Secrets of Berrett-Koehler’s Success

Opening address at “BK Makes the Future” strategic planning event by Steven Piersanti, June 18, 2013

Many thanks to all of you for taking so much time in your busy lives to participate in this event.

We want to recognize all of our participants. To do so, I’m going to ask each of you to stand when I announce a stakeholder group to which you belong. Please stand each time I announce a group to which you belong, even if that means that you stand several times.

1. BK staff
2. BK board of directors
3. BK shareholders
4. BK customers
5. BK authors
6. BK sales partners
7. BK service providers
8. Industry experts who are external to BK (which should be everyone who has not already stood)

Thank you for being here!

I was asked by the planning team to introduce ideas and perspectives that will help ground, inspire, and set the tone for this event. I’ve chosen to organize these ideas and perspectives around 15 “Secrets of Berrett-Koehler’s Success.” To help me do so, I reached out to various BK staff, authors, and other stakeholders for their views. And I received many wonderful responses, some of which I will quote in this presentation.

1. Multiple Stakeholder Focus

This is really the foundational concept of Berrett-Koehler. This concept came before our publishing programs, our mission, our books, everything. It goes back to before Berrett-Koehler existed. Before founding BK, I had been president of Jossey-Bass Publishers during its challenging transition from being an independent company to becoming part of the media empire of Robert Maxwell and being placed as a division of Maxwell Communications Corporation. I quickly discovered that our new corporate parent was calling all the shots, and none of the other Jossey-Bass stakeholders really mattered. Not the Jossey-Bass employees who were central to the company’s success; not the authors with whom Jossey-Bass had longstanding relationships; not the suppliers and service providers on whom the company depended. All that really mattered was the call from my boss in New York City.

What was especially troubling about this new balance of power was that there was nothing our new corporate parent was doing that made Jossey-Bass more productive or profitable. Yet, without adding any value, the corporate parent presumed to unilaterally govern our company. It was easy to see that something was deeply wrong with this equation.

And so, when I created Berrett-Koehler’s founding document, “Vision and Plan for a New Publishing Business,” the starting place for my attempt to “rethink the concept of the publishing company” was what I called “Multiple Stakeholder Focus.” “Five -stakeholder’ groups - authors, employees, suppliers, owners, and communities (customer, societal, and environmental) - contribute to the success of publishing ventures. Each has a -stake’ or investment in the publishing business, whether that investment is time, talent, money, or other resources. . . . Berrett-Koehler believes that more balance and equity is needed in the dealings among the stakeholder groups, so that the employees, authors, suppliers, and communities benefit more from the investment each makes and the value each creates for the publishing business. Berrett-Koehler also believes that the relationship among the stakeholder groups needs to be more of a partnership and more fair, open, humane, ethical, and interactive among all of the groups.”

An early manifestation of this focus was that our very first catalog in May 1992 listed many of our stakeholders by name in the catalog (show catalog). We’ve done this in every catalog since then (show catalog).

2. Stewardship

This has gone hand-in-hand with multiple stakeholder focus from the beginning. We were deeply influenced by the ideas in Peter Block’s book Stewardship, which I started working on with Peter right after I began organizing Berrett-Koehler Publishers. In our first catalog I wrote: “If I were to choose one word to describe our vision, it would be -stewardship.’ By this I mean a deep sense of responsibility to administer the publishing company for the benefit of all of our -stakeholder’ groups.”

Block defines stewardship as “the willingness to be accountable for the well-being of the larger organization by operating in service, rather than in control, of those around us. Stated simply, it is accountability without control or compliance.”

So here was our role as BK managers and employees: to be accountable for serving the interests of all of BK’s stakeholders without needing to do so through control or compliance. Actually, we hope that all BK stakeholders will view themselves as stewards who are accountable for serving the interests of other stakeholders and the whole without needing control or compliance to do so.

3. Community Engagement and Support

A couple of years into my service as president of Jossey-Bass Publishers I got a call from my boss in New York in which he said that there was a corporate-wide workforce reduction going on and all units were required to cut their headcount by 10 percent. Jossey-Bass had 68 employees, and we were instructed to reduce our headcount to 60 employees. This made no rhyme or reason for Jossey-Bass because we were highly successful and growing rapidly; we had just finished a year in which our sales were up 22 percent and our profits were up 46 percent. Moreover, our business plan of adding 8 more employees had already been approved, and now we were told that we had to instead cut 8 employees. This would have required us to lay off 8 employees, which was unjust and unjustified to me, given the circumstances.

Long story short, our management team fought this edict for two months and I refused to carry out the corporate order. On the afternoon of May 29, 1991, I was fired and told to clean out my desk. But the grapevine worked very quickly and the very next day at my home my phone started ringing with calls from Jossey-Bass authors, suppliers, and service providers who expressed their dismay at this chain of events, their belief in my work and stance, their encouragement to start a new publishing company, and their offers of support. These calls continued for many weeks, as one person who had heard the news would tell another person and encourage that person to contact me, and so on. It was through the support and engagement of all these people that Berrett-Koehler Publishers was born. Listed on the screen are some of the many people who became part of our original community in the first few months when Berrett-Koehler was being organized.

Today there are hundreds of ways that BK engages our communities and receives support from our communities. In the interests of time, I’m going to mention just one. BK authors and other community members are an army of scouts out searching for good authors and good book projects for us and recommending to those authors that BK would be the best publisher for their books. They are the most credible and influential scouts we could possibly have because they know so much about their fields and about BK.

Here’s how bestselling author Peter Block describes this engagement: “I have been a constant source of new authors. When someone comes to me about publishing a book, BK is the first place I send them. I do this partly because I know they will be treated with respect, and they will learn something about the market for their ideas. Most people I refer to BK get refused, but in a useful and sensitive way. So this publisher has a low cost feeder network for new properties, the life blood of the business.”

And here’s how bestselling author Richard Leider describes this engagement. “I have proudly referred dozens of would-be authors to BK over the years. So many that they have offered, partly in jest, to print a BK business card for me! Whether an author landed a contract with BK or not, EVERY single one of them thanked me for the care and insights that they received from BK. Now, that’s walking your talk!”

4. Publish Books That Make a Difference

When our Editorial Director, Neal Maillet, applied several years ago to work at Berrett-Koehler, he wrote: “As a business and leadership editor whose titles frequently competed for shelf space with BK, I can only express my deep sense of admiration and, to be honest, envy, for the consistent sense of mission and values that BK titles communicate. BK books are for people who are determined to improve themselves and their organizations - not just to rely on corporatespeak or easy answers. BK titles always present a challenge and an invitation - the challenge to do the hard but rewarding work of making positive change, and the invitation to seek beyond self-gratification to community. . . . More than anything, a BK book isn’t just a product to be sold. It is invariably part of a message that is consistent across the entire organization.”

It may surprise you but publishing books with a difference-making message was not part of the original concept of Berrett-Koehler. The original concept was more mainstream, which I described as “Leading-edge publications that make new contributions to professional audiences.” But this quickly changed. The books we attracted - and the books that most interested us - were books with big, pathbreaking messages about changing individuals, organizations, and the world.

This started with Leadership and the New Science, which was one of the first three books BK published. When a former college advisor of mine sent me Meg Wheatley’s manuscript, I immediately saw that this was different from all the hundreds of books that I had worked on in my previous thirteen-year career as an editor and book marketer. The Library Journal review captured the difference: “Hold onto the top of your head when you read this book. . . Using exciting breakthroughs in biology, chemistry, and especially quantum physics, Wheatley paints a brand-new picture of business management . . . nothing less than an entirely new set of lenses through which to view our organizations.” A newspaper columnist called “The Lazy Literate” expressed the uniqueness of Meg’s work on her next book in a less flattering way: “Yikes! These folks have been eating too many avocados in their hot tubs!” Either way, Leadership and the New Science went on to not only sell nearly 400,000 copies but also to profoundly influence the work of thousands of other book authors, organizational thinkers, and organizational leaders.

In your binders is a list of “20 Ways BK Books Help Create a World That Works for All.” In our 20^th Anniversary Celebration a year ago, I cited, as one example, the case of how a single BK book, Future Search, has made a positive difference for tens of millions of people around the world through the many thousands of future searches in more than 90 countries that have been conducted by the more than 4,000 people who have been trained in the future search methodology.

To give a very current example, the annual meeting this month of the foreign ministers of the thirty-five member countries of the Organization of American States focused on drug problems in North America, Central America, and South America. This meeting was organized around the methodology of Adam Kahane in his new BK book, Transformative Scenario Planning. For the past year the president of Columbia and other country presidents and prime ministers have been working to develop new approaches to drug problems, and they turned to Adam Kahane and his book’s transformative scenario planning methodology to help create and articulate those new approaches.

5. Eat Our Own Cooking

From the beginning, we have been striving to learn from the books we publish and to practice our book’s ideas in our own company and community.

For example, a central concept in Stewardship is to avoid class systems in management, employment, and compensation practices. One manifestation of class systems is that most organizations have two compensation systems, with the executive compensation system designed to pay those at the top as much as possible and the employee compensation system designed to control costs. Inspired by Stewardship, Berrett-Koehler has just one compensation system for everyone in the company, and it is designed to pay a living wage to everyone, to minimize the disparity between the lowest and highest paid employees, and to direct our company success to raising the whole boat. Accordingly, the difference between my salary and the salary of the lowest paid full-time BK employee has always been less than four to one from the beginning of our company until now. And the same benefit programs and incentive compensation programs apply to everyone.

Another example. Anyone who interacts with Berrett-Koehler soon learns that our culture is all about sharing information openly and freely, so that everyone knows everything. We are open source with authors, suppliers, customers, service partners, and even competitors. And I have always perceived my job to be continuously sharing information in many ways with all of our stakeholder groups. But you may not know the source of this culture and practice. It all started with internalizing the ideas in Chapter 6 of Leadership and the New Science, which is called “The Creative Energy of the Universe - Information.” Read that chapter and you’ll see what I mean.

BK has also been influenced by another of the first three books we published: Getting Things Done When You Are Not in Charge. Give up the illusion that you are ever in charge. None of us is ever in control. But we all can get things done when we are not in charge. Of course, this lesson applies to this event. We all can get important things done by acting on ideas that inspire us here even though none of us is in charge of others here.

Finally, here’s an example in the words of our tremendous Director of Subsidiary Rights, Maria Jesus Aguilo: “I was hired as a production and marketing assistant in 1996. At about that time we were publishing Managers As Mentors, so my boss at the time, Pat Anderson, took me aside and told me: I just finished this fantastic book and I really feel like I need to be a good mentor to you. Therefore, I would like us to talk about what it is that you expect from your work here at BK and help you all I can. I told her that I was very happy with my position and learning a lot, but what I would really like to do is rights licensing. A couple of years went by before an opportunity presented itself for me to do rights, but when it did, Pat offered me the position. I learned two things early on in my career at BK: that BK really walks the talk in ways that deeply affect others, and that my managers at BK really listened to my needs and acted upon them. Almost twenty years later, I still derive a lot of inspiration for my work from how the ideas in our books change lives in big and small ways. They changed mine!”

6. Mission: Creating a World That Works for All

For the first eight years of BK’s history we were in search of a way to express our mission. A mission articulates the fundamental purpose of an organization or enterprise, succinctly describing why it exists. We tried many different ways of expressing our mission. Some are shown on the screen. All had good points, but we were not satisfied with any of them. So we made articulating our mission one of the central objectives of our strategic planning process in the year 2000. “Creating a World That Works for All” emerged from that process and has been our mission ever since.

What has happened over the past thirteen years is that “Creating a World That Works for All” has come to be shorthand for everything that BK community members love about Berrett-Koehler. It has come to signify - all wrapped up in one short memorable phrase - our multiple stakeholder focus, books that make a difference, stewardship, partnership, sustainability, and many other dimensions of BK. It has come to have great meaning for many BK community members, who use it frequently in telling others about BK and expressing their own connection to BK. It has also served to communicate to authors and others a BK point of view, and this point of view is one of our major competitive advantages, as book marketing consultant Todd Sattersten recently pointed out to us.

What does this mission mean in terms of seeking changes in the world, selecting publications that advance these changes, and striving to pursue these changes in our own company and community? These questions are addressed in my Fall 2013 catalog letter in your binder.

7. Partnership

Partnership is the way we seek to run Berrett-Koehler and to interact with all of our stakeholder groups - with collaboration, invitation, dialogue, consent, respect, openness, integrity, and mutualism, instead of compulsion, force, violence, or hierarchy.

Partnership is at the heart of the relationship we strive to establish with authors. One manifestation of partnership is our publication agreement, which has many clauses that create a more collaborative relationship between the publisher and authors than is the norm in other companies’ publication agreements.

The fullest manifestation of our partnership with authors is the BK Authors Cooperative, which is a one-of-a-kind organization in the world where authors come together to help each other in many big and small ways to increase their success and impact.

We are now seeking to establish a Berrett-Koehler Foundation that would further extend our partnership approach to helping young leaders around the world put into practice systems-changing ideas and methods that help create a world that works for all. Please see me or Jesse Stoner if you would like to know more about this proposed Foundation.

This partnership approach extends to our relationships with our suppliers, service providers, sales partners, and other stakeholders, as I’ll describe in later examples.

8. Quality and Value Added

All of our systems and approaches are designed to add value and create quality throughout the publishing process. For example, we create high quality in our books by forming longstanding, close, collaborative partnerships with about twenty of the best book production teams around the country, then by sending each new book to the book production team best matched to the unique requirements of that particular book, then by that production team, the author, and the BK staff all working closely together to customize and enhance the book.

Throughout the book publishing world there are constant lamentations about decades of decline in how much editorial guidance and support publishers offer to authors. In contrast, one secret of BK’s success is the extensive editorial guidance and support we provide to authors. We do this in three ways, of which only the third way is common today among other publishers. First, we do a great deal of up-front editorial coaching of authors to improve the core ideas, organization, and framing of books, even before draft manuscripts are written. Second, we send all draft manuscripts to multiple outside reviewers who provide readers’ views of how to improve manuscripts. And third, we arrange top-notch copyediting of manuscripts.

This quality pays off in helping many BK publications to be bestsellers, not just upon publication but for many years following publication. On the screen are the covers of three BK books that have each sold well over one million copies. In each case BK provided editorial guidance that made the book sell far more copies and have greater impact than otherwise would have been the case. For example, my and our manuscript reviewers’ guidance tremendously strengthened John Perkins’ messages in Confessions of an Economic Hit Man, anticipated the major challenges from critics, and helped Perkins add and clarify materials to address the challenges before the book was published.

9. Author-Friendly Practices

When Corporate Responsibility Officer magazine gave Berrett-Koehler its award for “Stakeholder Accountability,” it told the following story in the article announcing the award. “At first, Howard Karger says, he couldn’t figure it out. . . A two-time Senior Fulbright Scholar, Karger is the author of multiple books. In late summer of 2004 he found himself working for the first time with Berrett-Koehler. . . . [He said] -After 25 years of book publishing, I was suspicious. . . I was made to feel like a part of the organization. Almost like staff.’ He grew more wary when the publisher insisted that he travel to San Francisco to meet editorial, marketing, design, and publicity staff. Finally, he realized, -these were people doing what they believed in and producing books they were proud of. Democracy for Berrett-Koehler is not just a slogan.’ [The article concludes] In the rough-and-tumble world of book publishing, Berrett-Koehler stands out not only for its treatment of authors, but also for the manner in which it engages employees, business partners, readers, and community.”

This article is describing one of Berrett-Koehler’s many unique practices: launching each book with a full-day Author Day that connects the author to the whole BK staff, gets everyone excited about the book, and creates close collaboration between the author and publisher on all aspects of making books successful.

On the screen are listed some of our many other author-friendly practices.

10. Integrity and Transparency

These are two elements of partnership. I’ve decided to feature them separately because they pull together so many other dimensions of what makes BK work, as does Jamie and Maren Showkeir’s book Authentic Conversations.

One example of the power of our sharing information openly is our how our partnerships have worked with our two principal book printers, Malloy and Hamilton. There have been times in BK’s history, such as from 2001 to 2003, when we faced severe cash flow shortages and probably could not have kept operating as an independent company without agreement from our printers to extend substantial additional credit to BK even though we were far behind in payments on previous printing jobs. Here is the explanation from Bill Upton, Malloy’s president at the time, for why Malloy continued supporting BK: “One experience that stands out is how open you were with financial information, both current and projected, as you worked with Hamilton and Malloy during the years of loans and past-due payables with us. That openness is what made it possible for both printers to hang in there and continue to support BK.” He continued: “The obvious integrity and commitment of you and the entire staff was a very important factor. We’ve had experiences with other publishers in the past where they expanded their trade credit by working with additional suppliers - our old invoices were left unpaid while the publisher worked with new suppliers on a cash terms basis. We’ve also had publishers simply throw in the towel. Those scenarios were unimaginable with BK.” Fortunately, this trust paid off both for our printers and for BK. For some years BK has been, in Bill Upton’s words, “a model of correct, prompt, complete, problem-free bill paying.”

Our focus on doing what we say we will do, not overpromising, creating systems to fulfill promises, and holding ourselves accountable is especially noteworthy in the area of sales and marketing. Publishers are notorious for making lofty sales and marketing promises in their early discussions with authors and then not fulfilling their promises. Berrett-Koehler has just the opposite approach, which begins with being straight with authors about “The 10 Awful Truths about Book Publishing,” which is one of the documents in your binder that we share with all authors. The rubber really hits the road with the extensive systems that our Sales and Marketing Department has set up (1) to explicitly tell authors all the things we will and will not be doing to market their books, (2) to follow through on everything that we said we would do, and (3) to report back to authors that we have done what we said we would do. Kristen Frantz, in particular, has provided great leadership in setting up and maintaining these systems.

We strive to create systems of integrity and transparency in all areas of the company. For example, our book production systems are set up to enable us to publish books almost always on the schedule laid out at the beginning of the production process.

All of this is extremely challenging in an industry as complex as book publishing. BK Editorial Director Neal Maillet reflects this challenge when he reports, “I once asked the manager of a publisher’s royalty department how she kept track of all the tricky contractual exceptions editors negotiated and was told -We don’t - we just use the boilerplate and apologize profusely when an author or agent catches the mistake.’”

BK’s approach is to only commit to things that we can deliver, to create systems that enable us to actually fulfill our commitments, and to share information with our stakeholders that show how we have performed what we promised to do.

11. Sustainability.

Here I am focusing on two dimensions of sustainability. The first dimension is the thrust of many of our books, such as those pictured here, to establish lifestyles, institutions, economic systems, environmental systems, and other ways of living and interacting that are sustainable for generations going forward. The second dimension is establishing strategies and practices that make Berrett-Koehler Publishers sustainable both in terms of being able to stay in business and in terms of the environmental and social responsibility of our own business practices.

One embodiment of our commitment to sustainability is that Berrett-Koehler is a Certified B Corporation. B Corporations meet rigorous standards of social and environmental performance. To qualify as a B Corp, Berrett-Koehler had to complete and pass a 230-question “Impact Assessment” that examined BK’s performance on measures of corporate accountability, transparency, compensation, benefits, employee training, worker environment, worker ownership, social benefit, community service, local involvement, diversity, job creation, and environmental practices.

12. Multichannel Marketing and Sales

This has been part of BK’s formula from the very beginning. Our June 1991 “Vision and Plan for a New Publishing Business” listed 17 sales and marketing channels for the company. Today we still are active in all of the original 17 channels and have added many other channels, such as online booksellers and social media, that did not exist in 1991. An incomplete list of these channels is on the screen.

Our multichannel approach is good for authors and book sales because it increases each publication’s chance to succeed in the marketplace by giving each publication many diverse channels in which to find a market. For example, some books do poorly in bookstore sales but do well in special sales or foreign language translations.

Of course most publishers market through multiple channels. But most do not market as extensively in as many different channels as does BK.

The downside of BK’s approach is that it is very expensive. Berrett-Koehler devotes over 20 percent of our revenues to sales and marketing, which is far above publishing industry averages.

13. Independence

In an age of corporate consolidation, BK has remained fiercely independent. Berrett-Koehler is owned by our stakeholders, including our employees, authors, customers, suppliers, service providers, and sales partners.

This independence allows us to chart our own course and to not have our unique values and practices submerged in a giant corporate bureaucracy. And it allows us to own our own future and to not be governed by short-term stock market pressures and shifting corporate edicts.

14. Continuity, Constancy, Fidelity

One of BK’s great strengths has been our ability to keep good people and the resulting continuity of our staff. 18 of our 25 employees have been with BK for 5 or more years. And our average staff tenure with BK is 10 years. Love -Em or Lose -Em has not only been a bestselling BK book, it has also been a guide to our company.

Another secret to our success has been the constancy of our purpose, vision, and distinctive practices over many years. Included in your binders is a list of 11 “Guiding Concepts for Berrett-Koehler Publishers” that was written 21 years ago. All of these “Guiding Concepts” are still our touchstones today - such as multiple stakeholder focus and environmental consciousness and action. This constancy increases our ability to move Full Steam Ahead!, as the title of Jesse Stoner and Ken Blanchard’s book proclaims.

When people ask me what about Berrett-Koehler I am most proud about, my answer is our fidelity to our mission and values during the many challenging periods we have had over the years. For example, when the great recession hit in 2008 and 2009, like most publishing companies we experienced a substantial revenue decline. However, we decided to respond to this crisis by doing more of what BK stands for - under the headings of Integrity, Mission and Strategies, Participation, and Efficiency and Effectiveness - rather than compromising our mission and values. Whereas Publishers Weekly reported that approximately two thirds of publishing companies laid off employees and cut back their publishing programs during this period, Berrett-Koehler did neither. Instead, we shared full information with all employees, and the employees collectively decided to take a 10 percent across-the-board salary reduction (except for the lowest-paid employees, who received smaller reductions), which the employees then lifted after revenues recovered. My hope is that our identity as a company and community is so deeply imprinted that it will be our destiny and carry us through the many other challenging periods that are surely yet to come.

15. Continuing Innovation

The previous 14 secrets may make it sound like BK is in good shape. However, it is clear that we cannot stand still. Everything is going through continuous change around us in our business and publishing environments. Unless we are leaders ourselves in making the future, unless we do new and surprising things to leapfrog over obstacles that have constrained us in the past, and unless we continue developing new ways of doing business that bring greater value to our customers and other stakeholders, Berrett-Koehler will not survive over the long term.

Larry Ackerman, author of Identity Is Destiny, recently observed that BK is now 21 years old and that this age can be viewed as having reached “adulthood.” I think that is a good image for where we are now. At 21, it is time to turn more of one’s focus outward to contributing to a larger work and to making a bigger difference in the world through service to others. This can be true of Berrett-Koehler as well and this event can help BK reach out in new and better ways to make a greater positive difference in the world.

As we seek to innovate in new ways, it is my prayer that we will continue to be guided by the secrets named in this address. I believe that there is great power within these ideas and that they will make our innovations better and more likely to succeed. We can do more to create a world that works for all. Thank you.