New Kodak chief applies lessons from pharmaceuticals industry

Coyne tells Kodak workers to expect change

The staff at Kodak Health Sciences had better learn to live withchange, says Martin Coyne, because it is what PACS customers demand-- and Kodak is going to give it to them.

Coyne last September assumed the presidency of Kodak HealthSciences division in Rochester, NY, replacing Carl Kohrt, whowas promoted to a three-member executive committee overseeingKodak's overall corporate operations (SCAN 9/13/95).

Kodak employees learned almost immediately that change wouldbe a constant phenomenon under their new boss. One of Coyne'sfirst moves after becoming president of the division was to layoff some 200 workers. The layoffs hit the Dallas-based Kodak HealthImaging Systems PACS unit particularly hard, and the unit wasintegrated back into the Health Sciences corporate structure (SCAN10/11/95). As part of the changes, KHIS CEO Catherine Burzik wasreassigned to another part of the Health Sciences division.

The moves led to widespread uncertainty among Kodak's workforce, but the layoffs had to be made, according to Coyne.

"We had to downsize in Dallas to get the cost structureback in shape," Coyne said. "We were behind the curve.The impact of managed-care and group purchasing organizationsled the pharmaceutical industry to downsize two years ago butthat had not happened in the imaging industry."

Coyne is intimately familiar with the pharmaceutical industry,having spent 10 years in executive positions with Kodak subsidiarySterling Winthrop. In 1994, Coyne was serving as executive directorand vice president of Health Group Marketing in the Kodak HealthGroup, which consisted of the Health Sciences division and threenon-imaging health units that Kodak divested that year.

The challenge then was for Coyne to turn uncertainty into success,which he did through the creation of a consulting firm that specializedin helping healthcare suppliers develop strategies that addresschanges in the marketplace. The challenge now is to convince Kodakstaff that uncertainty is not necessarily bad.

"I have told the whole organization that change is hereto stay," Coyne said. "If you don't think we are goingto change our organization every year, you are wrong. If you don'tthink we are going to cut expenses every year, you are wrong.Our folks have to learn how to deal better with ambiguity anduncertainty and they have to learn that change is not somethingto be feared. It is something good."

Reengineering PACS. Kodak was a favorite early on to take aleadership position in the PACS industry, but in recent yearsthe company has seen its efforts eclipsed by other firms. Kodak'sproblems in the PACS market can, in fact, be described as beingthe result of either a lack of change or the wrong kind of change,as seen in Kodak products that failed to meet customer expectations.

"In the past the company thought it had a viable solution,only to find that by the time it was on the market customers hadmoved further along the continuum in what they wanted," Coynesaid. "It was like trying to hit a moving target."

The company's problems were exacerbated, he said, by the implementationof the wrong kinds of changes, such as sporadic and unplannedmodifications in product design that exposed the company to criticismfrom the Food and Drug Administration.

For example, at the urging of customers, Kodak engineers yearsago apparently introduced changes in software that did not complywith the FDA's good manufacturing practices (GMPs). These changescame back to haunt the company when they were uncovered duringan audit in the fall of 1994, which led to a voluntary withdrawalof the company's remote capture device (SCAN 4/26/95).

The GMP problem has since been fixed and procedures have beenput in place to keep such problems from happening again. Thatdoes not mean, however, that Kodak has stopped trying to meetcustomer needs. On the contrary, Coyne is intent on developingan operation that accommodates the shifting needs of the PACScommunity and seeks customer feedback to ensure that those needsare met. Coyne is setting the example for staff by talking withcustomers every chance he gets.

"My observation is that we need to improve our level ofcustomer involvement," he said. "If the boss sits inan office and never gets out to see a customer, then (the staff)will say that is standard behavior. I am trying to lead by example."

Coyne is confident that the prescription he has written totreat Kodak's ills in electronic imaging will prove successful.

"When I ran the pharmaceutical products division of SanofiWinthrop, I was absolutely amazed at how fast you can change anorganization," Coyne said. "We had been losing marketshare; new prescriptions were down. In six months we flattenedit out and started growing and we did it by getting people tofunction and react differently. We didn't make them smarter; wedidn't send them to school. We just got them to think about thingsa little bit differently."