How Formerly Mighty Publishers Fall, But Sometimes Recover

By Michael Foy, President of Publishing Search Solutions

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As many of you know I’m a big fan of Jim Collins and his studies of how good companies become great, how some can choose greatness, how others weather the test of time etc… I’ve written articles on how these findings apply to Publishing Companies where I distill the lessons down to actionable strategies for our industry in times of change and disruption.

I recently read ‘How the Mighty Fall; And Why Some Companies Never Give In. After collecting and analyzing data over the course of years, a common pattern of decline revealed itself. This pattern can be broken down into five stages but overall the study showed that if a great company grows its revenues faster than it puts the right people in the right seats to sustain that growth it will fall.

For the sake of this article let’s picture a hypothetical Publisher that has experienced the pinnacle of their particular market. With historic and consistent success such a Publisher is vulnerable to the first stage of decline. And that stage is Hubris.

Not too many Publishers would be guilty of Hubris after dealing with recent digital headwinds in their markets. Conversely, those publishers that have dealt successfully with those or other difficulties may be even more vulnerable to this first stage. Hubris is apparent when the feeling that success will be automatic infects the decision makers. They take short cuts without adhering to the principles that allowed the organization to thrive in the first place. This leads directly to the second stage or Overreaching.

Overreaching entails growth into new areas that a Publisher cannot deliver with excellence. It’s described in Jim’s book as the Undisciplined Pursuit of More. It can take the form of an unwise acquisition or risking too much of the company reserves to expand too quickly. Not all acquisitions or expansions are bad, however. It’s just that a Publisher shouldn’t divert so much capital, particularly human capital, from the core business that one damages the original driver of success. Even if that success is being challenged by disruptive technologies one shouldn’t completely abandon the business’ core. Modify it? Yes. But don’t discard it. When Publishers change to meet the demands of the times and they dilute their human capital assets with the wrong agents of change they may feel the need for more discipline, more beauratic procedures. The right people who didn’t require rigid rules to support the Publisher’s goals before then tend to leave. See my article on ‘Do Publishers Have the Right People On The Bus’ for more of who the right people for our industry are.

The third stage is Denial. This occurs once one has started down the road of overreaching and returns on investment prove unpromising. Often due to unsupported faith that everything will work out, a Publisher will put itself at risk by continuing to support a losing venture. Evidence of this stage is when good news is amplified and the negative is discounted. Inevitably, the Publisher’s market share erodes. A typical reaction is to reorganize to no productive purpose.

Grasping for Salvation is the fourth stage. In many ways it’s very similar to stage two. The difference is that by this time in a Publisher’s decline it has realized its missteps. Oftentimes it tries to correct by repeating the overreach mistake with new ill advised ventures as opposed to rational and measured action plans.

The final stage is Capitulation to Irrelevance or Death. Going bankrupt or being bought out are the typical outcomes when poor decisions have depleted cash reserves enough so that an organization’s options have narrowed to an inevitable death.

All very gloomy but the good news is that stage five can be replaced by Recovery and Renewal. It can happen if the decline is recognized in stage one, two or three and even some times in stage four if one still retains enough resources to break the cycle of grasping and instead rebuild one step at a time. As recoveries go, a remarkable one occurred with the giant company Xerox which was losing hundreds of millions of dollars annually. Anne Mulcahy took on the top post when it was deeply mired in stage four. By making hard but sound decisions backed by empirical evidence, instead of grasping at straws, Anne turned the loss of over 350 million dollars in 2000 and 2001 into profits of 1 billion dollars by 2006. And she did it by reinstituting the original Xerox culture and employee model in spite of some very loud voices to blow it up and declare Chapter 11.

Talk about putting the right person in the right seat in the nick of time. But if you’ll recall the Jim Collins’ conclusions in the second paragraph of this article, all of the stages of decline can be avoided if one puts the right people in the right seats to support growth. For any organization, hoping to sustain a successful business model during growth, the process for finding the right people has to be a priority.

Are you familiar with a Publisher that started a decline but turned things around?

 

Do Publishers Have the Right People on the Bus?

By Michael Foy, President of Publishing Search Solutions

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I know from talking to many of my clients that most have read Jim Collins’ book ‘Good to Great’. I have also been inspired by his research into what makes great companies great. Many of you will recall a blog post I wrote on applying the lessons of Jim’s more recent book ‘Great by Choice’ to publishing. Thus inspired I recently read his earlier book ‘Good to Great’ for the first time. In ‘Good to Great’ Jim Collins’ and his research team discovered that the great companies didn’t ask what product or which strategy first. They asked who. Who do we need on our (company) bus for a successful business journey? Company owners Hewlett and Packard, for instance, consciously built their future by hiring outstanding people even before they knew what they’d be making, what direction they’d be driving. Whenever they found these people they hired them even without a specific job in mind. Hewlett Packard became one of the great American success stories and outperformed the stock market by many times. They were one of many cases that emphasized having the right people above all else for an organization to achieve greatness.

So that begs the question who are the right people? More specifically, who are the right people for the publishing industry if it is to thrive in a marketplace disrupted by the digital revolution. I’ve had a lot of conversations of late about what constitutes the right person and have tried to document the most well considered and proven profiles for success.

Several times I’ve heard from hiring managers that someone with a willingness to experiment is important. These days, for marketing programs, that means more than just plying social media. Understanding and employing tools with acronyms like SEO (Search Engine Optimization), SEM (Search Engine Marketing) and PPC (Pay Per Click) are needed to make up a comprehensive strategy to exploit new opportunities in mobile devices and other digital channels.

Thinking quantitatively has been another common theme in conversation. Content specialists that rely on more data as opposed to anecdotal evidence to justify new products are in demand. Not a few people have said that they prefer to recruit outside of the normal publishing talent pool for people who think in numbers. Indeed, I’ve had to expand my reach beyond the industry to identify talent that suits clients’ newest needs. This goes for positions like Technical Project Manager, Software Developer, Digital Product Analyst to name a few.

Given the discoveries in ‘Good to Great’ one can project for publishing that an entrepreneurial mindset with content expertise and digital know how should be the target for recruitment efforts. Easy, right? Not exactly. And not cheap if you’re targeting these people from other industries. But certain publishers have recruited younger prospects with some skills that can be trained up. The new hires enter a publishing industry in the midst of experimenting with new business models so adaptability has to be one of their personal attributes. But they should also be excited at the prospect of re-imagining a venerable industry. Jim Collins posits that when you have these kinds of people the question of motivating and management largely goes away since they are by definition self motivated.

Importing technical skills is essential but I think it’s important to note that the case studies in ‘Good to Great’ showed that technology by itself didn’t drive success. For example, the mandate to put at least one robot on assembly lines at GM failed to staunch the loss of market share to Japanese car makers in the 80s. By contrast the great companies applied carefully selected technology to accelerate their growth strategy already in progress. So even though technical skills are important, core personality traits are even more important according to the research in ‘Good to Great’.

So, if personal attributes combined with creative and digital skills define the right people for publishing, how do we find them? Some have tried an impersonal automated approach to locate these special people. Take a minute for a little thought experiment to see if this approach sounds right in vetting people with the proper personal make up. Some of my hiring clients have definitively said that this method misses some desirable prospects. Some companies do personalize their recruiting by tasking their Executives with it but is this an efficient use of their time and skills? It takes time… lots of time to tap the best prospects. To do it right one has to identify candidates whether or not they’re applying to ads or putting themselves out on job sites. But having the right people for your bus is vital so shouldn’t the method to land them be as thorough and efficient as possible?

Contact Me for questions or comments