Congratulations to All!

I was on vacation when I learned the news that my colleague and friend, Don Linn, was moving on to become the President of the Chicago Distribution Center.  My immediate reaction was very complicated. I wasn’t at all surprised that Don was moving on to another full time position, but I was shocked by his destination. The emotional dimensions were even a bit more complex: saddened, sure, but mostly excited for him, and even more excited for my friends at the CDC and for the university press community that use the CDC’s services.

I am extremely excited that Don has found a position that will challenge and engage him in ways he hasn’t been challenged or engaged in quite a while. Don is a man of many talents, with a wide variety of experiences. Every one of those past experiences will be a great help to him in his new position. In many ways, Firebrand Associates was founded to showcase those talents, and yet, we never really accomplished that goal. So, I am very pleased that Don has found a new venue.

Don takes over a mantel with a formidable legacy. The previous President of the Chicago Distribution Center, Don Collins, was another man with a unique personal style and many talents. Since I have been lucky enough to call both of these gentlemen friends over the years, I’m sure that many in the CDC community will be curious about my opinions, and to them I will say this: after much reflection, I don’t think a better choice could have been made. Don Linn is not Don Collins, and Don Collins is not Don Linn. Their differences are immediately apparent, but they have several attributes in common:

1. they are both enormously caring people; caring for their colleagues, their friends, and the publishing industry.
2. they are both incredibly smart, and have a penchant for understanding bottom line impacts of actions and decisions.
3. both men are “straight shooters”, and are willing to defend their positions even when they may seem controversial.
4. both keep an eye on the future and are generally ahead of most when it comes to understanding the implications of new technologies on publishing.
5. neither man is afraid to get his hands dirty. Sometimes the only way to understand an issue is to dive into the detail.

As should be obvious by now, I have tremendous respect for both Don and Don. As I mentioned before, I believe this to be a “win” for Don Linn, a “win” for the employees and clients of CDC, and a big “win” for the University of Chicago Press.  Kudos to Garrett Kiely for his brilliant choice!

 

What’s a Seller to Do?

While walking the floor at BEA last week and meeting with a number of small to medium-sized publishers (as well as a few larger ones), it became clear to us that the Mergers and Acquisitions market in publishing is about to become active again after a couple of years of relatively light activity. On the potential sellers’ side, many are simply ill-equipped or unwilling to continue dealing with the massive change the industry is undergoing and would like to cash out while they still have an attractive ongoing business. On the buyers’ side valuations of potential acquisition targets, even those with very attractive content have reached levels at which a reasonable ROI is achievable and many of them believe that they can exploit sellers’ content further than the original owners.

Potential sellers often ask us, “If I did want to sell, what should I do to maximize the value of my business?” (because everyone is bashful about saying “I want to sell”). We’ll return to the subject of how to arrive at a company’s value in another post (it’s complicated) but for now, we’ll point out some things business owners can do to prepare for sale if and when they decide it’s time to pull the trigger. Many of them are common sense business practices, but following them can make it much easier for a potential buyer to embrace the company and ultimately to say, “Yes” at an attractive valuation.

An important part of any buyer’s due diligence will be to understand the publisher’s strategy and forecasts. Step one in this understanding is to have Written Strategic Planning Documents, including a 5-year business plan, Annual budgets, Operational goals and objectives, Key success factors (including a SWOT analysis), Organization charts for both personnel and operations.

Second, it’s critical to collect and organize complete and accurate Historical Financial and Operating Information, including Financial statements (audited preferred),  Financial forecasts, Corporate income tax returns (filed on a timely basis), Fixed asset and depreciation schedules, Accounts receivable history and experience, and Inventory analysis and inventory locations.

Third, you’ll need to collect and organize Important Business Contracts and Agreements.  (They are all in writing, aren’t they? If not, fix that now.)  These could include Shareholder agreements, including loans, Bank or other borrowing agreements,  Employee agreements,   Long-term leases, purchasing commitments and customer contracts, Facility/building lease agreements, Licensing, franchise and distribution agreements, Trademark names and patents, Author agreements and any other documents that are critical to the ongoing business.

Fourth, Prepare for the Actual Sale. You’ll need to create a transition plan, thoroughly Understand your business’s value,  Build flexibility in the company to survive if the transaction doesn’t take place, Find qualified partners to do the specialty work (Accounting, Tax, Legal, Sale Representation) so you can focus on the next point.

Finally, Run the Business as if It Were Going to Belong to You Forever. Buyers want to see an active ongoing business so continue to acquire, edit, produce and market normally. Trying to dress up or maximize for the short term before a sale seldom fools buyers.

Owners can increase their business value by developing and implementing an exit strategy. If you have (or might have) an interest in selling your publishing business at any time in the next five years, beginning to get these things in order will help maximize your company’s value in any market conditions.

The New Skills in Publishing?

One of the more interesting sessions coming up at the Firebrand Community Conference in September is going to be a discussion of the new skills required by publishers as the internet converges as both the platform and fulfillment mechanism for books and reading.

There are many aspects to this topic. What new skills does everyone in the organization need to acquire? What skills are required of everyone entering publishing today? Do we need a new vocabulary? Do we need new processes? What things do “digital natives” inherently understand that those of us who came to the business before e-mail arrived don’t quite get?

In this disruptive time, publishers are being asked to fundamentally change the way they produce and market every product. The shift is massive for publishers, moving from where essentially business-to-business companies to business-to-consumer companies, both because they can, and because leaving it to “middle-men” is no longer having the desired effects.

What do you think?  What skills do you think you need to compete in today’s job market? What disciplines and new habits are you currently working on to be the best you can be?

For me personally, there are some old challenges that take on a new twist, and some new challenges that require iterative tweaking. Many of mine are not related to books, but just to the generally escalating speed of communication and the need for immediacy in so many things. Some of the old challenges are:

• Managing my time – I think I’ve been working on this since I entered the workforce many years ago, but now its different. As my roles have changed the demands on my time have increased dramatically. Moving from a “do-er” to a “manager – do-er” to a “manager” causes different time management challenges. Every day there seem to be new tools and software, and retaining a single discipline over a long period of time seems nearly impossible.
• Managing email – I’m one of those people who entered the workforce when email was only a theory on a whiteboard. Now my inbox can carry upwards of 600 messages a day. Learning to triage, and making time to triage is a constant challenge. I highly recommend Inbox Zero as a way to help, but it is still a constant challenge.
• Understanding how and how much to engage in social media and which social media. I’ve been all over the map on this one, and it’s still a constant challenge. I am amazed at how well some people work their social media presence and have used it to elevate their own personal standing, yet it takes a fair amount of time to get it right.

Some of my newer challenges relate to understanding how other people, especially younger ones, naturally think about   things and communicate with each other. Trying to understand and engage in social media is part of this. However, there is also no denying that the traits that were important in the products and services we offer when I was selling them, are different now that median age of the customer we engage has declined.

What are your challenges?

Book Publishers Are Facing Tough Tradeoffs Managing Inventory

I’ve recently worked on inventory projects for book publishers and wanted to share some keyobseravtions that warrant blogging. 

• Success in controlling inventory in book publishing now should be defined as having inventory levels dropping more rapidly than book sales, while still meeting service level targets.  Since print book sales are declining, successfully managing inventory means being able to anticipate/forecast declining patterns, yet still maintain high in-stock rates to maxmize existing demand.   More working capital can then be used to invest in the digital side of the business.
• Decreasing inventory levels  increases the number of transactions (like printings) that are required to resupply inventory.  Obviously, printing for shorter supply timeframes means that you might, for example, print a title twice a year instead of once.  Over a large title base, this can mean a huge percentage increase in reprint transactions that have to be processed.
• Increased numbers of transactions put pressure on staff, processes, and systems for greater efficiency.  Most publishers are very leanly staffed at this point, and may not have the bandwidth to absorb signficantly higher transactions without major problems.  Investment in better processes and/or systems could save publishers from having to make difficult staffing tradeoffs and suffering supply disruptions.
• Based on these observations and assuming continuing declines for print sales, book publishers will increasingly face tough tradeoffs between managing their inventory relative to sales, managing their transaction volumes, and covering staff overhead faced with diminishing print sales. 

It seems counterintuitive during this digital transition away from the primacy of physical books, but book publishers that lack strong inventory systems and/or processes may need to invest soon for improved performance and sustainability.   The risk of inventory ballooning while sales fall is one that can consume working capital and pollute a balance sheet, hampering a  publisher’s flexibility to invest as needed in the digital business.  A reasonable investment in improvements can save a lot of pain in the long term.

Tim Cooper

In Search of Simpler Solutions

We’ve recently been working on consulting assignments involving evaluating vendors and solutions to publishers’ issues. In every case, the publisher is looking to solve or simplify a basic problem without using multiple vendors or software packages and the Requests for Proposals also included a specification for a ‘global solution’. We weren’t looking for a front-to-back publishing system…just a solution for a specific problem.

Know what? Complete single-vendor global solutions for many typical problems don’t exist. You can find all the components, but putting together a complete package (at reasonable pricing and with a good chance of success) typically involves combining pieces from two or more vendors. This raises the price (and the amount of brain damage) significantly. There are exceptions, of course, but if you want, for example, to sort out contracts, royalties, rights and permissions with one vendor you’re, as a practical matter, out of luck.

Now, this is not a reflection on those providing products and services to the industry. They’re smart and hard-working and many of their offerings are first-rate. What it reflects is the speed with which the ground is shifting under the industry’s feet and a notion we have of ourselves that publishing is a snowflake, unlike any other business category.

There’s a big opportunity here to serve small to medium-sized publishers with light, nimble solutions to problems like global digital distribution, workflow management, rights and permissions. We tend to think that each publisher’s issues are unique and require a bespoke solution when in fact if an off-the-shelf product could solve, say, 90% of these kinds of problems, it could be immensely useful and, I’d guess, profitable. Sometimes a Chevrolet works as well as a Bentley. (If you’re interested in an example, have a look at PressBooks [pressbooks.com/about ], which uses the lightweight WordPress platform to produce multiple format outputs…avoiding the conversion process entirely).

I’m not one of those who typically calls for publishing to “think more like Silicon Valley”, but in looking for answers to some of these knotty problems, rapid development of ‘good enough’ solutions would give many publishers a chance to move ahead without taking on major projects and the attendant costs. These aren’t easy problems, but they’re not as complex as we want to believe.

Go for it. There might not be an Easy Button, but there might be some “Easier” Buttons that could be low hanging fruit for vendors.

Note: This post was previously published at http://www.baitnbeer.com by Don Linn.

New Senior Management Skills

Most people in senior management arrive based on some outstanding qualities that elevated them among their peers. It is rightly expected that those qualities will be the cornerstone of how that person will perform in the future.

But, what if the industry pivots on you, and you find that you need to know more about an aspect of your business than you ever thought possible? Very few senior people are secure enough to say, “Help!”. After all, wasn’t it their knowledge and skills that got them there in the first place? Shouldn’t they be omniscient (or at least appear that way to the people who work for them)?

Some will try to “pick it up as they go along”. Others, will quite frankly, fake it. Others still find people in their organizations they trust who can backup their knowledge deficiencies.  But, at some point there is no getting around the fact that you need to at least have a working knowledge in order to get by.

The most common – and commonly accepted skill deficit – is financial acumen. Hence for many years, there have been courses available like “Finance for the non-Financial Manager”. But, in the world of publishing today, there are two areas where many senior managers are lacking, and where significant opportunities abound: technology, and production. In the current publishing evolution, knowledge of these areas of the business is no longer a “nice to have” skill, it is a necessity.

The publishing world is pivoting on technology and production to the point where these areas are no longer just cost centers but the basis from which a publisher can most efficiently position his products in the marketplace. Technology and production are no longer just tools of the publisher, they are (or can be) it’s weapon in the battle for growth and profitability.

As a senior manager, you owe it to yourself and your company to become more knowledgable in these areas. Seek out trusted advisors who can help you get the knowledge you need, and don’t be afraid to ask for clarification or dive into the details.

As you seek your path to understanding, bear in mind the following questions:

1. What are the latest innovations in technology and production for publishers?

2. How can I leverage these in my business?

3. What are the capabilities of my own team, and what new skills do they need?

4. How will utilizing the latest innovation affect the way we bring products to market?

Learning any new skill requires learning the terms, and understanding the concepts. However, as a senior manager, you must also keep your eye on the big picture, and continue to run your business. The ever changing landscape of publishing requires that we all work hard and understand new things. Taking on this task of learning about areas that you never needed to know about will set an example for your entire organization and make you a more respected leader.

The Easy Button

We all want simple.  Sometimes simple is best, but we tend to convince ourselves, even when the data indicate otherwise, that the simplest, most straightforward answers are the correct ones. When we do that, we often find ourselves in a more complicated situation than we might have if we’d done the analysis and hard work first.

I think, in some ways, senior management at many (but by no means all) publishers want an Easy Button to simplify the route from a primarily print to a primarily digital world. It’s a trap, but not because the easy solution to any given problem could be the best. It’s because the inter-relationships of the many functions publishers have performed and will need to perform going forward are of such complexity that optimizing one process can sub-optimize the whole. So the Easy Button, however appealing, is a dangerous thing.

Because of the inter-relationships, I’d argue that structuring  publishing operations going forward is a strategic matter requiring top-down direction and oversight, not a tactical issue to be addressed by individual departments, divisions or imprints. Building from the bottom up risks duplication of effort as well as sub-optimal outcomes for the organization as a whole.

Among the most important items that need thorough review and possible restructuring for an outcome that provides the highest probability of survival and a prosperous future are:

• Clarity on the vision and a coherent strategy for where the organization needs to be and what it wants to do going forward;
• Are the organizational structure and the human resources in place adequate to achieve the vision and goals or is a realignment (not necessarily downsizing) required? As an example, we still see digital groups or departments in some publishing firms, almost assuring a two-track approach to products and marketing that is inherently inefficient and increasingly antiquated;
• Are the acquisition, internal management and output of content efficient and congruent? Could more be done with title management and content management systems?
• Is workflow optimized for content creation in multiple formats? If the organization is not ready or able to adopt a full XML workflow, can it optimize its existing workflow to assure efficient outputs complete with metadata and other discovery tools.
• Are existing supply chain and distribution arrangements adequate for current and future outputs? Does the company have arrangements in place to serve global and increasingly mobile markets?
• Is the rest of the marketing mix (product, pricing, positioning,packaging, etc.) aligned with new realities? Further to organizational structure, is the marketing group integrated into the process from the acquisition of content through sale?
• Finally, is the company’s culture aligned with its vision and strategy? It’s difficult to act in an entrepreneurial and innovative environment with a culture that’s locked into a different view of what a publishing program should be.

None of these matters is easy to address as a stand-alone issue. Integrating the solutions into a coherent whole is even more difficult. Don’t fall into the trap of the quick solution or the Easy Button. Do the hard work now (and get help if you need to). It’ll pay off sooner than you think and the cost of not doing so could be steep.