Thursday, February 10, 2005

Trouble at (Penguin) mill

Publishers Lunch yesterday, and today, draw attention to reports that the head of Penguin Group UK's operations, Anthony Forbes Watson, is 'leaving the company' after fifteen years. You can find the brief Reuters report here. The stated reason for Watson's departure is 'differences on the way forward' for Penguin and Dorling Kindersley.

Hmm. I wonder what 'leaving the company' means? Does it mean that Watson got fed up and resigned, or that he was sacked?

Anyway, before we go any further let me make it clear that I see no cause for rejoicing over any person's career coming unglued. Whether Watson left voluntarily or was booted out, the fact is that things have not gone smoothly at Penguin in the past year, and no one can take any pleasure in that. (Except, possibly, Penguin's competitors; and even they, if they are smart, will realise that there but for the grace of God....)

The chief problem (to bring new readers up to date) is that, in the early part of last year, Penguin opened a brand-new warehouse and distribution centre. It was designed to be a state-of-the-art installation, and would, it was claimed, save them oodles of money. The whole system was, as you would expect, heavily computerised. And unfortunately it turned out that the software didn't work. The result, sadly, was quite a lot of chassis, if I may quote Sean O'Casey.

The failure of the new warehouse system meant that books were not being delivered to booksellers; not, at any rate, until long after they had been ordered, and well after customers had got tired of waiting and had bought something published by a firm other than Penguin.

Writers and agents were severely displeased. The Society of Authors set about trying to negotiate compensation for lost sales. These negotiations failed, by the way.

The estimated loss to Penguin was put at £20m to £30m. Which is a hell of a lot of money, by any standards. Penguin's parent company, Pearson, was forced to announce that annual profits would be at the low end of market expectations because of the warehouse problems and a slowdown in the U.S. consumer book sector. That last bit was, I suspect, strictly a face-saving exercise.

So far as one can tell, the warehouse system still isn't working particularly well. Or let's put it this way: Penguin has not invited journalists to have a look round and marvel at the wonders of science and technology. (Pity about the books, though, isn't it? If only someone could program a computer to write books, so that those damned authors wouldn't keep making a nuisance of themselves.)

This debacle led a number of observers, such as Publishers Lunch and yours truly, to wonder whether, in the course of time, anyone would be held responsible -- because a disaster of major proportions is what it was. And now it seems somebody has. Possibly. Though you would never know from the Penguin press release. The overall Penguin CEO, John Makinson, says of Watson that 'in the face of our distribution difficulties last year, he led the business with distinction and delivered a remarkable publishing performance, which leaves our UK business with a very healthy outlook. Anthony fully deserves the enormous respect that he commands both inside Penguin and throughout our industry and I'd like to thank him for the energy, commitment and achievement that he has brought to Penguin.'

Well, as it happens, I have some sympathy with people who get caught with massive software development schemes that go wrong. About fifteen years ago I had regular dealings with a man who was responsible for a major computer development in the UK national health service. It went wrong, of course -- these things do, more often than not -- and the man in charge was hauled before a House of Commons committee, in the full glare of the television lights, to explain himself. He did not have a happy time.

That experience was sufficient to prove to me that handling these big schemes is no easy matter. In the years since then, of course, there have been umpteen similar cases; see almost any issue of Private Eye for the latest example.

As far as the book world is concerned, ample warning of the possible difficulties was provided by the case of Tiptree. In 1992, Tiptree was declared book distributor of the year, but when they tried to introduce a new and improved warehouse system, everything went pear-shaped. You can read a case history of it all here.

Will the Penguin disaster also be the subject of a full enquiry, the results of which are made fully available to the public? Given the culture of commercial confidentiality, and the desire to bury the past as quickly as possible, I very much doubt it.

Meanwhile, the job formerly done by Anthony Forbes Watson will be taken on by the overall Penguin CEO, John Makinson. He apparently feels that he can do that job, and continue with his present duties, without too much trouble. He intends to announce how he will proceed 'in a few days'.


Anonymous said...

I don't think it's true that the Society of Authors "failed" in their negotiations with Penguin. These are ongoing. My understanding was that the AAA / SoA had an initial meeting with Penguin execs to hear what they intended to do to remedy the situation, & that when royalty statements come in for the period of disruption the legal case for compensation will be examined. It's hard to know who lost out, and how much they lost, until Penguin have accounted.

Anonymous said...

It is likely that despite the failure, penguin maybe on the path to the future, being the first to adopt this approach to systems that will eventually become ubiquitous. Whether we like it or not, methinks.
Sarah -

Brandon Kasahara said...

hehe =)