Kodak, The 'Great Yellow Father,' Is Innovating Like A Newborn

Kodak, The ‘Great Yellow Father,’ AUTHOR: MATT DAMSKER Date: May 30, 1988 Is Innovating Like A Newborn To young scientists, it’s yuppie paradise; to the veterans, a mixed blessing ROCHESTER, N.Y—The old Kodak is still in evidence here. Downtown, the dignified brown skyscraper lords the familiar logo over Rochester as it has for more than half a century. A few miles to the north, there’s the company’s sprawling scientific complex, Kodak Park, and, at its hub, Building 83, where the VPs of the various science divisions have directed re search for two decades. For The (Sick) Times Of Your Life Whether you knew it or not, Kodak has always been involved in your health. Last year, for example, Kodak produced X-ray materials blood analysis instruments, and the like, generating more than $1 billion in revenues. Two years ago, though, company executives took note of the fact that an aging population and growing market for pharmaceuticals would triple percapita spending on health care by the year 2000. Now Kodak wants to enter your medicine cabinet. The plunge into pharmaceuticals is being taken by a new subsidiary Eastman Pharmaceuticals. With headquarters in Malvern, Pa., com pleted last fall, Eastman entered the direct health-care industry with no direct experience and no product close to market. But it did have a distinct asset: Over the years, the parent company had amassed some half-million proprietary chemical compounds. While each compound Was originally developed for photographic and industrial chemical applications, a number Eastman finds, are quite similar to known pharmaceuticals. One compound mimics the properties of a lymphokine, an immunologic agent. Another, which appears to sequester sodium could be developed for the millions of Americans who have to limit their salt intake. To exploit such opportunities, Eastman’s vice president for R&D, Eugene H. Cordes has hired 125 scientists. But building an internal R&D division and screening the thousands of chemicals are both long-term strategies that are unlikely to yield marketable products in the near future. In order to speed the flow of products to market Eastman has embarked on a number of joint ventures, nine at last count, with other pharmaceutical houses. Earlier this year, in a move that more than doubled its investment in the industry. Kodak purchased Sterling Drug, whose 1987 sales toped $2.3 billion. Of most benefit to Eastman, notes Conies, is Sterling's worldwide marketing and drug registration infrastructure. The immediate success of Eastman’s tactics will begin to be measured next year when the company plans to get a “significant,’ number of products to the clinical testing stage. Among the most promising monoclonal antibodies for cancer therapy; interleukin-4, which stimulates the production of antibodies and could be used to treat cancer S.O.D (polyethylene glycol-super-oxide dismutase), a compound that helps minimize tissue damage following heart attacks. --Susan L-J Dickinson Their efforts—and those of their predecessors, paid off: the lobby walls are lined with dozens of international medallions earned throughout a century of leadership in the development of photographic processes. But like old snapshots, Kodak’s dominance has been fading of late, and the company's nickname— "Great Yellow Father," was beginning to seem all too apt. Until now. Beneath the centenarian’s ribbons so proudly displayed beats a restive heart--one usually associated with younger, entrepreneurial creatures. Three years ago Eastman Kodak Co. reorganized its immense research, manufacturing, and marketing staffs into 24 business units. Each is run by a general manager responsible for product development with no corporate bureaucracy to impede the road to market. And, as the company’s earnings indicate, the strategy is paying off. Where the old, hierarchical Kodak once insulated itself and its researchers from real-world pressures—devoting, for example, a decade of R&D to its line of copiers before bringing them to market— the new Kodak has been spinning out hundreds of products of late. Its ColorEdge line of color copiers, introduced in January for example, was developed in only two and one-half years. Its Fling 35 disposable cameras took only six months. Analysts agree that Kodak is positioning itself well for the long-term, but the reorganization has hit its creative community of scientists with all the impact of culture shock. The researchers once were free to indulge in relatively undirected research; now they find themselves reined in by marketplace demands. And although the new "entrepreneurial" structure has had the desired effect of infusing the Great Yellow Father with new vigor, it ironically has spawned a more conservative, button-down culture for its people in the trenches, and at the benches. Understandably, Kodak scientists are ambivalent about the change, and concerned that the short-term product emphasis might short-change long-term creative gains. "When I started here in 1970," notes chemist Annabel Muenter, who specializes in emulsion sensitization in Kodak’s Photographic Research lab, "our prime concern was to conduct ourselves in a way that would avoid any antitrust action, we weren’t working to compete. But now we have to focus on things we really need to meet the competition. So...the more fundamental explorations [have] become harder to justify." For example, Muenter used to study the properties of light-absorbing dyes in solution. Now she must look at them in the crystalline form in which they will be marketed, a prospect she finds "much less interesting." "A lot of people committed to scientific discovery find the current atmosphere frustrating," Muenter continues. "There are now marked-off areas where you can’t go because they’re not part of your defined goals." Nonetheless, the consensus among seasoned Kodak scientists seems to be that the shift in focus was inevitable and that it makes sense to align research more closely with product. "I personally don’t feel an identification with the products," admits chemist Paul Borsenberger, a senior researcher who worked on the color copier line and who has logged more than 20 years with Kodak. "But lately I find that every time we have a new product announcement, everybody goes to the assembly hall and there’s a lot of positive noise, people feel a strong expression of their efforts in the products." Muenter adds: "I find that as we have dialogues with people in marketing, for example, that their crystal ball is a little better than ours, and that together we have a better crystal ball than separately." The bench veterans further acknowledge that Kodak appears to have their concerns in focus and has reassumed the paternal mantle through two programs that address the special needs of researchers. One, designed to squelch the temptation some scientists may have to go entrepreneurial on their own, provides venture capital for chosen staffers with bright ideas outside their specific line of research. Another, founded jointly with universities in the area, allows senior researchers up to two years to pursue "purer" scientific studies in an academic environment. Under this program, senior research associate Robert Belly recently spent a year at Cornell University working on recombinant DNA research and on developing dye systems to detect cell receptors. In contrast to their senior colleagues’ grudging acceptance of the new regime, young scientists view the reorganized Kodak almost as a yuppie paradise. Jeffrey Blood signed on seven years ago fresh from graduate studies at the University of Wisconsin. He now heads a small interdisciplinary group of physicists and chemists in the Microelectronics Division of the Electronics Research labs. Blood’s team is working on solid-state image sensors, attempting to endow them with the highest resolution ever achieved. This research has recently resulted in the million-pixel Megaplus industrial camera which allows minute inspection of assembly line processes. "At the university, I was doing very abstract work," recalls Blood. "One project I was working on there, involving a phenomenon of photochemical energy transfer, was something few people would really care about, I didn’t see any application for it, and when you pressed him, neither did my research advisor. Coming here, into a structured, targeted situation was a real step up. It’s been a lifelong dream of mine to see something from development through all the research stages to manufacturing." If there’s an ideal scientist type for the new Kodak, it would seem to be Jeffrey Blood, a researcher hungry to see the end products of his research. "When one of our Ph.D. recruiters interviews at a grad school, and the candidate says he has no interest in the application of his pure research, that’s probably going to be a short interview," Borsenberger wryly observes. Moreover, the new Kodak scientist is equally comfortable managing costs or mixing chemicals. In the Great Yellow Father era, scientists weren’t required to stick to budgets or streamline their research needs. Under the reorganization, research divisions have individual budgets, and research equipment and modeling shops are set up as virtual cash-and-carry businesses. " "In the past, it was always, Let’s order all this hardware or data, then sort it out later," says Roger Cole director of Research Management Resources, nodding toward a fabrication lab where technicians are molding various reaction vessels. "Now, at a cost of, say, $10 a study, you’d better sort it out before you order the data. And that improves efficiency." One result of this emphasis on bottom-line-conscious Kodak scientists is likely to be an increased flow of researchers into management. Cole, who was hired 30 years ago as a photo chemist, afirms that, while such career models were ,fairly common, over the years, their numbers stand to increase now that more diverse managerial challenges are available and research scientists are better trained to handle them. Larry Zimmer, for example, joined Kodak in 1979 as a photo chemist. Last year he was put in charge of the Magnetic Materials lab of the Diversified Technologies Group. "I’ve been impacted more than others by the reorganization," says Zimmer. "Kodak has not been a recognized leader in magnetic materials; it has no huge, profitable product lines supporting it. So part of our mission is to reach out to wherever magnetic recording can lead us, and that has a very long-term payoff. But somehow we have to fit that fundamental work into the needs of business." Ultimately, the scientists who can savor rather than resent that sort of challenge are the ones upon which Kodak is staking its future. And as streamlined and profit-conscious as it has become, the Great Yellow Father still seems to inspire a traditional company loyalty and enthusiasm. Matt Damsker is a senior editor in the magazine division of Rodale Press.

Kodak, The 'Great Yellow Father,' Is Innovating Like A Newborn

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