MGT510 Cultivating Organizational Culture Case Study Analysis ? Evaluate the organizational culture and identify the problem(s). ? Discuss the implications

MGT510 Cultivating Organizational Culture Case Study Analysis ? Evaluate the organizational culture and identify the problem(s).
? Discuss the implications and propose general solutions for the organization.
? Propose specific change management and organizational communications strategies for the organization For the exclusive use of R. Pean, 2019.
9-913-554
MARCH 25, 2013
FRANK V. CESPEDES
LYNDA ST. CLAIR
Robin Ash and Printzhof Press
On March 19, 2011, Robin Ash glanced at her watch, a gift from her parents to celebrate her
promotion two and a half months ago. In January, Ash had been named chief operating officer (COO)
of Philadelphia-based Printzhof Press and a vice president of its New York-based parent, Education
and Entertainment Holdings, Inc. (EEH). Ash had been with EEH eleven years and was a rising star.
On her last assignment, in the entertainment group, she had spent four years reviving and expanding
Print Play, the smallest of the company’s six divisions (see Exhibit 1). Print Play published fiction
books for children in a variety of genres. Prior to Ash’s arrival, Print Play had contributed less than
1% to EEH sales revenue and had been losing money. Under Ash’s leadership, the division broke
even in 2008 and, by 2010, was contributing 6% to EEH sales and 3% net to EBIT.
Ash’s new assignment was a different challenge. Printzhof Press published college-level textbooks
and was the most important division at EEH, accounting for 35% of its 2010 revenues and 43% of its
net earnings before taxes (see Exhibit 1). For decades, authors had vied with one another to be
published by Printzhof. Because only a minority of textbook authors earned substantial royalties
from their books, prestige—rather than personal profit—drove many authors’ preferences, and most
considered Printzhof the most prestigious textbook publisher in the country. But Printzhof had been
slow to respond to changes in the higher education publishing market. In recent years, other
companies had won recognition as “gold standard” publishers. Consolidation in the industry had
created three global powerhouse players: Pearson, Cengage, and McGraw-Hill Education (see
Exhibit 2). The digital revolution was transforming the industry—for example, authors now had the
option of self-publishing materials on the web in open-source formats. In addition, cash-rich
companies with high-tech expertise, such as Apple Computer, were considering entering the market.
Ash’s charge was to reposition Printzhof so it would remain a major player in this complex and
rapidly changing environment.
During her first week on the job in January 2011, Ash invited Paul Davidson, director of product
development; Deseray Matson, director of marketing; and Harry Raines, manager of human
resources, to an informal restaurant lunch. Most of their time was spent on introductions and small
talk. Near the end of the meal, Ash asked Davidson his ideas for enhancing Printzhof’s offerings. He
said, “We’ve got a 163-year track record of success, so, as I see it, since nothing’s broken; there’s no
________________________________________________________________________________________________________________
HBS Senior Lecturer Frank V. Cespedes and writer/researcher Lynda St. Clair, PhD, prepared this case solely as a basis for class discussion and
not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. Although based on real events and
despite occasional references to actual companies, this case is fictitious and any resemblance to actual persons or entities is coincidental. The
authors thank Columbia Business School Professor Todd Jick and Babson College Senior Research Scholar Mary Gentile, whose earlier work
informed the development of this case.
Copyright © 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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913-554 | Robin Ash and Printzhof Press
need to fix anything.” Raines quickly seconded Davidson’s point and told a lengthy story about how
inaccurate predictions about the impact of technology, including the 1970s belief that the world
would soon be working in “paperless offices,”i had resulted in poor long-term planning decisions in
the past. He added, “Printzhof is interested in educational excellence, not passing fads.” When
Matson didn’t say anything, Ash turned to her. “What’s the marketing perspective, Deseray?” After
hesitating a few moments, Matson spoke slowly:
It’s true that some instructors would like to see us expand the supporting materials for our
texts, including multimedia and internet-based supplements. But Harry’s right—Printzhof has
always been the standard bearer for educational excellence. There are real questions about how
well standardized exams like a publisher’s test bank can assess student learning. At Printzhof
we believe that college-level instructors achieve better educational results by relying on their
skills and knowledge, and by designing exams for their students and preparing their own
classroom materials.
The arrival of the check gave Ash a chance to reflect on what had been said without responding.
Although she was anxious to point out all of the challenges facing the company, she decided to drop
the topic until she’d had more time to research the situation at Printzhof.
Two and a half months later, Ash was about to meet with Bob Richards, the executive vice
president (EVP) of the Educational Publishing Division, to outline her priorities and plan. Richards
had been clear about his own perspective: “Printzhof needs to change, and to change quickly, but just
be sure you don’t kill the golden goose while you’re turning it into a swan.”
Printzhof Press: A Family Business (1848–1992)
Eric Nygren, the founder of Printzhof Press, was born in Philadelphia in 1820. At 18, Nygren
moved to New York City and began working for John Wiley, who had continued to expand the
publishing business started by his father, Charles, in 1807. In 1848, after ten years with Wiley, Nygren
returned to Philadelphia to open his own publishing company. Thanks in part to Nygren’s
experience with Wiley, Printzhof Press quickly began to grow, publishing respected books in
philosophy, history, and other areas of the liberal arts. This narrow disciplinary focus minimized
direct competition with Wiley, which published more on scientific, technical, and medical subjects.
As Nygren built his company, he emphasized the importance of treating everyone—employees,
customers, and suppliers—with “decency and respect.” That philosophy and related practices, such
as excellent benefits, an annual summer “Printzhof family” picnic, and monthly birthday celebrations
for employees, were passed down through subsequent generations of Nygrens who led the firm:
Hans, Johan, Leif, and most recently Earnest, who took the helm in 1990 at the age of 50. An avid
sports fan, Earnest enjoyed chatting with employees, whom he referred to as his “family,” and more
often than not, those conversations focused on topics other than the business. Operational issues,
Nygren felt, were best left to employees: “Printzhof people know our business is providing the best
books for the best educators—they don’t need me to tell them how to do their jobs.”
From the company’s founding, the Printzhof vision had been to promote educational excellence.
To achieve this vision, the executives emphasized that Printzhof needed to act as a partner to
academic institutions and instructors, not just as a seller of books. In support of that goal, the
company’s staffing policy was to hire from the best schools, especially the Ivy League colleges that
members of the Nygren family had attended. The business model was built on the idea that longterm relationships were more important than short-term profits. At the company’s 100th anniversary
celebration in 1948, Printzhof officially unveiled its first official mission statement:
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Printzhof Press publishes classic as well as groundbreaking textbooks and research
monographs written by eminent academics and used in elite institutions of higher education to
expand the minds and horizons of society’s future leaders.
Leaders at Printzhof worked hard to keep employee turnover low. Employees, in turn, were
expected to work hard to retain authors and instructors who adopted a Printzhof text. To help build
strong personal relationships, employees were encouraged to send birthday greetings to the authors
that they worked with, a tradition started by Leif Nygren in the 1940s. One consequence of low
turnover was that authors were often able to work through revised editions with the same
developmental editor who helped produce the first edition of their textbooks.
Printzhof’s sales model also differed from that of its competitors. Most higher education
publishers had “sales reps” who called on professor-customers in a wide range of disciplines, seeking
adoption of their textbooks. This one-rep-to-a-school approach saved costs by keeping headcount
down, but sales reps had limited knowledge of the broad array of products they were responsible for
selling.
In contrast, Printzhof sales employees were referred to as “publishing reps” and focused on a
more limited group of related disciplines, mainly in the liberal arts and social sciences, giving their
reps the opportunity to better understand their product offerings. Printzhof’s narrower niche strategy
also relied less on external acquisitions of other publishers and more on internal growth, creating less
turmoil for their publishing reps. This approach increased labor costs but created stronger customer
relationships and better service due to superior product knowledge. Like other publishers, Printzhof
sent its publishing reps to professional conferences related to the disciplines that they covered. Rather
than focusing on selling at these events, Printzhof publishing reps attended professional events to
find out about new trends in research and teaching. In this role, the reps worked closely with
Printzhof’s developmental editors, identifying and often making the initial contact with experts who
could add to Printzhof’s prestigious catalog. When publishing reps were hired, their managers
always told the story of a Printzhof rep who was credited with bringing into the house two young
author-professors who later won Pulitzer Prizes.
For many years this business model produced positive results, as Printzhof’s well-paid
developmental editors forged strong relationships with eminent academics and published firstedition textbooks that became market leaders (with regularly updated editions to follow) in history,
English, psychology, and eventually biology. As a result, Printzhof was well positioned as a top
academic publisher by the 1940s when the industry began to experience significant growth.
Higher Education Publishing After World War II: Changing Markets,
Beliefs, and Expectations
Prior to the 1940s, the market for higher education and thus for textbooks was relatively small. A
college education was generally reserved for individuals (primarily men) who had been born into an
elite, fairly homogeneous social class.ii Publishers tended to focus on the needs and interests of
instructors, who selected the textbooks, and not students, who were required to purchase them.
In 1944, higher education changed dramatically when the U.S. Congress passed the GI Bill, (i.e.,
the Serviceman’s Readjustment Act) which provided free college tuition for military veterans. Eight
million veterans entered the market for higher education.iii The GI Bill also altered broader societal
beliefs about who should be able to obtain a college degree. In 1947, fewer than 2.4 million students
were enrolled in higher education; by 2005, enrollments were nearly 17.5 million and projected to
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reach 22.6 million by 2015.iv A second enrollment surge in the 1970s, following rapid growth in
community college systems,v and resulted in an even more diverse student population.
Beginning in the 1970s, educational publishers faced an additional challenge as new markets
organized for the efficient resale of used textbooks, a business that cut into sales of new books.
Publishers adjusted their strategies to remain profitable and sustain growth. Virtually all, including
Printzhof, began raising prices on a yearly basis. But unlike Printzhof, some publishers published
new editions more frequently, which thwarted the used book market.
The 1970s and 80s also saw a movement among college administrators and faculty to regard
students as “customers.” Hence, educational publishers increasingly sought to provide educational
experiences that suited students’ preferences and expectations. They also conducted market research
with both instructors and students to learn their preferences. One result was the proliferation of
ancillaries—supporting materials like study guides for students and test banks for instructors.
Initially, ancillaries were designed primarily for instructors and typically included an Instructor’s
Manual with teaching guidelines, overhead (and later PowerPoint) slides, and test banks containing
thousands of questions (and answers) that instructors could draw upon to assess students’
recognition, recall, and comprehension of material. Over time, innovations such as videos, interactive
study guides, and computer-graded testing systems were developed. Many instructors valued
ancillaries because they helped busy faculty cope with the increasing demands of their jobs and
helped to increase student satisfaction. Steeped in a culture of colorful, fast-moving video images,
many students were unimpressed by traditional “chalk-talk” lectures and responded positively to
multimedia presentations in the classroom. By the late 1990s, providing students with interactive
Internet-based learning aids and self-testing programs was also important.
Technological advances also led to options that helped publishers to compete against the usedbook market. New techniques in printing and packaging gave rise in the 1980s to custom publishing
programs, which allowed the individual instructor to select a subset of chapters from a book (or from
multiple books) that the publisher produced as a “course-specific” text for student purchase. Because
the total package cost less than a full-size textbook, students responded positively. Because custom
texts were uniquely designed, used-book dealers could not resell them in an efficient manner, and
publishers more than made up for lower per-student revenue by achieving greater sell-through.
Under Leif Nygren, Printzhof did eventually authorize the creation of new textbooks aimed at the
community college segment. Printzhof publishing reps elicited faculty comments about the difficulty
of teaching students who often had not enjoyed the benefits of college prep courses, and they used
this input to encourage authors to develop textbooks better suited for those students. This initiative
was successful in attracting new authors to Printzhof and ultimately increasing penetration in the
growing community college segment. One innovative math program developed in the early 1980s for
underprepared first-year students proved to be especially popular, quickly outselling competitors’
lines and generating more than two decades of dependable income for the firm.
However, Leif Nygren resisted other changes, following the approach taken by his predecessors
and focusing on providing “the materials necessary for an excellent educational experience.” He felt
that some of the “innovations” being offered by other companies hurt, rather than helped, students.
Nygren rejected custom publishing and shorter cycles for new editions, saying: “Our authors tell us
when their books need to be updated, not the calendar,” and “Quality textbooks are integrated
textbooks. It would be an affront to the expertise of authors to excise parts of their book and sell
what’s left over.” Both Deseray Matson, who supported the idea of custom publishing, and Paul
Davidson, who did not, were taken aback by the sharpness of Nygren’s comments; as a leader he
typically expected his managers to work out conflicts without his taking a side. When Matson
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Aug 2019.
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Robin Ash and Printzhof Press | 913-554
worried aloud about student resistance to prices, Nygren said, “A good education delivers greater
value than any other purchase students can make.”
By 1992, two years after Earnest had taken the helm, growth had declined considerably, and the
family decided to sell the company. Earnest Nygren said,
None of my nieces or nephews, most of whom were doctors or attorneys, wanted to enter the
business. And maintaining profitability as we invested in products for new academic
disciplines was stressing us financially. The best of the firms to court us was Education and
Entertainment Holdings. They had access to levels of capital we could not obtain on our own.
The sale to EEH stipulated that Earnest Nygren, 52, who retained an ownership interest, would
continue to run the business as CEO. Because Earnest had no children, there was no discussion at that
time about who would eventually succeed him.
Education and Entertainment Holdings (EEH)
EEH was formed in 1962 as a closely held investment holding company to take advantage of the
rapid growth in the higher education market. EEH initially began by buying up profitable publishers
and letting them operate with limited interference. In 1994, however, two years after acquiring
Printzhof, EEH went public and began to assert more control over its holdings, consolidating several
smaller businesses into centralized divisions. Because of its size and profitability, Printzhof was
allowed at first to operate as its own division with only minimal direction from EEH. By 1996,
however, some leaders at EEH were concerned that Printzhof was not doing enough to keep up with
changes in the higher education marketplace. Although Printzhof was still performing well
financially, there were hints that rougher currents lay ahead. Printzhof experienced more difficulty
signing new authors, causing the number of profitable first editions being introduced to decline from
14% of the “front list” in 1992 to 11% in 1995. Worse, several institutions that had long been
considered “Printzhof schools” had begun switching to other publishers’ textbooks. Feedback from
authors and instructors indicated that a key reason was the lack of strong ancillary packages to
support the texts.
Fearing that their most profitable division might decline further, EEH began to take a more active
interest. Although Earnest Nygren had continued to serve as COO even after becoming CEO, at
EEH’s insistence, in 1996, the COO …
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