," says Scott Grier, a director at First Consulting Group who specializes in medical information technology. But here, again, old rivals are already a threat, while other technological powerhouses--GE, Phillips, McKesson and Siemens--have competing products and services.

The company's third core business, commercial printing, seems promising, even though it's losing money right now. But here Kodak will have to battle a giant called Xerox. That does not mean the technology is anything like that of office photocopying. Kodak's machines can be 40 ft. long and cost from $11,000 to $5.5 million. Its pricey Versamark, for example, produces color prints in huge volume--at a rate of 1,000 ft. per minute. The magic: digital technology makes it possible to economically print custom copies of anything at almost any volume--books, flyers, bills. "It's a reasonable thing for Kodak to do," says Jack Kelly, an analyst with Goldman Sachs. "The competition isn't as vicious." Barbara Pellow, chief marketing officer of Kodak's Graphic Communications Group, points out that the customers Kodak will target--like direct marketers who want to customize their flyers or retail chains that need variable posters--represent a $30 billion market that's growing at a 12% clip. Once again, Kodak's recently acquired portfolio of products is arranged to bridge the gulf between traditional and digital printing.

Carp's clarity of purpose and Perez's management seem to have engendered some enthusiasm, but this is epic work. Very few companies of this size, faced with a seismic shift in technology, emerge intact. When his team gets weary, says Pierre Schaeffer, director of business strategy for Kodak's digital and film imaging business, he boosts their spirits with a reminder. "We're involved in a really exciting transition," he tells them. "Regardless of the outcome--and hopefully, we're playing it for the best--the moments we're going through now will be making the textbooks." In a sense, Carp has turned Kodak's quandary into strategic inspiration. As he puts it, "The strategy is to lead our customers through the transition from traditional products to digital products." And, presumably, to take Kodak with them in the bargain.