Commentary & Analysis
KPG: Listening to the Market - A Conversation with Jeff Jacobson
After watching Kodak Polychrome Graphics&
By Cary Sherburne
Published: September 29, 2004
After watching Kodak Polychrome Graphics’ (KPG) strategy evolve over the years since Jeff Jacobson took over the helm, I had the pleasure of speaking with Jacobson recently to delve deeper into his strategy, beliefs and future plans for KPG.
KPG launched its new integrated strategy at drupa in May of this year, focused on delivering end-to-end color managed solutions to the commercial print, packaging and newspaper markets. Following drupa, I spent a day with the KPG team in Norwalk CT, where I learned more about the implementation of that strategy. And the interview with Jacobson adds more to the KPG picture.
This interview is Part One of a series. Part Two will be published during Graph Expo.
WTT: Jeff, thanks for taking the time to speak with us today. Why don’t we start with a little background on KPG, your role there, and how you got to the point you are today?
JJ: KPG is actually a relatively new company—it was started in 1998. But we certainly weren’t a brand-new startup. We were comprised of a $700 million division of Kodak, the $300 million Polychrome Division of Sun Chemical, and we bought Horsell Anitec, which was part of International Paper, in April of 1998. I ran the U.S. and Canada for the first 24 months, and in January 2000 was appointed head of the Americas, and then CEO in April of 2000.
I have to say, the previous administration had difficulty integrating the businesses, as many new joint ventures do. The good news was that the products and services were great, but you can’t take three big companies and run them like they were run before the merger. It is simply not financially prudent.
Since I took over as CEO, we acquired Imation’s color technology division; TSI, which had its roots at Dupont; the Mitsubishi chemistry and plate business in Japan; RealTimeProof; and PageComposer from Bell Microproducts. So KPG is a compilation of eight companies that, today, truly function as one—one team, one vision, coupled with best of breed partnerships. Our partnerships include Kodak, Sun, EFI, Screen, Exanet and Canon, and together, we are able to deliver best-of-breed solutions to the marketplace.
WTT: That’s a lot of progress in a relatively short time.
JJ: Many people will say, “Jeff, many companies have tried to put together the best solutions. What makes KPG different?” My response is that the reason some other companies haven’t been successful is because they try to build everything themselves. You have to be honest with yourself about your core competencies, build on them, and fill the gaps with partnerships or acquisitions. EFI, for example, is a great partner of ours. We have a mutually beneficial relationship, and we both win. We don’t get into problems of ownership or control. What we do is to look at it from the marketplace backward and say to ourselves, “How do we make sure the customer wins, and how do we bring an integrated, transparent solution to the customer?” Our aim at KPG is to be the premier solution provider to the graphic arts industry.
WTT: If you had to summarize your overall strategy in a few words, what would you say?
JJ: I look at it as the classic three-legged stool: First, we have a strong consumables business which has been the foundation of our company. Second, we are the preeminent color experts in the industry. And third, we are packaging our more conventional solutions together with digital printing, storage and workflow. That’s how we can be the true solutions provider to our customers.
Drupa was really a coming-out party for this strategy, and when our customers, partners and employees saw it all presented clearly on the floor, it was the first time many of them were really able to see how far we had come in the last couple of years. Our U.S. business is much more advanced from a digital standpoint, but keep in mind that 60% of our business is outside the U.S. So many of the things we showed at drupa—like Canon, the new DI, our Screen relationship—were not being utilized in the rest of the world. With drupa we said, “This is a global show and we are going to demonstrate our global capabilities.” The Color Fidelity System was a good example of that. Since we try to roll out our products in a logical, rational manner, only a few our colleagues in Europe had seen it. When they saw their customers’ reaction to these products, including RealTimeProof and the Color Fidelity System, they were anxious to get their hands on them.
WTT: Speaking of drupa, did the drupa excitement outlast the buzz? Did KPG see any meaningful business results as a result of being there? I guess what I am asking is, did anything really change?
JJ: I see drupa as really analogous to the Republican or Democratic convention. You do get a buzz, but how long does it hold? Many people went in to drupa with low expectations, especially considering the economic situation we had just started to come off of. But they came out with a buzz that was surprising to all of us. This was a selling show—the last drupa was not. And interestingly, we sold as much in non-consumables as we did in consumables.
Better yet, the buzz has lasted, at least for KPG. And we have used drupa and the buzz to build on our message.
WTT: What are some of the other factors to which you attribute your success?
JJ: With CTP, for example, how did we become the leader? Our product came out early, and we had the largest base of conventional users to migrate over to CTP. The same thing has happened with our digital products. We have the customer touch points, and we have the relationships in commercial printing. I think it is hard for companies coming in from the pure digital world to develop that depth of understanding of the commercial print customer base. Our biggest challenge is to work with that base to migrate them to the future. We are always looking at where our customers are going and how we can stay ahead of those needs.
WTT: Talk to me a little about your strategy in packaging.
JJ: We have our own flexo plate, Flexcel, and we should be introducing a digital Flexcel plate soon. We will be taking our monitor proofing solutions into the packaging segment as well. And believe it or not, we are placing more Kodak Approval systems into packaging right now than we are into commercial segments. Packaging is booming, and in that market, an accurate depiction of color is extremely important to the customer. With our color expertise and our solution set, we believe we can gain a foothold in the packaging market. Think about the rapidity with which these companies have to change their packaging. A good example is the impact that various diet strategies have—no fat, no carbs, counting calories—each change in consumer behaviors requires changes in packaging of consumer products.
Earlier this month, we announced that the Kodak Approval NX Proofing System with Rapid Recipe Color was certified for use with the Opaltone Seven Color printing system, which is optimized for the packaging industry. It is another indicator of our commitment to giving our customers choice. We have also extended the Matchprint digital line to include metallics and white, both of which are very important in packaging.
WTT: I know KPG has worked on incorporating JDF compliance into its solutions. Do you have any general comments in that area?
JJ: We just had a three-day strategic planning session that included our corporate officers and eight customers representing printers, publishers and agencies. The dynamics are fun to watch, but you marvel at the conversation that takes place as they are looking at the total supply chain. We had a very brief conversation about JDF as part of that session. Our group, which I believe was fairly representative, said that there is still such an education process that is needed relative to JDF and print automation, and that it is really in its embryonic stages. I believe the industry is making its way towards becoming more of a process driven industry, and although CIP4 has been around in its various forms for 20 years, we are still not there yet in the U.S. And when you go to other parts of the world, there is no implementation at all. In China and India, for example, we are still talking computer to film. The important takeaway we should have about JDF is how the standard can be used to help customers with their workflows, and we are beginning to address that with DirectFlow and RealTimeProof.
WTT: What do you think is the next big thing for the industry?
JJ: From a KPG standpoint, I believe what will be revolutionary will be monitor proofing. It will be a complete paradigm shift and will help us to fully integrate digital workflows. There will always be hardcopy proofs, but I believe that monitor proofing will stem some of the growth of inkjet proofing and we won’t need inkjet proofing to the degree we do today.
For the industry as a whole, the big question is how we diversify. One area, specific to packaging, is RFID. Another is what role can we play in the overall supply chain. There are some huge potential markets for diversification, but at the same time, we need to be cognizant of our core competencies and capitalize on those. But if we are going to be a true solutions provider to our customers, supply chain management and MIS are a big part of being able to work with customers across the enterprise, and printers need to plan in that arena.
Some of the biggest impacts we are seeing on the printing industry relate to cross media. To me, it is all about how marketers get their message out and what is best way to do so in a measurable manner. We need to find ways to do that with print to keep print viable into the future.
WTT: Can you share a couple of your personal goals for the future?
JJ: I’ll be 45 soon, and what is exciting to me is that when you run a company, you feel a responsibility to the people in your company. I joined the industry when I was 27. Over my career, people gave me opportunities, and I looked up to role models like Ed Barr (former chairman of Sun Chemical) and Harry Quadracci. I hope I can run this company the same way when I am 64 as I am at 44, because there are going to be 25-year-olds coming along that want a career in our industry, and I would like to be a role model to them and help them make future contributions.
Also, as I said before, I want to see this industry remain viable. We need to get our message out that print is still the most economical, efficient way to get your message out. But all of us—including manufacturers and print service providers—need to demonstrate better cross media participation. It is about communications as much as it is about printing, and about the fact that we are helping our customers get their messages out. We have the tools to do that and we need to demonstrate it to the market.
WTT: What do you do to stay in touch with customers?
JJ: I spend a lot of time with customers. I barely go a day of my life without speaking with customers. In fact, at least 40% of my time is spent in front of customers. That’s a big commitment—two days out of five days of a working week. When I am in the field, my typical day starts with a 7:00 AM breakfast with a sales rep or manager. We go on the road all day, visiting customer sites, having lunch with a customer, with a customer often till 6:00 PM in the shop and then out to dinner. That’s often a 7:00 AM to 11:00 PM day.
WTT: What do you do with what you learn from customers?
JJ: Everything we do in our company is marketplace backwards. It’s the pull concept at its best: customers tell us what they need and we ultimately feed that information to R&D to improve existing products and develop new ones. Of course, R&D develops its own ideas, but you still test the concepts with customers. And I put a lot of pressure on R&D. I manage R&D like you manage a sales funnel. In the same way that you need to keep a sales funnel full to deliver results, you also need to keep the product funnel full—and aligned with a product roadmap that makes sense.
WTT: What do you like most about what you are doing now?
JJ: I really have two lives that I thoroughly enjoy: family and business, and they cross paths often. When my wife meets people in the company, she understands why I do what I do. My customer relationships are important to me as well. Early in my career, a mentor told me that you are doing your job right when your customers become your friends. Sometimes I feel like if I didn’t have customers at this point in my life, I wouldn’t have any friends!
What is also exciting is building a culture that is one team with one vision. That’s not easy to do on six continents and with 4,000 people. KPG has not been immune to the ills of the industry, but we have demonstrated every day that we are winning—not at the expense of our customers, but with our customers.
WTT: Tell me a little more about that.
JJ: I hear people say that graphic arts is a mature business, an old industry that is back in the dinosaur age. I couldn’t disagree more. I love the industry; thrive on it. I find a lot of reward in getting 4,000 people on the same page every singe day and focused on being better every day—and doing it because they want to do it. It’s the greatest high. And there is no greater high than having a customer place his or her trust, and the success of his or her of job and company—in your hands and want to do business with you. When I give a business card to a customer, I am not giving it to them so they can file it away. I am giving it to them so that they know I am there to address any issues or concerns they have about their relationship with KPG. If you are a KPG customer, we will never promise you perfection, but we will provide you with responsiveness.
WTT: And what do you like least?
JJ: I wish we could spend more time with our families. But other than that, there is nothing about my job or this company that I don’t like. There are things I would like to do better or faster, but when you live this industry and are as involved in the company as I am every day, it becomes a part of who you are.
WTT: Jeff, I want to sincerely thank you for sharing your thoughts with our readers. Before we close, do you have any parting comments or words of wisdom you would like to add?
JJ: One thing I think all companies can do a better job of is developing leadership. To quote Jack Welch, he said he was not the brightest bulb in the chandelier, but that he certainly knew how to make the chandelier burn brightly. That’s leadership. But our families often pay a price.
My son is 11, and my daughter is 13. My son was trying to figure out why I travel so much. He asked me, “What does it mean that you are the CEO of company? Do you have any bosses?” I told him that yes, I have a Board of Directors. But what he was really getting at was that if were the boss, why did I travel so much rather than spending time with him. I tell you, that was a knife in the ribs!
That’s why when I send a holiday message to the KPG family, the letters always include their families at home, because we owe them a lot of thanks for our success.
For more information on KPG, see www.kpgraphics.com.
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