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Guest lectures 6/11 (Pascale)AFGA
How do you manage company that has to shift from core competence
Start question? Do you know kodak the company? It is a company that
was making cameras but not digital only analogue. Everyone knows
the brand that is the power of the brand
Agfa is European kodak you need to develop and print to get the picture,
the difference with kodak, we never went bankrupt
The power of brand kodak is a little bit stronger than Agfa because not
many people now the brand (is a local Belgium company that has been
existing for more than 160 years)
The founder is lieven geveart is one of the first Belgium Flemish
entrepreneur and developed the company in the 19th century but I can
tell you it’s precense is almost still felt in the company because of the
culture he created
The company has 150 years of success, it was a pride of Europe…, it
was very strong company for 150 years and one day the world change
(started do digitalize and the company business was disrupted)
they needed to reinvent to move forward
First if you start a company you start with core competence why
are you in business, in case of agfa it was a clinical company and
was super good in making films.
Then when you have a technology which is film what do I do whit it,
where does it make sence where does it bring value…, the technology
of film found 3 markets (2 are totally disappeared today, the first is
fotography is first case of bringing photo’s to the public was first that
was developed. X-ray was second market inside image of bones or
structure, also for equipment. The third market was printing (film
printing))
Then it was a business model that was developed if you want to
sell film you need to sell camera’s (so try to associate an equipment and a
consumable (that is the real competence) but the camara is needed to sell
it (look at razor and blades…)
And everything was fine until the beginning of the 2000, you had 3
companies leading the technologies in these areas and than boom
disruption
,The third market it took a bit more time but also X-ray market
went digital so 3 markets 2 disappeared or evolved very much
and the other evolved also
What does it do to a company when such a rapidly disruption
happens a lot of things disappeared (more people retired than in
service). Negative topline for the past 15 years until recently,
negative topline (is where everything starts) it meant for this company to
shrink and shrink
So the challenge how do you reposition the company for growth on the
one hand and you still have legacy activities that you need to manage on
the other hand onbydextras: on the one hand I need to generate growth
on the other hand I still have a huge film factury that I need to manage,
not easy because to very different things
Remember we were a film company
Now if you want to pivot so address and reinvent the company in
the right markets it is one of the most difficult things to do
because when you have 150 years of a company doing this
activity you have perfective the model a congruence model (= you
have a strategy, you have key success factories that are going to make
you win
You build you processes the organization of the company the way it is
managed, you hire the people and you create the cutlture to be winning
and you dob that and spend years to perfect it but if you do something
else this model is not useful anymore
What you can do in order to help you pivot a little faster you can
make acquisitions why because you always need to consider when
you build capability that you believe you need to be succesfull either
you make it or buy it, bt if you make it you run a different kind of
risk so difficult
Netflix in 2008, now they do streaming (are the largest producer of
media content in the world) 15 years ago they were a mailing video
store.
Small developing businesses in a large company does not get the
attention, we try to manage these businesses in the same way
that we are managing the full business but that is a huge mistake
but typically everyone does it
Most important part is that it is about culture and that is also reason why
Netflix is so successful is due to culture they developed, so it is
also a competitive advantage.
,After looking very carefully in company portfolio he found 3 area’s where
you could position yourselve first was business of IT in
healthcare that was totally related to the knowledge of radiology x-ray
market that agfa developed
Secondly was an attempt to develop digital printing which was
developed for a few years a long side to the analog printing and thirdly
there was an R&D project about making a membrane for the
production of green hydrogen
But they were all operating in growing markets, so all these that could
have a potential were losing money because these have terrible flows that
neede to be corrected, agfa is not well positioned in winning in these
markets
He is there as CEO not to provide answers but to help the people
find the answers that they need
He has to take care of talent pool (find the right people)
So first portfolio so he refocused the group he also sold part of group
portfolio and then he had to take care on 3 activities on which he was
going to bet the future of the company (they were in right market but not
with right positioning) so if you zoom in for each businiess you have a
specific strategy you need to implement and here he has 3 promescies
but these businesses were broken (not able to win)
They had a product that was not at the right level (were losing
customers because they were not happy with product) they did
not provide latest technology for the IT healthcare
Digital printing ; (so were to small and were operating in a
segment for which the size was not enough to make money, and
they has developed this business but missed train of the next gen
technology.)
The 2 mean question in terms of portfolio and activity where do you
want to play and can you win? You need to be in place where you
have opportunities in terms of market and growth and you need
to look at who you are to make sure you can effectively win in the
market
What company does if you go to hospital, from moment you take
appointment with radiologist you are in Agfa software then you
capture an image (that is the software) for the radiologist to make his
diagnosis, then image goes to you can be pulled in later stage (the quality
, is critical for diagnosis). We don’t have enough radiologist in the world
but with system you can take image in ghent but read it somewhere else
so can really manage the workload, you can have fast diagnosis and can
process more people (so also about productivity of system)
In digital printing they provide big printers (like 5 meters large) and
mean markets it to create big billboards, promotions… they are providing
a full solution, so they buy the printer and go from their pc to the printer.
Their strategy is to move up in the food chain so they are moving from
industrial size printing to production line
Green hydrogen, climate change everyone knows that very well, we
electrify everything in order to move use of fossil fuels but not
everything is possible you need for this hydrogen will be part
of the replacement of fossil fuels, the main way is to do it from
natural gas. You have wind turbines, photovoltaic in stores that are
feeding green electricity to hydrogen making plant and once you have
that you can use it as replacement for fossil fuels…
You breake water is oxigen and hydrogen but these 2 cannot mic
and therefor you need a separation that is a membrane; is
something we need for dearbonisation in the world. Is a similar process to
make film, they have not yet invented the membrane but captured
the technology bought from another company and they made it
industrial
The past the mature activities, we still sell a lot of these
To secure the right to win
They placed leardership team in the US,… they haved turned around the
business
what really makes the difference is people, talent, he renewed
80% of the first toplines of leadership in the company, bringing
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