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Good Company Culture Comes in Small Packages

Common wisdom says that small companies are more nimble, responsive and adaptable than their larger cousins.

My personal experience reflects this. I’ve worked in large organisations — FMCG corporates, international aid organisations and government — and I’ve worked in small ones — private consulting firms and small non-profits. In each case I’ve found that small enterprises outperform large ones when it comes to transformation. Smaller companies are faster to identify industry trends and respond to new business opportunities. They also punch above their weight on some forms of R&D, particularly business process innovation. Put simply, small companies are more fleet of foot.

But why?

We’re seeing a lot of reports come through about how small publishers are responding to trends and opportunities. MediaBistro and The Christian Science Monitor have both reported small publishers are leading the charge when it comes to digitization. In his article, “E-book revolution favors the agile“, Matthew Shaer said:

But it’s not the bigger houses, such as Macmillan or HarperCollins, that are moving the fastest. Instead, some of the most extensive restructuring efforts are being undertaken in the independent publishing world, traditionally a hotbed for innovation and experimentation.

Soft Skull Press, Canongate, Akashic are all good examples. Shaer also points out that publishing is emulating the music industry in this pattern and, I’d wager, other industries as well.

Again, I ask why?

The obvious reasons are the ones people usually point to. Smaller companies are like the canary in the coal mine. They are first to feel the effects of major shifts within an industry and may need to move faster to find solutions. On the other hand, small publishers also have an incentive to exploit technological efficiencies that might even up the playing field against big competitors.

Small size also helps with changing direction. This week Wheatland Press announced it is taking a publishing hiatus in 2009:

What this means is that I will publish no new books during 2009 (including Polyphony 7). I will continue to fill orders on existing titles and will keep those titles available through Amazon and Barnes & Noble.com … I will explore ways to put Wheatland Press on a firmer financial footing including, but not limited to, seeking external funding via arts councils, seeking partnerships with other presses, etc. I hope the break will allow me to return to a regular publishing schedule in 2010.

On one level this could be regarded as just another volley of bad news from a publisher affected by global economic conditions. But it’s worth noting that only a small publisher could make this kind of decision. HarperCollins and Random House can’t make the choice to stop publishing books for a year to sort out their business model and make necessary changes. They can cut costs through staff layoffs and tightening budgets, but their operational overheads are way too large to ever get off the treadmill of publishing hundreds of titles a year.

Underneath it all, though, the one thing that has the biggest impact on a company’s ability to transform is the one thing that almost never gets talked about in the publishing industry: organizational culture. Paul Biba of TeleRead, quoted in the Shaer article, hints at this but doesn’t quite nail it down:

“In general, I’d say the big publishers tend to be really dinosaurs, intrigued by e-books but afraid of them … [Younger readers] have grown up with a whole different way of looking at the world, and I don’t think many publishers understand this. They think people are just sitting down in leather chairs and reading hardcopy books.”

I’m not sure this is a fair characterization of publisher attitudes today, but I do think it alludes to a bigger problem that is stopping large publishers from embracing new opportunities.

Big trade publishers are fighting a losing battle against their own organizational cultures. The history of business is littered with examples of companies that couldn’t transition from one paradigm to the next, not because they couldn’t see the necessity, but because they couldn’t undertake the necessary internal change.

The larger a company is, the harder organisational change is to effect. The big trade publishers are now subsidiaries of the largest media companies in the world with thousands of employees, hundreds of offices and decades of crusted-on beliefs, traditions and systems. Small teams, by virtue of scale, can change their organisational culture quickly, sometimes through shifts in personnel, other times by the sheer force of personality from a charismatic leader. In any case, smaller teams tend to adopt a tenacious, can-do, try-anything culture because they have to.

Organisational culture is the bedrock of performance. This, more than any problem of physical infrastructure or technical or financial systems, makes big publishers slow to adapt. Too slow, I fear, to survive the speed of change within the cultural and economic ecology of which they are a part.

New experiments are popping up, such as HarperStudio, which could be the exception that proves the rule. Only by hiving itself off as a separate, entrepreneurial unit within HarperCollins, with its own small-team culture, has HarperStudio been able to achieve the clear-eyed perspective and momentum to try really different and new ways of publishing.

Paul Biba may have called it right by using the word “dinosaur.” After all, it was the small dinosaurs, with modern-day descendants still thriving, who made the successful adaptation that evolution requires. The big guys fell hard and fast and it’s increasingly rare to find any evidence of their impact on us at all.

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  • bowerbird

    surely it’s not the first time you’ve heard the word “dinosaur”
    used to describe our corporate content overlords. or is it?

    -bowerbird

  • http://www.munseys.com dmoynihan

    Umm, I understand that you only get away with charging $1,500 a head every couple of weeks by peddling jargon to the uninformed, but if you’re going to use “nimble” to describe small publishers who quickly embrace ebooks, you might want to, err, find small publishers who have actually embraced ebooks.

    Johnny Temple is a great guy; he fights for his authors and promotes them tirelessly. He’ll even cut you a deal on his latest noir anthology if you say hi at the show. He has not yet made a single download available for sale. Richard Nash did a few a few years ago. He “will” be offering them in bulk soon.

    They were not “wrong” to wait. The market for literary fiction wasn’t really there, and of course the early days of epublishing saw a lot of conversion houses jacking up the costs of entry while offering little of substance to their clients (unlike now, when… well… there are more conversion houses, so they can’t all suck as badly).

    With some notable exceptions, particularly in romance and, err, smut, it’s been the big guys who were first on the scene with ebooks. You really don’t have to convince anyone at HarperCollins or Hachette that they need to offer their content digitally.

    You just have to convince them that your own company isn’t completely incompetent.

  • http://electricalphabet.wordpress.com Kate Eltham

    Hi David, I don’t work for O’Reilly Media so any suggestion of incompetence should fall on me personally.

    I wasn’t really focusing only on e-books in my argument, although I may have misled by referring to the title of Matthew Shaer’s article. I mentioned Soft Skull and Akashic in this context because they are emphasised in Shaer’s article as having imminent and extensive digital plans. You’re absolutely right, of course, so do large publishers.

    The main point I was driving at was that the organisational culture of small companies better equips them to embrace change and opportunity, in whatever form that comes. For additional examples, how about Book Glutton and Smashwords and your own Munseys?

    On your point that it’s the big guys who were first on the scene with e-books, it’s worth noting that Baen Books is not a large publisher nor does it specialise in smut or romance and yet has been digitising its entire list and offering it for free for nearly a decade and was into the space a lot earlier than nearly all the major publishers.

    Best wishes,
    Kate.

  • bowerbird

    kate-

    you confuse the issue with big/small.

    even “nimble” and “responsive” and
    “fleet of foot” are slightly off-kilter.

    it boils down to what’s in the d.n.a.

    and the d.n.a. of the corporations is
    tightly wedded to the idea of scarcity,
    an operational concept that loses all of
    its meaning when it comes face-to-face
    with unit costs which approach zero with
    cyberspace reproduction and distribution.
    in a phrase, corporations can’t give it away;
    pure and simple, it goes against their d.n.a.

    dinosaurs don’t become mammals
    just by “downsizing” themselves,
    so that — alone — won’t save ‘em.

    not unless they learn to fly as well.

    -bowerbird

    p.s. and just to drive the point home completely,
    consider the fact that google — who _does_ know
    how to make money by giving something away –
    has grown into one of the biggest mammals around.

  • http://electricalphabet.wordpress.com Kate Eltham

    Hi bowerbird, the debate about giving away content for free wasn’t part of my argument (although, as an aside, I think there are smart ways publishers of all sizes could embrace this and Baen is one example)

    On the issue of dna, I think you and I are probably saying the same thing. Where you say dna, I say organisational culture, and you’re right, the answer isn’t about large publishers downsizing. I was simply arguing that organisational culture is the biggest factor differentiating companies that are able to adapt to a fast-changing environment and those that aren’t. In the main, I believe the kind of culture needed to adapt successfully can be found more often in small companies rather than large.

    Of course there are as many small companies that are stuck in the dark ages as there are large companies that can adapt quickly. But where an organisation needs to change its organisational culture to meet new threats/opportunities, I think small firms have a natural advantage.

    So, your extension of the metaphor – dinosaurs learning (or in this case, evolving) to fly, is exactly right.

  • bowerbird

    kate-

    i agree that you have it right with “organizational culture”.
    rather than “big/small”, however, i’d focus on “old/new”…

    and i’m not sure i agree with david that some of the big
    (and old) corporate publishers were “first on the scene”.
    i never saw anything like the right level of commitment.

    and at this late post-napster date, everyone is now tardy.

    -bowerbird

  • http://gingatao.com Paul

    So by this smaller equals more adaptable logic, the best placed people to take advantage of change would independent or self-publishers. One person organisations with all the tools freely available on the net and zero overheads.

  • bowerbird

    one tiny correction, paul: the overhead isn’t totally zero.
    (overhead never is, by definition.) but it’s close to zero…

    and paul, other than _that_,
    you have the idea down pat! :+)

    you’re still having some trouble with terminology, though…

    we don’t call them “one-person organizations”, fortunately,
    because i’m not sure if that makes ‘em sound like a big deal
    (the “organization” part), or a little deal (the “one-person”)…

    and i’m confused: what does “an independent publisher”
    have to sell? or to trade? or to offer as a gift to people?

    and we don’t call them “self-publishers” any more either,
    because if you name it with a fancy word like “publishing”
    when you have just basically put a file up on the web and
    told people that they can have lulu.com print it for them,
    it sounds like you’re trying to sound bigger than you are.

    publishers were big companies with big production budgets
    and they owned big real estate on which stood big buildings
    which housed big printing machinery that did big print runs
    that then got loaded from big loading docks into big trucks
    which hauled them big distances to store in big warehouses,
    until big marketing campaigns moved ‘em to big bookstores,
    where ordinary people paid big prices to take the books home.

    you ain’t a “publisher”. you’re a writer sitting at a computer.

    and if you try to lord it over your fans, well,
    um, they probably won’t gift you with cash,
    even if you did gift them with your book first.

    it’s far better to return their love with humility and grace.

    so we’ll just call him “an author”. or we’ll say that she is
    “a writer with a very large readership which supports her
    enough that she makes a good living off what she does”.

    henry rollins used to say “don’t call me a poet, call me
    a jerk that writes well.” and that about says it all, eh?

    yeah, right, like i’m gonna let henry have the last word…

    _____it’s not what you call yourself…
    _____what matters is how many people
    _____come when they hear you call…

    -bowerbird

    p.s. the next step in the evolution of the artist
    is to _stop_caring_ how many people “love” you,
    so you can get on to the more important act of
    saying the things that need to be said whether
    people might be inclined to hear them or not…
    but don’t worry if you can’t do it. most can’t…