Wednesday, October 31, 2012

Welcome to a World of Pain

I feel for the staff of Random House and Penguin, I really do. They are in for a very painful experience over the next few years as the merger of these two large and respected publishers takes place around the globe.

In my experience it is a far better outcome for everyone involved if companies are acquired rather than 'merged'. An acquisition means there is clarity around who is in charge, i.e who sets the agenda and who has to give way; whose policies and processes take precedence; whose jobs will likely go.

A merger means constant, ongoing political infighting at every level over things large and small.

Of course the new management will trumpet the virtues of collaboration, joint decision-making, consensus achieved through committee processes, the adoption of best practice, etc.

But the reality, the lived experience, is one of extreme stress and pain.

In the Penguin/Random case there will be added difficulties. Penguin is a creature of the UK publishing tradition and culture, and Random its mirror image in the US. Although both companies have long been global in reach their deep cultures reflect their countries of origin. It will not be easy to reach consensus on key policies, procedures, structures, reporting lines, responsibilities, etc, let alone sensitive decisions on who goes and who stays, office locations, etc.

Think of the enormous changes that need to be made to reduce costs, eliminate duplication and introduce streamlined systems and processes across the new entity from top to bottom - fundamental things like IT systems, HR policies, editorial/production operations, sales/marketing operations, distribution logistics, trading terms synchronisation, and many others. Agreements on ebook issues - agency, DRM, library supply, etc, will be relatively simple in comparison.

So many senior staff will be spending most of their time in meetings and conference calls 24/7, that is, internal navel-gazing, that the core objective of the business - competing in the fast changing marketplace - will get far too little attention. The whole entity will suffer. This is so predictable and usually beyond the capability of management to prevent.

As well, morale generally hits rock-bottom. The people who win - who survive or get additional responsibilities - are universally the smooth and political, those who can best game the system.

Maybe Rupert was right when he tweeted that this 'faux-merger' will all end badly. I sincerely hope not, but I would be very surprised if it survives beyond the first five years. One or other party will buy out the other, or the whole thing sold.

At least you can be sure that when HarperCollins buys either Simon and Schuster or Macmillan it will be an outright acquisition, and the same with Hachette. Life will be simpler for everybody.