Kodak’s misfortunes began long before the bad economy. At best the economic downturn exposed and accelerated already failing conditions that were quite significant. The business was dying and Kodak could do nothing to stop the bleeding. But now, Kodak had someplace to point fingers.
Just prior to joining Kodak, Antonio Perez was an independent consultant for large investment firms where, among other things, he provided counsel on the effect of technology shifts on financial markets. I find it incredibly inconsistent that in spite of his background in technology, it appeared that Mr. Perez didn’t realize that it was the consumer demand for technology that was destroying Kodak.
Beginning in 2008, Antonio Perez embarked on a drenching communication hail to Kodak employees, aimed at navigating his already-ailing company through the nose-dived economy of 2008-2013. His unease was obvious and relentless, and would not let up for the better part of four long years. And although there were numerous past adversities weathered by Kodak, it was now in the midst of an unparalleled, and perhaps the perfect, storm.
The down economy and the declining film business proved to be a mix unlike Kodak or Antonio Perez could have imagined. And while Antonio’s distress signals were heard loud and clear, his effectiveness as the leader at Kodak will always remain a topic of debate.
As you read on, also bear in mind that Antonio Perez was being considered, and later nominated, for President Barack Obama’s Council on Jobs and Competitiveness in February 2011. Ironically, only a few days later, I was laid off as Purchasing Manager at Kodak Gallery. Many of my colleagues shared my fate. The layoff resulted in a 27% reduction in the workforce, the single largest of several lay-offs in nearly 7 years while working at the digital business unit.
His appointment to the council meant that Antonio would now join 21 others on the board, including the likes of Sheryl Sandber, Facebook chief operating officer; Richard Trumka, president of the AFL-CIO; and chairperson Jeffrey Immely, CEO and chairman of General Electric Co.
Among the accomplishments that the White House highlighted for his nomination was that Antonio led the global transformation of Kodak from a film-based organization to one based primarily on digital technologies. Based on those general comments, it is quite apparent that the White House either missed or perhaps decided to turn a blind eye to some finer points.
It also appears that it didn’t concern President Obama or the other members of his Council that in 2009 Antonio was widely criticized for being one of the worst CEOs in the nation due to Kodak’s demise under his leadership. He was also later named one of the Top 10 CEOs that needed to be ousted.
Still unwavering, in the President’s State of the Union address, there was additional praise for Antonio and others on the board.
All that said, here you will have the unique and exclusive opportunity to go inside the mind of a once-celebrated Chairman and Chief Executive Officer, Antonio Perez, and behold firsthand how he led the famed Eastman Kodak Company into shambles in its final days. The following emails are Antonio’s communications to all Eastman Kodak employees from 2008 - 2011. He talks about the troubled state of Kodak and the impact the 2007-2009 recession had on the company.
Antonio Perez’s emails reveal a charismatic writer with a determination to dazzle Kodak’s shareholders down to the bitter end. He was also bent on proving all naysayers, as he calls them, wrong about what some had said about the future of Kodak. Despite the broadcast flair of his words, lurking behind them was the truth. Kodak had run its last mile and was now exhausted and closer to collapse than it had ever been.
December 10, 2008 Dear Colleagues:
Today, we announced that we have withdrawn our second-half and full-year financial guidance for 2008 because of the deepening economic recession and dramatic changes in the value of the U.S. dollar.
I wanted to take a moment to put this news into perspective, and to offer my candid thoughts about how Kodak must respond in these turbulent times.
First, I want to emphasize that we enter this period in a position of relative strength. We will end the year in a solid cash position at a time when cash means everything. Maintaining our cash resources is more critical than ever. All of us must do everything we can to save cash because it is the one thing that is entirely under our control.
Second, we continue to maintain our market share in key businesses. The combination of our healthy balance sheet and our winning product portfolio, along with our well-respected brand and the exceptional people of Kodak, are great strengths that will serve us well during this unprecedented time.
But we need to do more. The economic environment is unlike anything any of us have seen in our professional lives. Auto sales are plunging. Consumer spending is drying up. Credit markets are frozen. Companies are cutting capital expenditures, and even those that want to spend struggle to get loans from banks.
The challenges that Kodak – and all companies – face today require immediate action. This is what strong, smart companies do. If we do not take action now, we risk losing our current advantage. Instead, we want to position the company today for success when the economy recovers.
Kodak knows better than anyone the price to be paid by waiting and delaying action. We cannot afford, ever again, to be slow to react to change. Either a company changes, or the world will change that business to its disadvantage. It is so much better to make the change first.
This is why I am taking the step to save cash in 2009 by canceling executive salary increases globally, with the exception of those few countries where this is not legally permissible, or in certain cases where an individual makes a job change that involves a substantial increase in responsibility. In addition, we now expect our Leadership Stock program for executives to have no payout for the 2008 performance cycle. Other difficult actions are under consideration as we align the company with the new economic reality. It is the only responsible thing to do.
While painful today, these actions are for the greater good of Kodak tomorrow. With market demand declining rapidly, we cannot afford to operate as we have in the past. The actions we take now will allow us to emerge from this recession a better, stronger company. With your dedication and devotion, proven so often in the recent past, I am confident that Kodak will again enjoy a brighter day.
Antonio
December 17, 2008 Dear Colleagues:
After finishing the restructuring of our traditional business toward the end of 2007, we enjoyed three calendar quarters of very exciting revenue growth as per or above our plans. We now find ourselves battling a set of circumstances few dared to imagine a year ago: A global recession resulting from a credit crunch unlike anything we have seen in our professional lives. When investors are lending money to the U.S. Treasury for zero interest, you know something truly extraordinary is happening in the economy.
With the very real prospect that this recession is likely to deepen and persist well into 2009, we naturally look to history for direction in dealing with this crisis. In doing so, I am reminded of one of my favorite quotes created in times of difficulties, one which applies not only to the economy but to Kodak:
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Sir Winston Churchill
Despite rising unemployment and falling consumer spending, despite fear that things can only get worse, despite all that seems to be going wrong in the economy, there is always room for optimism and opportunity.
We at Kodak have good reason for optimism. At a time when a strong cash position is vital, we have it. At a time when customers are increasingly searching for different attractive value propositions, we offer them. And at a time when fortitude and stamina are critical, we demonstrate them. For that, you have my sincerest gratitude. The people of Kodak have defined, year after year, what it means to be strong and dedicated and determined. I stand in admiration for all you have done for this great company, and I thank you for it.
In a real way, now is our opportunity. We know how to manage through tough times. We know how to adjust to a rapidly changing environment. Many of our competitors do not, and that’s our advantage. Times like these test the character of an individual and a company. Ours already has been tested, and we know the result: Kodak has the character required to survive and to thrive.
We stand proudly behind our key technologies and exciting customer value propositions and thanks to them, and our commitment to success, we will perform better than most in 2009.
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Our goals for next year are simple. We must do three things: generate positive cash flow; solidify our digital businesses; and continue to improve the engagement and diversity of our employees. As much as we made progress toward these goals in 2008, we need to do more in 2009 because the world will be that much more competitive.
To be sure, I don’t mean to minimize the difficulties we will face next year. We remain confident in our strategy,