Harrison-Keyes

Problem Solution: Harrison-Keyes Inc.

Since 1990, America’s major book chains--Barnes & Noble, Borders, and Books-A-Million--have opened about 700 new stores. As of September, 1997, Books-A-Million had 93 stores nationwide, Borders had 180, and Barnes & Noble (whose public relations department proudly states that "a new Barnes & Noble superstore opens every 4 1/2 days") had 440 stores.

The sheer number of superstores in operation today has given these three corporations an inordinate share of the book retail market. While in 1972 independent bookstores controlled 84 percent of the market, by 1983, shortly after chain bookstores first began expanding, that share had dropped to 71 percent. By 1994, the market share of independent bookstores had fallen to 41 percent. Today, independent market share stands at 25 percent, leaving only a few corporations in control of 75 percent of the book retail market. Market studies indicate that this trend will continue in the future. In 1996 alone, as the independents’ market share continued to plummet, sales at book superstores rose 36 percent, to $3.27 billion. It is not hard to foresee a day when independent bookstores have only a negligible presence in the book retail market. (Kornhaber, 2004, p.2)

What this means for writers and publishers is simple. As late as 1983, publishers could get away with selling most of their books to independent stores and still turn a high profit. In other words, they could get away with publishing new and innovative fiction by relatively unknown authors because there were stores willing to buy it. Today, though, it is impossible to survive as a publisher without selling most of your books to chain bookstores. If those chain bookstores aren’t interested in buying new, experimental authors, then publishers can’t afford to publish their books. The reasons for the ascendancy of book superstores are manifold. One of the main factors involves the prices at which these superstores can afford to sell their products. Run by corporations worth billions of dollars, stores like Barnes & Noble can offer discounts that independent stores, with their limited budgets and assets, could never hope to match.

Over a century old, Harrison-Keyes was founded in 1899 and made its early money publishing the works of literary giants. In recent years, the Company has suffered the woes plaguing the entire industry. As competition from low-cost retailers eats into profits, publishing companies are finding success -- or even survival -- a challenge. In an effort to revitalize the company, the Harrison-Keyes Board of Directors recently hired a new CEO.

Describe the Situation

Issue and Opportunity Identification

What exactly is the problem with chain bookstores? They’ve probably increased the total number of bookstores in the US, and they seem to offer a wide variety of books. What is important to publishers, though, is not the number of bookstores in the country, but the number of book buyers. Every independent bookstore in America has a person or group of people in charge of deciding which books to order from publishing companies. Thus, if there are 500 independent bookstores, there are 500 autonomous buyers placing orders, and publishers can sell them a wide variety of books because they all have different tastes. Corporate bookstores, however, only have one or two book buyers for the entire chain. So although there are 400+ Barnes & Noble stores in the country, there are only one or two people deciding what is being sold in all of them. In fact, the chain bookstores that control 75 percent of the book market have a total of only five buyers deciding which books are being sold. So while the total number of bookstores may have increased, the number of potential customers for publishers has decreased.

Clearly, if the decline of independent bookstores continues and America is left with only five wholesale buyers in the future, those buyers will have an enormous say as to what types of books get published. The threat to new authors--especially those in respected but non-lucrative genres like literary fiction--is obvious. If they wish to get published in the future, writers will have to tailor their work to the demands of corporate buyers.

Harrison-Keyes’ endeavor to improve organizational function and product offerings can be seen in the new e-book publishing project. Consequently, their attempts to maintain external competitive positioning is jeopardized by internal team disarray. In fact, a thorough investigation of current issues adversely affecting successful project implementation yields blurred vision and severe disconnect.

Taken as a whole, profitability is not the only issue frustrating Harrison-Keyes. For the organization to rebound as the frontrunner in the publishing industry, it is strongly recommended that as they move further into this new project, they restructure internal teams in a way that each member is inclined to play to one another’s strengths. This is solely accomplished by creating a shared vision through team development.

Globalization and instant access to products, services and information have changed the way customers conduct business. Most companies attempt to delight customers by relentlessly looking for new ways to exceed their expectations. So is the case with Harrison Keyes. As a leading publishing company, they have been in business several years and have obviously been successful at remaining a contender in the market. When GE decided to improve competitive positioning, they implemented Six Sigma as a part of their corporate culture.

General Electric began moving towards a focus on quality in the late '80s. Work-OutÐ'®, the start of GE’s journey, defined how they behaved and opened its culture to ideas from everyone, everywhere. Work Out Ð'® also decimated the bureaucracy and made boundary-less behavior a reflexive, natural part of GE’s culture; thereby, creating the learning environment that led to Six Sigma. According to the Chartered Quality Institute’s website, today, Six Sigma is defining how GE works and has set the stage for making customers appreciate Six Sigma. Harrison-Keyes can implement a similar program to create structure for the e-publishing initiative. The program will help to reduce mistakes and move the project forward in a timely manner. (2)

When former CEO, Jack Welch communicated his intention for GE to become Six Sigma certified in 1995, GE Appliances nominated a team of full-time Master Black Belts to lead the process of change. Of the initial team

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