Marty Edelston’s Idea Factory
Only book publishing may have a worse business model than print journalism. It’s been a bad month for newspapers.
* As well as 200 staffers being let go at the Seattle Post-Intelligencer, news of the week included Le Monde in Paris axing 130, and the probable demise of the Journal Register Co. in New Haven, Conn.—which was summarily wiped off the New York Stock Exchange yesterday because of its “abnormally low” stock price.
* Newspaper shares are in the tank. At the end of this story you will find stock charts of the seven largest publishing conglomerates, which are not pretty.
* On March 28, Editor & Publisher reported the “biggest ad revenue plunge in 50 years—off 9.4% over the prior year.”
* Newspaper circulation has fallen an average of 10% in the past four years, with the Los Angeles Times off 20%, and San Francisco Chronicle readership down a gut-wrenching 30%.
* Last week, AngryJournalist.com was launched—a forum for newspaper people to bitch and moan anonymously. If you want a depressing read, plus a good reason never to hire an ex-journalist, start here.
Newspapers in hard copy are becoming vestigial as readers migrate to cable and network TV news, the Web, and BlackBerrydom.
For example, Ed Lind , my carrier, shoves roughly a quarter ton of newsprint annually through my front door slot at 4:30 a.m. every day—three newspapers for which I pay some $700 a year, plus a $100 Xmas tip for Ed, and read roughly 1/1000th of what I receive.
Is your business—or parts of it—becoming vestigial?
If so, what can you do about it?
Allow your people to spend time whining like those on angryjournalist.com, and your company is dead meat.
Instead, try I-Power.
The Chinese Wall
In the world of journalism, a so-called Chinese Wall exists between editorial people and their counterparts in circulation and advertising. For elitist editors and writers, to so much as acknowledge circulation and advertising is to whore—to compromise your journalistic integrity—even though these departments put food on the table and money in the 401(k).
In 1992, when my wife, Peggy, and I took over a seriously faltering Target Marketing magazine, we had two goals in mind: to create content that would help readers make money, and to convince suppliers and vendors that professionals were reading the magazine and that it was well worth the investment in advertising.
The first thing I did as president and editor was to travel the country and attend trade shows, where I talked to potential advertisers to learn about their businesses. After all, these were the folks whose products and services were going to make my readers rich.
An advertiser—or potential advertiser—could not buy a story in our magazine. But if a company had a product or service that was valuable to the readership, I wanted to know about it—and possibly do a story on it—whether or not that company advertised.
To hell with the Chinese Wall, was my outlook. We’re in this business to make money for our readers and ultimately for ourselves; let’s figure out how to do it. In tough times—when you have to save a company—the Chinese Wall artifice is a pile of crap.
Peggy and I saved the magazine.
In 2007, Chicago real estate mogul Sam Zell coughed up $315 million, borrowed $8 billion more, and bought the sinking Tribune Co. With circulation and advertising way off and debt service through the roof, Zell is currently sliding down the razor blade of life.
To try and right his ship, Zell has eliminated hundreds of jobs in newspapers all across the country. Long Island Newsday is about to be put on the block, as is the Chicago Cubs baseball team. In his April 7 story in The New York Times, “Sam Zell: A Tough Guy in a Mean Business,” Richard Pérez-Peña wrote about America’s newest wannabe Charles Foster Kane:
He told reporters in Washington, D.C., that there were far too many of them, and said to employees they should be free to look at explicit Web sites while at work. He has also told journalists that they must be part of the quest for revenue, an unsettling prospect for people in a line of work who have prided themselves on remaining apart from their employers’ business concerns.
Imagine that! Journalists must be part of the quest for revenue!
In 1994, two years after we took over Target Marketing, I wrote a cover story about our Direct Marketer of the Year: Martin Edelston, founder and publisher of the $125 million-a-year Boardroom mini-conglomerate of newsletters and books.
In the course of his life, Marty Edelston held a dozen jobs before becoming a publisher. In his boyhood, he worked on a milk truck and behind a soda fountain. He sold greeting cards door-to-door and, later, behind a counter. He also worked as a swimming instructor and lifeguard, and sold advertising pencils, Yellow Pages advertising and billboard space. After stints selling advertising for Hearst magazines and The Reporter magazine, he went on to become business manager for Norman Podhoretz’s Jewish intellectual monthly, Commentary. In 10 years, Edelston took the circulation from 10,000 to 80,000.
In 1972 he founded Boardroom and various offshoots. For 20 years, Edelston and his editors talked to hundreds of important and successful management consultants, business school professors, Wall Street analysts and business executives as they continually searched for specific advice on how a company could improve productivity, creativity and profitability. He told me:
Then about five years ago, I began to feel uneasy. It was becoming evident that there were major flaws in the ways American managers were handling their businesses. And as a major advice-giver to America’s managers, that meant there were flaws in the advice we were seeking and publishing.
Edelston’s doubts were not only directed at American business, but inwardly to his own business, as well. Once, after a grueling day of working with consultant Peter Drucker, the great business guru asked, “How are the meetings in your company?”
“Pretty bad,” Edelston responded. “But aren’t they bad at all companies?”
Drucker’s reply: “Have everyone who comes to a meeting be prepared to give two ideas for making his or her own department’s work more productive. ... Ideas that will enhance the company as a whole.”
Drucker’s suggestion, which was tossed off almost casually, changed Edelston’s life—and his business. Edelston began calling meetings; instead of asking for two ideas, he asked for three.
I wasn’t prepared for such a flow of ideas. I took detailed notes, lost some right away, and couldn’t remember others. As a result, I wound up awed by the power of ideas but felt guilty, chagrined and embarrassed that I couldn’t make them happen. Ultimately, almost all these initial ideas were lost because we didn’t have a structure and process in place to make sure these things got done.
Drucker’s scheme fell by the wayside. Boardroom was doing extremely well without the ideas.
Then disaster struck. A computer model showed the company was bloated. Without a massive cutback in personnel, the future would be in jeopardy. “After we downsized, I wanted to bind up the wounds,” a chastened Marty Edelston said. “When somebody makes a suggestion, you write down the ideas, and you implement them.”
Over the next two years, Boardroom became an idea factory. The system was institutionalized. The original name, the Continuous Improvement Program—or CIP—was a mouthful. What Edelston had stumbled on was a power program that included:
Ideas – Ingenuity – Invention – Innovation – Intelligence - Imagination - Improvement.
It became I-Power, based on the Japanese system of “Kaizen,” or continuous improvement.
I-Power is an adaptation of the philosophy of W. Edwards Deming, the Bell Labs management genius whom Douglas MacArthur brought to Japan following World War II, and who was, in a large part, responsible for Japan’s massive resurgence as an economic superpower. Each year, Edelston awards more than $100,000 to employees for their ideas.
“I cannot stress enough: In order to foster a flow of ideas, the atmosphere must be totally free of negativity,” Edelston said. “People must feel comfortable about saying things right off the top of their heads, since that’s where some of the best ideas come from.”
A former Boardroom employee said that when she was there, I-Power was somewhat of a nuisance. She took it for granted. But in her new company, she had just as many ideas, but no mechanism is in place to give them a fair hearing or implement them. She was very frustrated.
In the May 26, 2005, issue of Sales Training/Management, Mike Kust wrote:
According to the Delphi Group, a whopping 70% of a company’s knowledge resides solely in employees’ heads. This means knowledge of customers, of the social network of interpersonal internal contacts, of the industry and of processes. It’s know-who. Know-what. And, of course, know-how. And it’s all quite valuable. Some sources say that $6 out of every $7 of market value among S&P 500 companies is accounted for by knowledge assets; intellectual capital typically constitutes 75% of the total balance sheet of companies, and the economic value of knowledge is responsible for 46% of the U.S. gross domestic product.
If you do not have an active I-Power system in place, you are woefully underutilizing your corporate assets.
Incidentally, I-Power spawned a book of the same name, written by Martin Edelston and Marion Buhagiar, which is available in the aftermarket (Amazon.com, Alibris.com, etc.).