Jim Continenza, Kodak CEO: Reinventing a brand

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1:09Leanna Byrne:At its height, Kodak dominated the photography industry and became one of the world's most recognisable brands. But the rise of digital photography helped trigger one of the most dramatic corporate collapses of its era, and Kodak filed for bankruptcy in 2012. Jim Continenza, now the company's chief executive, joined Kodak's board in April 2013 during the bankruptcy process. He had built his career as a turnaround specialist, serving on more than 30 boards and often stepping in when businesses were struggling and needed reconstructing. Jim tells me how he helped reinvent the iconic company as an industrial manufacturer and what it took to bring the business back from the brink.

1:48When I got here, I think I was doing about 60 million and losing 48 million dollars. I mean, it was losing a lot of money. It was broken. They didn't put money in CapEx. They didn't update the machinery. They weren't investing. They're letting it run down. We're doing 5x what we were doing then. And, you know, we've doubled just in the last couple of years.

2:09Leanna Byrne:Welcome to the interview from the BBC World Service with Jim Continenza. So I kind of learned how to take a company going through a bankruptcy, which I never wanted to learn. I started sitting on other boards of distressed companies, and I've been on approximately 30-plus boards, either as chairman, CEO, director, and almost every single one distressed. And that's how I was put on Kodak. When they were in the bankruptcy, I was asked to join the board as they were guiding their way out by the DIP lenders, the debtor and possession lenders. And then when Kodak came out, I stayed on as chairman. Kodak went some different directions.

2:45And in 2019, February 22nd, 8 o 'clock, it's not been that hard. I was asked to step in as executive chair and take over the operations. And we were just, we were kind of losing our way. They tried some different things that didn't work, but that's okay. If they were to work, they're geniuses, right? So, you know, I don't ever judge anybody because you don't know what they were going through at that time. I just care about what's in front of me. and we were losing about$160 million a year. We burned through our cash, and we had to make some changes. And so I stepped into the role, changed the majority of the leadership team, and from different guys that have also been around and ladies around, restructurings and going through, not really I call it restructuring.

3:33When I say that, I don't mean a financial restructuring. I mean transformation of the business. It's a skill in an art when you walk into a company, one, I have to turn it around. and it's not just everyone here, right, doesn't know what they're doing and everyone you brought in doesn't know what they're doing and this person is smarter than the other. It's still just one team. And I can say that today we act as just truly one team. But you have to walk in and take a look at the business and say, what do they do today? And I asked that question. I asked, what does Kodak do today? I couldn't get an answer.

4:04One person said, well, we're doing the 50th anniversary of the moon. I don't even know what that means. And I thought that was really interesting. And we had to get our identity back. And we had multiple divisions, multiple decision makers, multiple products. We had to get refocused. So the team, you see, a lot of us have been together a lot of years, but I've also been around most of the Kodak folks since 2012. So it wasn't like I was new to the team either. So it was great. And we had to pick our paths. What are our core competencies? What are our skills? What do we do? And that's kind of the path we went down.

4:45And I'm happy to say, you know, it's worked out.

4:49Leanna Byrne:Two things I've observed from what you said. First of all, that you didn't necessarily want to learn how to run a company that was going into bankruptcy. But a lot of people would think for a CEO, that's one of the most important things to learn. Because to pull a company out of that, I mean, that's invaluable, right? You know, that's why you said that. I agree. Even for my management team, not even CEO, I love people that have gone through distress, right? Most people can sail in beautiful winds and calm waters. It's the storm that makes the difference. And, you know, as you saw the world, especially the last seven, eight years, to just be candid, right?

5:27It's global wars. It's been pandemics. It's been shipping, logistics, inflation. It's been crazy politics. I mean, it's been really interesting, right? Right. That's all happened in like five year span. That's a lifetime for a lot of folks. And, you know, with my team, we don't really worry about how bad it gets because we just know that we're going to manage through it. We're used to that news, you know, because it doesn't scare you. And it's funny. It's a great question you asked on the first bankruptcy. When I went through intelligent, I never knew what was going to come off the other end. But once you go through them, you learn that it's OK.

6:02It's all OK. Right. Talk to your shareholders. Talk to your board. Rely on your lenders. Just be upfront. Rely on your people and understand who really runs a company. And I guess the best way to put it, in a distressed situation, HR, legal, and finance kind of run the business until they come out. The problem is a lot of companies keep those groups running the businesses. That isn't their job. You've got to become a manufacturer or a seller. You have to sell your way out. You can't just cut your way out of business. And that's what you learn by going through these de-stress different businesses.

6:36You don't worry. You move on. When the pandemic came, the first thing we did, we sat in a room and said, look, the world's changed forever. How are we going to change? That's literally. And how can we help on things you have to do? But you're right. I like people who have gone through the toughness and the distress because they learned that it's not you're in trouble. It's what decision did you make once you got into trouble? And that's kind of a skill set that I really see in my leadership team.

7:04Leanna Byrne:Well, that was another thing that I observed is that it's not just the gym show. You seem to take people along with you. So do you think that you could have made these big moves without taking people along to various different companies? No. I've got to tell you, no. It's straight up no. It's not even me thinking about it. We work great as a team. We understand what direction we're going. You know, when I come into, like, these businesses, I didn't learn even what Kodak did. We just do what we know works. We change the entire systems out. This haven't changed many years ago. Processed from Salesforce to SAP.

7:44We gutted everything, servers around the world. We streamlined the business. We've taken$260-plus million of cost out of the business, and yet we're more efficient today than we've ever been. You can't do that by yourself, and if anyone thinks they can, they're crazy. It's not. It's not. And it's not just them. They have good people below them. We're big on trust and loyalty and taking that on, but we're very hands-on. I spend my time going to see customers, and I spend my time in the factories. When CapEx has to be spent, I go visit the guys who are working on the equipment a lot of times. I want to know, do we really need this, and why, and how will it benefit them?

8:21You know, you've got to really rely on the ones that actually drive your business. They're the ones that make your products. And we're here to support them and our customers.

8:30Leanna Byrne:Now, you mentioned that you, when you took over, you initially went in and said, what does Kodak do? So I'm going to ask you the same question. What does Kodak do? Oh, that is so easy. I love you. I can make it easy. We do film, right, which is one of our core pieces. It's inside of a group that we form called Advanced Materials and Chemicals. And what film is, is layering and coding. It's very complex. I get it. Most people can never do it. And when I look at that business, I love it. But there's different types of film, too. We're doing, you know, NDT film, which is like X-ray film. We're doing other types of films, not just Hollywood films.

9:07They're still films. It's layering and coding. That got us into battery. That's in AMC. We also have now built out our first pharma group to start working on heavy water, working on salines, working on reagents. That's all kind of the same network of what we do in layering and coding and chemicals and chemistry. So that's one group. And the other group is our print group. And the print group is the largest part of our business. But AMC is catching up finally, which is great. But that is in our print group, right? We make the plates that go on large printers, processory plates. I say they're the best out there.

9:43We also make the CTPs that write on those plates. We also give you the service. We also do the pre-software. And we have two of the world's fastest digital machines. So we also cover that print business, cradle to grave, I call it, with great service. So we do print and advanced materials and chemicals. That's it.

10:01Leanna Byrne:That's what we do. Well, this might be a harder question because when people hear Kodak in five or 10 years time, what do you want them to associate it with? And is there anything that you want them to stop associating it with? Oh, great question. Wow. You know what? I think, you know, one of our goals from day one was create jobs for the next generation. I was very clear in my very first meeting, last in the film, last in plates. and I think they will see that. We're committed to that art and our heritage. A lot of people run from who they were or who they are when they get into these bankruptcies.

10:34They try to do things they shouldn't do or restructurings and that isn't what you should do, right? What is your core competence? And that's part of our heritage and that led us into other things. So when you look at Kodak down the road, we're an industrial manufacturer and we're damn good at it. Our layering and coding technology is greater than anyone in the world, literally. And it drove us into other businesses. So Kodak is a company that you want to work for. You have a job for the next generation. We left it better than when we got here. And we brought value to our shareholders. And that's kind of been our motto for the business.

11:08So Kodak is an industrial manufacturer that has expertise in layering and coding and chemical and science. That's what they should think of Kodak as the company.

11:18Leanna Byrne:Now, I mean, this turnaround has been huge, but I just want to take you back to when it went bankrupt. I mean, despite having pioneered digital photography, it did go bankrupt, didn't it? But from your perspective, what was the single biggest mistake if there is one that comes to your mind? And then also my other question would be, did bankruptcy actually ultimately make the company easier to fix? Interesting. It's hard for me to answer both of those. And I'll tell you why. I wasn't here. And I really don't look backwards. And I'm not trying to dodge your question. I just don't. I don't spend time dwindling on.

11:54Look, it's easy to sit after the game. You know, I'll give you an example. They just had a college national championships here in the U.S., right? Seconds ago, the quarterback threw an interception. Boy, they should have ran the ball. I mean, it's easy to second guess, right, after the fact. So I'm not going to judge. You don't know what's going on. And, you know, when you start getting distressed, here's what happens. It happens years before you go into bankruptcy. And then you start doing things to protect shareholder value because that's your job. And when you start doing that, it looks like, oh, my God, why are they doing that?

12:25Well, that's how they're trying to protect their shareholder value. You work for shareholders. So that's just kind of what you see. So it's hard to challenge it. Oh, boy, they made some really bad decisions. You don't know why they made those decisions.

12:36Leanna Byrne:I guess I just want to get into your head and just understand what kind of situation you took over at Kodak. Like, what were you thinking when you went home at night in those early months and were like maybe tearing out your hair? You know, what skill sets do you need that you just can't possess? And how quickly can you get that skill set? So that's what kept me up at night. And, you know, the balance sheet, the balance sheet was really broken. You know, we are heavily levered and losing a lot of money. And I did three different financing rounds. I had the balance sheet has to match where you are in the stage of your business.

13:09And it wasn't covenant you're buttoned up to and you start doing things for covenants. I don't do things for covenants. You know, talk to your lenders. Make sure your balance sheet matches the direction you're going. That's what kept me up. And can I get there? And I've been blessed to have really good shareholders and good investors. They've come along and they've been very supportive.

13:28Leanna Byrne:Did you ever want to scrap the film side of the business? Would that have made your life easier? I got to tell you, you asked really good questions.

13:40Let's not say scrap it. I want to understand it. It was losing, when I got here, I think it was doing about$60 million and losing$48 million. I mean, it was losing a lot of money. It was broken. They didn't put money in CapEx. They didn't update the machinery. They weren't investing. They're letting it run down. Acetate's a primary ingredient for film, and they got rid of the factory. I mean, it was interesting, and it was on the decline heavily. And I'm not sure if I wouldn't say shut it down or stay or go was probably on the path to to wind down. We're doing 5x what we were doing then. And, you know, we've doubled just in the last couple of years.

14:19So but to answer your question and boy, Chris is going to hate this. I actually got a call from Christopher Nolan. I'm not a name dropper. And I had a great conversation.

14:30Leanna Byrne:That is a big name. That's a big name. I know. and had a conversation with him. And his love and understanding of film, and it was a really good conversation. I'm not going to go into detail, but it was changing for me. And he actually, one of the guys that convinced me to really get into this and understand it better, he is really clear how this art needs to continue and stay. And the differences that film brings, you know, you see things you don't see. I mean, he's well beyond my intellect on film, but it was just amazing and so he inspired me to really spend time in that group and I did and when I did, when I came to the conclusion if you or I want to start our own film company we couldn't do it the complexity the cost it is the barrier to entry huge and the know-how and I looked at that and I went now I see it and I do shoot film and unfortunately I do and I love sunsets, right?

15:32And you push that trigger on that camera when you pull it, it's like everything's perfect when you do it, right? And I remember, you know, one of the questions Chris asked me, he goes, how many pictures do you have on your phone? And believe it or not, it was 90 plus thousand. Pretty sad. But yet I would never do that with film and it's just interesting. So I credit him for getting me to truly focus on it and he's been a real big supporter. But I would say leave it. My question is, what else can we do with it? Right? We know it's a declining business. We know it'll never be what it was. But what can it be?

16:08And what else can we derive from that skill set? So it drove us into doing substrate coating for EV batteries and other things. Very same process as making Felmberg. So it just levered other pieces of the business. And I realized there was a lot of fixes we had to do, and we fixed them. And obviously, you know, we even built a new spooler and it may mean nothing to you, but couldn't find one. It had been made in 50 years. I'm exaggerating the years, but decades. And several million dollars in five years to build something that was built many years ago. And it's very difficult to go backwards. It just is.

16:44If you wanted to go build a VCR, it would cost you so much money to do that. And it was so tired to go backwards. and we had to build this machine that its tolerance is one in 150 millionth. It's unbelievable. It's got to be literally perfect. And we did it. And it doubled our film capacity. You know, so that's a commitment. We went hard on film. And then Hollywood films, motion picture film, we call it, has really picked up. And what they've learned, if you want to look different on digital, film, digital looks like digital. And you know what? Digital tries to look like film. You've never once heard film tries to look like digital.

17:21You've never heard of that. And so that really told me that this is something special. And I just need to really understand it. And fortunately, Terry Tabor and our team there just really, I mean, Terry's brilliant on film, several patents. He really convinced me that, you know, this needs to stay. We just have to fix how we operate and how we sell it. And that was really the key. So, yeah, to answer your question, the obvious question was yes. and then in reality would have been one of the biggest mistakes if I would have made that decision.

17:58Leanna Byrne:You're listening to the interview from the BBC World Service with me, Liana Byrne.

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18:37Leanna Byrne:I spoke to Jim over Zoom back in January, and he joined me from Kodak's home in Rochester, New York. It was an audio-only interview, so I didn't get to see whether he had a camera beside him but he did tell me he now shoots on film himself. The thing that struck me about Jim the most was that he was unusually candid for a CEO. Right at the start of the interview he told me if you're looking for a marketing fluff boy I'm not your guy and he very much lived up to that. He admitted so many things that film was broken the balance sheet was really broken that Kodak has lost his way But at the same time, he wasn't actually defensive and he refused to blame previous management.

19:19Leanna Byrne:When I asked him about the bankruptcy, I was almost giving him an opportunity to criticise his predecessors. But instead, he said things like, I don't ever judge anybody. You don't know what they were going through at the time. It's quite a measured answer and quite reflective. He thinks like an operator too, not a marketer. He was constantly talking to me about the machinery, the factories, the production, the chemistry. And he gives specific examples about the different machines. He tells me about a spooler and I think he spoke to me about that for two minutes. Instead, most CEOs would simply say something like, we invested heavily in machinery.