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 & … 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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