‘We’re not selling a dream, we have to sell the reality’
Monday, April 14, 2014
Martin Mayo officially became head of Kodak’s UK operation last summer. An engineer by trade (his first job was as a service engineer for Radio Rentals, fixing video recorders) he’s possibly the first Kodak UK boss to have worked his way up from the bottom, something he’s immensely proud of.
He’s also proud of his Brummie roots, his team and the fact that his straight-talking, self-deprecating style makes him an unlikely corporate boss.
Darryl Danielli In typical Kodak fashion you have a very long job title [cluster director UK/Nordic and vice-president Kodak, EAMER], but what’s your actual job?
Martin Mayo If you sat the other five Kodak cluster directors down, I’m pretty sure they would all give you a description that doesn’t match what I do. I’m fairly unique in many ways, and I’m very lucky in that I used to have a real job once – I started out as an engineer. I only went into sales temporarily as I just wanted enough money to get married, so I guess you could say it’s been a 24-year temporary job. I’m grounded in where we are as a business though, so I’m running it very hands-on. I don’t like being stuck in meetings; I prefer to be with the sales team, the engineers or the customers, because you get a feel for where you are. I’ve taken the approach that the best chance I’ve got of making this role a success is making the business work from the bottom up, because if I can get all of the things at the bottom right, then the numbers at the top should be right. That’s my theory anyway.
That sounds like the polar opposite of the Kodak managers of old in some ways.
Possibly. Kodak corporate management were always managers and leaders from the start. As far as I know, I’m the only one who started at the bottom. So I’ve been through all the stages of it, and if I cock it up I can drop back through them all.
It sounds like you wouldn’t mind going back to being an engineer again.
No, not at all. But I don’t want to cock this up either.
How long have you been at Kodak then?
If you take into account all the different guises – Kodak, KPG, Creo, Scitex, a little bit of Linotype, a little bit of NexPress – then I think it’s 18 years, with a few detours in between.
Were all the detours within the industry?
Yes, well there was Lüscher – I learned so much in those four years. I worked with Steve Emerson and he was just one of the best guys I’ve ever worked for. I think a lot of the style that I have now, if I’m honest, I copied from Steve.
On the sales side you mean?
No, the management style. Steve was a great believer that you shouldn’t keep a dog and bark yourself. He would empower people and he was prepared to let people make mistakes, which I think is the biggest problem in management today – we’re not prepared to let people make mistakes, so people never learn or do anything new. If you give people the right opportunities, more often than not, it pays off. One thing I’m really proud of, for example, is that every year the chief executive writes a letter to the top 20 or 25 sales people across the globe; it’s very old-school, but it’s nice. We’ve probably got 140 sales guys in Europe, double that and add a bit more for the rest of the world, and out of that lot, seven of my people got thank-you letters. That’s astonishing, and I can’t tell you how proud that makes me. It proves the power of trusting people. Sure people make mistakes, but as long as you support them and they learn from that – it’s all good.
Traditionally, though, corporates aren’t really known for accepting mistakes; surely they’re more likely to want to play the blame game?
It was like that once here, but it isn’t now.
Is that because of what you’ve been through as a business?
Completely. I said to someone recently that I’m effectively running a $100m-plus start-up company. So if I cock it up from here, there’s no one to blame but me. I would never want to go through the Chapter 11 experience again, it was brutal for the people and for the business. But what came out of it was so much better than what went in. All the old notions of how you have to behave and what you can and can’t do go out of the window when you’re in a lifeboat. Instead you just have to focus on doing the right things.
Do you mean that before Chapter 11 the business was too big to change fast enough and just did the same as it always had because that was seen as the safe option?
Correct. And I’m the perfect example of that. My mum always said I was a lucky lad and I honestly don’t think I would be in the position I’m in today without Kodak’s Chapter 11 period. There’s no way that the old Kodak would have promoted a guy that has my accent and my, at times, less than delicate approach – apparently I’m the poster boy for WYSIWYG. Chapter 11 enabled me to shine, because when you’re in that process, people need someone they really want to follow, and for some reason my team really wanted to follow me. When everything’s rosy then it’s easy for people to perform well, but when you’re in a tough spot you need people who are on your side to have any chance of surviving. They don’t have to agree with you – in fact, sometimes it’s better if they don’t – but they have to know that you want the same thing as them.
So that was one of the positives that came out of the process then?
Definitely. Take the guy who is now right at the coalface in the UK: Darren Chard, our UK sales leader. Take any other situation that you want in life – put us in a trench in France in 1916 if you want – I would follow him. Anybody would. That’s the calibre of people that we need now. Chapter 11 does put you through the mill, but you end up with, I think, a better company. Have we made mistakes, yes. We will again, probably – but we’re just going to get better and better.
When you say the business made mistakes, do you mean mistakes that led up to Chapter 11?
Not really. I think anyone in any other business in the same environment as Kodak was in, throwing the same dice, would probably have ended up in the same place. I don’t believe in big government, I believe in little government. Similarly, I believe in little corporate – I believe the best decisions are made as close to the coalface as possible.
I guess that’s helped by the fact that, because of all the cutbacks driven by Chapter 11, Kodak has a much flatter management structure now?
Much, much flatter. We’re at a stage now that if we’re going to do or not do a deal, the decision is almost 100% with me as the UK lead. And because of that you get so much more clarity in the business.
Wasn’t it always like that then?
No. Before Chapter 11 the decisions were nowhere near the local market. The decision on how a deal was structured or priced was made miles away, literally. The old Kodak’s big problem was that while it had the mentality and decision-making process of a massive corporate, towards the end it was no longer a massive corporation, but we still had the legacy of a decision-making process driven by ‘management by committee’.
Presumably there aren’t tiers of management to hide behind if things go wrong nowadays though?
That’s true, but that’s the way it should be. Jo [Francis] wrote a great article about profitability last year; it was about how you have to look at every individual account and drill into it. That’s what we had to do. Every account will have a waterfall P&L that includes the true costs; so we can analyse everything – what customers buy, how they buy it and even how they pay. Don’t misunderstand me, this isn’t draconian, it’s just good business practice and something that we should all do as an industry. It’s not like we’re firing off legal letters every two weeks, we just have visibility in the business. We’ve seen tough times, so we have to be understanding and I don’t think we’ve ever switched anyone off that has come to us with a genuine payment issue. We need to get closer to our customers and this is just one of the ways we do that.
Have you ever ‘switched people off’ because you can’t make money on their account, though? Because we’re hearing the occasional case of customers being priced out of service contracts, for example...
One of the nicknames a service engineer gave me was Attila the Brum, fairly or unfairly depending on your point of view. It’s not as black and white as just switching someone off, but it’s true that on some occasions we have had to go to a customer at renewal and explain that the deal they were on just doesn’t work for us, and in many cases it doesn’t work for them either. We have to be realistic and make sure that we do deals that work for our customers, but that also work for us – because we want and need long-term partnerships with our customers.
Give me an example.
Well, say a customer is buying 105 or 102 plates; that’s brilliant because we make millions of them, so there is an economy of scale. On the other end of the scale you have mini-web sizes that just don’t fit on any sort of ‘Tetris cut’ you can imagine and the volumes, by comparison, are low. Historically, we never looked at each plate in terms of how much it costs to make. Instead we just looked at a square-metre cost and priced on that. Well, that’s like saying that if a Ford Focus costs £10,000, then a Bentley, which is twice the size, should cost £20,000 – it’s nonsense.
Have there been any other positives of this new approach to accounts though?
What I’ve been really pleased with is the turnaround at the NexPress business. Don’t get me wrong, you could double our figures and add a zero on the end and HP and Xerox would probably still laugh, but it’s now stabilised into a very nice business.
How do you mean?
It comes from having honest, two-way conversations with our customers. For example, one of the things we’ve done is said to existing users ‘You know what? That machine isn’t the right machine for you, and it’s not the right machine for us anymore either, so let’s work together to work this out’. With others, we’ve said ‘You know what? That is the right machine, but we structured the deal incorrectly or how you’re using it is wrong. Can we change this? Can we change that?’ Suddenly we’re finding those accounts work for everyone.
Is that because you’re taking a more holistic approach to sales, whereas before a customer was dealing with one rep for plates, one for digital, one for the platesetter?
Absolutely. I’ve just written something that I’ve got to present to Jeff Clarke [Kodak chief executive] at our business leaders meeting in which I’m going to highlight the biggest single success for Kodak in the UK: if a customer wants to talk to us about any product in the portfolio, then they just call their account manager. Of course, on certain products that account manager might have to pull someone in for air cover. But that has been Nirvana for us in the UK.
Is that something that was largely born out of necessity?
There are three reasons: firstly the customer prefers dealing with one person, second the industry can’t afford it any other way – if printers want to go back to £8/m2 for plates and £300,000 for a CTP, then I’ll employ as many salespeople as we had 10 years ago – and the third reason is, yes, Chapter 11. In the old days we not only had a fractured sales force, we had a management structure that was designed to be fractured. Today a customer generally has one point of contact and a key part of that is the whole business now works as one team.
I suppose a crisis always creates the best team...
It really does... although there are less painful ways to do it. But the team I have today was worth all of it. I can’t run a business that is going to produce the numbers that head office wants with 14 sales people [compared with 44 in 2008], it’s impossible. But when you’ve got an engineering staff of 50 or so knocking on customers’ doors – in effect selling – then it is possible.
So has the business completely healed itself in the UK now?
We’re not on the Yellow Brick Road yet, we’ve not finished evolving. There will still be tough choices to make in the future and we will lose some business as well as win some. But we’re headed in the right direction.
Is the UK a growth market then?
It’s definitely a growth business for Kodak. I would go as far as to say it’s a dynamic growth business. Some of the Kodak old guard worry that what digital cameras did to analogue film will happen again, but this time with digital print killing litho and flexo plates. If you look at the whole market, then, yes, volumes are in decline, but it’s a slow, steady decline and almost flat. Equally, the chart for digital goes up by the same rate, so at any point you can balance them out. We’re in the sweet spot now and that’s the end-game, keeping the business in the sweet spot, because if I do that then everyone gets paid.
What is the split within Kodak in the UK then?
Plates are still the lion’s share, 60% is traditional litho, flexo, etc; IPS [inkjet printing systems] is 25%; and NexPress is 15%. If you had asked that question four years ago it would probably have been 80%-85% plates. Our plate peak was 2008, but industry volumes fell dramatically from 2010 – everyone’s did. That had very little to do with digital though. In around 2010, we probably lost a million square meters in plates from companies that just went down, but we managed to get about half of that back by selling CTP in bundles. Since Drupa 2012, though, plate volumes have shelved; it’s not flat, but it’s very nearly flat. As a business we could actually start to see an increase. But if I keep plates flat and grow digital, because NexPress has had a Lazarus-style rebirth with dimensional print and things like that, then I’ll be a happy man.
What about inkjet? The heads seem to be flying, but the Prospers not so much?
It’s not an easy market, because Prosper is a big hungry beast and it only fits a certain type of business. Customers have got to have so much infrastructure in place. DST has, but it wasn’t quite the right machine for Howard Hunt. You’re right about the heads though – the technology, when we put it in other people’s hands, that’s the most exciting part. It gets me back to my engineering roots. It’s like a wood burning stove; it’s fundamentally a very simple process, with someone else doing the complicated stuff of moving the paper. That head technology has opened up so many doors for our customers, you wouldn’t believe it.
But what’s going to be the strategy for Prosper though?
It’s not a case of just being able to sell it to anybody, it can be a £2m box. It has to be right for the customer. We killed ourselves between Ipex 2006 and Ipex 2010 by trying to throw NexPresses to anyone that wanted one. That taught us a valuable lesson and we’re never going to do that again, and certainly not with Prosper. We’re not selling a dream, we have to sell the reality. Selling a dream is why we used to have a NexPress business that was 60 units strong but losing £1m, because we had 20 units making good money for us and the customer, 20 units doing okay and 20 units that were burning all the money the other 40 were making. With a digital product, because you’re fundamentally changing someone’s business, you have to sell the right machine to the right person, it’s a moral duty.
So how do you work out what is the right machine for the right customer?
All the numbers in my head say that if you can get through around 90,000 A3s a month then you can pay for the NexPress, the service and consumables, and make good money. Any more than that and the returns just get better, and we have users doing 250,000 a month making serious money. But we used to have customers that peaked at 35,000 pages; there was no way they could have paid for that and that was our fault for selling it to them. We shouldn’t have done that and it hurt us.
Is that a problem for the business though? Not having an entry-level range?
Well the Canon deal was a mare – it was just badly done really. You could see the logic, and we thought it would work, but it didn’t. If I was going to partner with someone now, then I wouldn’t want to make any money on it. I know that sounds odd, but we should just sell them to make money on say plates, or perhaps as an upgrade path to a NexPress.
But wouldn’t it be easier to sell NexPresses if customers could dip their toe with a ‘lighter’ Kodak machine first?
We can get in the sub £100,000 category with secondhand units, because these are solid machines that last, so there is a used market. Our core business is small printers with two or three [litho] presses, 20 people, probably buying 10,000-20,000m2 of plates a year – we have plenty of big customers too, but that’s our core. One of our worries was that we would kill the golden goose if we put secondhand NexPresses in at our typical customers, because they would be buying fewer plates. What we’re actually finding is that, in almost every case where we’ve put a digital device into one of those mid-sized printers, they’ve increased their plate volumes. I have two theories: one is that they’re increasing their short-run work – and when it comes to plates we love short-run work – second, I think it’s a force multiplier for a value-add service. I never saw that coming. But that’s about as good a win as you can get and we need to exploit that.
Are you trying to run the UK Kodak business as an entrepreneurial business then?
Exactly. We have to. I’m a simple lad; they’ve told me a certain amount of money that I have to make and given me a certain of money that I can spend. If I make more money, I can spend more money, and my best chance to make money is to make things happen. There are only two sets of people that matter to me: the people in this building and the customers outside of it. I’m very protective of the people I want in the business and of the type of customers that we want as a business, because if I lose either, I’m buggered.
Clearly Kodak has changed in recent years; how about the industry at large?
Print’s a manufacturing industry; in many ways it’s no different from any other manufacturing industry in terms of the challenges it faces – it’s tough. Some people will say that it’s going through a massive technological change; well show me an industry that isn’t. Every industry has changed, in fact print has probably changed a hell of lot less in the past few years than some others. It’s still an amazing industry with plenty of opportunities. We should never forget that.
But what are the challenges facing your customers?
They’re the same as the one’s facing us really – simply being in business in the modern age. The average age at Kodak is probably 50, but I need to recruit some graduates and apprentices – I’m 51 and there are only five people in the sales organisation younger than me. We need to change that. The world is going to be driven by Facebook and Twitter; I don’t necessarily mean that business will be done on them, but it will be done by people who operate in that world, and that’s not my world. So I need people around here who live in that world. Kodak used to have a great policy called ‘family members working’ and I want to instill that again, so that we can take on the kids of some of the people that work here. I want people that have worked their way up through the business.
But experience also counts surely?
Of course it does, but that experience needs to be passed on to someone else at some point, otherwise it’s lost. One of the best print businesses I know is Linneys; look at them, look at Miles [Linney, group managing director]. He started at the bottom and there is no business that I have more respect for. You can be old-school, because that’s just good morals and common sense, but you don’t need to be old to be old-school. That said, my wife thinks I was born in the wrong century, but that’s mainly just because I would have really enjoyed fighting the French.
That seems a good place to end…