Archive for the ‘entrepreneurship’ Category
Clayton Childress is an Assistant Professor of Sociology at University of Toronto. While making the case for examining the relationships between fields and reuniting the sociological studies of production and reception, Under the Cover empirically follows a works of fiction from start to finish: all the way from its creation, through its production, selling, and reading.
Three Reasons Independent Bookstores Are Coming Back
A couple weeks ago, Fabio had a post about the recent rise in brick-and-mortar independent bookstores, suggesting that perhaps they have successfully repositioned themselves as “artisanal organizations” that thrive through the specialized curation of their stock, and through providing “authentic,” and maybe even somewhat bespoke, book buying experiences for their customers.
There’s some truth to this, but in my forthcoming book, I spend part of a chapter discussing the other factors. Here’s several of them.
Why the return:
1) The Demise of the Borders Group, and Shifting Opportunity Space in Brick-and-Mortar Bookselling.
This graph from Statista in Fabio’s original post starts in 2009, lopping off decades of retrenchment in the number of American Bookseller Association member stores. Despite the recent uptick, independent bookstores have actually declined by about 50% since their peak. More importantly, it’s worth noting that even in the graph we see independent bookstores mostly holding steady from 2009 to 2010, with their rise starting in 2011. Why does this matter? As Dan Hirschman rightly hypothesizes in the comments section of the original post, the bankruptcy and liquidation of the Borders Group began in February of 2011, and is key to any story about the return of independent bookstores. To put some numbers to it, between 2010 and 2011 the Borders Group closed its remaining 686 stores, and between 2010 and 2016 – after spending decades in decline –651 independent bookstores were opened. It’s a pretty neat story of nearly one-to-one replacement between Borders and independents since 2011.*
Yet, if anything, this isn’t as much a surprising story about the continued prevalence of independent bookstores themselves, but rather, a story about the continued prevalence of paper as a medium through which people like to consume the types of books that are mostly sold in independent bookstores. When Borders liquated people didn’t predict that independents would take their place, but that’s because they had mostly misattributed the bankruptcy of Borders to the rise of eBook technology and Amazon. That story was never quite right, though. Borders last year of turning a profit, 2006, mostly predated these supposed causal factors. Instead, Borders’ rise to prominence came through a competitive advantage in their back-end logistics operations, which they then never really updated, and by the mid-2000s they had turned from a market leader to a market trailer. Borders also invested more floor space in selling CDs right when that market started to decline, and then turned that floor space into the selling of DVDs right when that market started to decline – their stores were always too big, and they seemed to have a preternatural ability to keep on filling them with the wrong things. As for the rise of Amazon and online book sales in the decline of Borders, they did play a role, but not the one that people think. In perhaps one of the least prescient moves in the history of American bookselling, as online bookselling started to take off, Borders decided to not spend resources investing in that market, and instead contracted their online bookselling out to Amazon, helping them on their way to dominance of the market. Oh, you dummies.
So, while it was mostly back-end distribution problems, stores that were too big, and a series of bad bets that tanked Borders, its demise was never really about a lack of demand for print books, which allowed independents to fill that market space after Borders disappeared. For independent used book stores (which have always had as much of a supply problem as a demand problem), advances in back end supply systems have in fact made them more viable.
2) Independent Bookstores are the Favored Trading Partners of the Publishing Industry.
Starting during the Great Depression, in order to keep bookstores in business, book publishers began letting them return any (damaged or undamaged) unsold books, meaning that for nothing more than the cost of freight bookstores could pack books up to the ceiling without taking on much financial risk on stocking decisions (if you’ve ever been curious why so many bookstores seem so overstuffed with product, here’s your answer).
It was the beginning of a long history of cooperation between publishers and sellers, and the cooperation has never been more friendly than it is between publishers and independent stores. Publishers and bookstores want the same thing: for people to go into bookstores looking for the books that are actually in stock. With about 300,000 new industry-published books coming out per year, that’s no small feat. For this reason, cooperation between publishers and independents is key, and they rely on an informal system of gift exchange, the details of which I go into in my book.
With the rise of chain bookstores such as Walden, Crown, Barnes & Noble, and Borders, this cooperation became formalized as “co-op,” a system in which publishers nominate their books, and if they are chosen for co-op by the seller, then pay to have their books placed on front tables and endcaps across the country. The basic shorthand is that it costs a publisher about a dollar per copy to get their book on a front table at Barnes & Noble, which is very roughly the same amount that an author gets paid per copy to write the book in her advance (talk to any publisher for long enough and they’ll grind their teeth while noting this).
From the cooperation system with independents the chains developed “co-op”, but a publisher’s relationship with Amazon is closer to coercion. With the chains, publishers can decide to nominate for “co-op” or not, but as soon as publisher sells a book on Amazon they’ve already entered into an enforced “co-op” agreement, in which usually around 6-8% of all of their revenue from selling on Amazon is then withheld, and must be used to advertise on Amazon for future titles. This tends to gets talked about less as “coercion”, and more as “just the way things are” –it’s what happens when you have a retailer that dominates the space enough to set its own terms.
As a result, while book publishers like independent bookstores because they believe them to be owned and staffed by true book lovers (Jeff Bezos was famously disinterested in books when launching Amazon – books are just fairly durable objects of standard size and shape and therefore ship well, making them a good test market for the early days of ecommerce), they also do everything they can to support independent bookstores because their trading terms with them are most favorable to publishers. In their most extreme forms, we can see publishing professionals collaborate in opening their own independent bookstores, but more generally, they engage in subtler forms of support: getting their big name authors to smaller places, and maybe over-donating a little bit to the true cost of printing flyers, and covering the cost of wine and cheese for when the author gets there. Rather than doing this out of the goodness of their hearts, however, publishers do it because independent bookstores are good for them to have around, as they’re the only booksellers who are too small and diffuse to make publishers do things.
3) A Further Reorientation to Niche Specialization at Independents
Here we get to artisanal organizations, and the independent bookstores that are sticking around (or even more importantly, opening) have mostly given up aspirations of being generalists. In Toronto, we’ve got an independent bookstore which specializes in aviation, another for medieval history, and a third which has found a niche for discount-priced theology.* They’re like the Cascade sour beers to Barnes & Noble’s pilsners. While it’s definitely a trend, it’s not one I’d trace back just to 2010, as instead, the artisanal organization market position is one that independent bookstores have been relying on at least back into the 1980s.
In addition to just being niche, while independent hardware stores and grocers were going the way of the dodo, independent bookstores were also able to both capture and foment the formation of the “buy independent” social movements of the 1990s. It’s not many retail outlets that can successfully advocate for their mere existence as a public good. For instance, when was the last time that the New York Times unironically quoted somebody referring to the closing of an independent laundromat halfway across the country as a civic tragedy? As generalist independent bookstores have come to terms with their inability to compete on breadth with Barnes & Noble and Amazon, we see not only a transition to niche sellers, but also more sellers overall, as each one tends to take up a smaller footprint and have lower overhead costs than the independents of the past.
Of course, while there has been a rise in the number of independent bookstores in the 2010s, we shouldn’t overstate it, or be certain that it will continue. At the end of the day –and nobody likes to admit this –we’re talking about a segment that makes up less than 10% of industry sales and is still way down from its peak. It took one of the two major brick-and-mortar chains going out of business for this return to happen, but if Barnes & Noble goes under, it will upend any balance left between Amazon and everyone else. Yet unlike the industries for music and journalism, a preference for analog books among a major segment of the market doesn’t seem to be going away. Maybe if Barnes goes under we’ll instead be graphing the rise of brick-and-mortar bookstores by Amazon, and romantically pine for the good old days of Barnes as the industry villain.
*If you’re a cynic, or even just a careful optimist, you’re also going to want to factor in the 80 stores Barnes & Noble has closed since 2010. So, since 2010 that’s a loss of 766 big brick-and-mortar bookstores which were selling a lot of books, and a gain of 655 generally much smaller brick-and-mortar bookstores which are generally selling many fewer books. Yet the number of physical books sold hasn’t really declined, and has actually increased for three years running (for reasons that are the subject of another post). In any case, the difference has been made up by Amazon.
**H/T to Christina Hutchinson and Chanmin Park, two undergraduate students in my Culture, Creativity, and Cities course, for these examples. You can see some of their work on bookstores, as well as other students’ great (and in progress!) work from this semester on Toronto martial arts studios, Korean and Indian restaurants, religious centers, food festivals, and so on here.
cfp: “Seeking a More Just and Egalitarian Economy: Realizing the Future via Co-operatives, Communes, and Other Collectives” at SASE in Lyon, France – abstracts due Feb. 17, 2017 (updated)
Joyce Rothschild and I are co-organizing a mini-conference at the Society for the Advancement of Socio-Economics (SASE) in Lyon, France. Please consider submitting an abstract, due to the SASE submission site by Feb. 17, 2017 (updated deadline!). Accepted presenters will need to provide a full paper by June 1, 2017 for discussion. Please circulate to this cfp to interested persons!
Seeking a More Just and Egalitarian Economy: Realizing the Future via Co-operatives, Communes, and Other Collectives
Forty years ago, as the most recent wave of economic collectives and cooperatives emerged, they advocated a model of egalitarian organization so contrary to bureaucracy that they were widely called “alternative institutions” (Rothschild 1979). Today, the practices of cooperative organizations appear in many movement organizations, non-governmental organizations (NGOs), and even “sharing” firms. Cooperative practices are more relevant than ever, especially as recent political changes in the US and Europe threaten to crush rather than cultivate economic opportunities.
Cooperative groups engage in more “just” economic relations, defined as relations that are more equal, communalistic, or mutually supportive. The oldest collectives – utopian communes, worker co-operatives, free schools, and feminist groups – sought authentic relations otherwise suppressed in a hierarchical, capitalist system. Similar practices shape newer forms: co-housing, communities and companies promoting the “sharing economy,” giving circles, self-help groups, and artistic and social movement groups including Burning Man and OCCUPY. While some cooperatives enact transformative values such as ethically responsible consumerism and collective ownership, other groups’ practices reproduce an increasingly stratified society marked by precarity. Submitted papers might analyze the reasons for such differences, or they might examine conditions that encourage the development of more egalitarian forms of organization.
Submitted papers could also cover, but are not limited, to exploring:
- What is the nature of “relational work” (cf. Zelizer 2012) conducted in these groups, and how it differs – or is similar to – from relational work undertaken in conventional capitalist systems?
- How do collectivities that engage in alternative economic relations confront challenges that threaten – or buttress – their existence? These challenges include recruiting and retaining members, making decisions, and managing relations with the state and other organizations. Moreover, how do these groups construct distinct identities and practices, beyond defining what they are not?
- How are various firms attempting to incorporate alternative values without fully applying them? For instance, how are companies that claim to advance the sharing economy – Uber, airbnb, and the like – borrowing the ideology and practices of alternative economic relations for profit rather than authentic empowerment? What are the implications of this co-optation for people, organizations, and society at large?
- How do new organizations, especially high tech firms, address or elide inequality issues? How do organizing practices and values affect recognition and action on such issues?
- What can we learn from 19th century historical examples of communes and cooperatives that can shed insight on their keys to successful operation today? Similarly, how might new cooperatives emerge as egalitarian and collective responses to on-going immigration issues or economic crisis generated by policies favoring the already wealthy?
- Are collectives, cooperatives and/or firms that require creativity, such as artists’ cooperatives or high tech firms, most effective when they are organized along more egalitarian principles? How do aspects of these new modes of economic organization make them more supportive of individual and group creativity?
Graeber, David. 2009. Direct Action: An Ethnography. Oakland, CA: AK Press.
Rothschild, Joyce. 1979. “The Collectivist Organization: An Alternative to Rational-Bureaucratic Models.” American Sociological Review 44(4): 509-527.
Rothschild, Joyce and J. Allen Whitt. 1986. The Cooperative Workplace: Potentials and Dilemmas of Organizational Democracy and Participation. New York: Cambridge University Press.
Zelizer, Vivianna A. 2012. “How I Became a Relational Economic Sociologist and What Does That Mean?” Politics & Society 40(2): 145-174.
Here is info about the mini-conference format:
Each mini-conference will consist of 3 to 6 panels, which will be featured as a separate stream in the program. Each panel will have a discussant, meaning that selected participants must submit a completed paper in advance, by 1 June 2017. Submissions for panels will be open to all scholars on the basis of an extended abstract. If a paper proposal cannot be accommodated within a mini-conference, organizers will forward it to the most appropriate research network as a regular submission.
More info about mini-conferences here.
The 2017 SASE conference in Lyon, France, hosted by the University of Lyon I from 29 June to 1 July 2017, will welcome contributions that explore new forms of economy, their particularities, their impact, their potential development, and their regulation.
More info about the SASE conference theme, a critical perspective on the sharing economy, is available at “What’s Next? Disruptive/Collaborative Economy or Business as Usual?”
Joyce and I look forward to reading your submissions!
Appetite for Innovation: Creativity & Change at elBulli (To be published by Columbia University Press on July 12, 2016)
How is it possible for an organization to systematically enact changes in the larger system of which it is part? Using Ferran Adria’s iconic restaurant “elBulli” as an example of organizational creativity and radical innovation, Appetite for Innovation examines how Adria’s organization was able to systematically produce breakthroughs of knowledge within its field and, ultimately, to stabilize a new genre or paradigm in cuisine – the often called “experimental,” “molecular,” or “techno-emotional” culinary movement.
Recognized as the most influential restaurant in the world, elBulli has been at the forefront of the revolution that has inspired the gastronomic avant-garde worldwide. With a voracious appetite for innovation, year after year, Adrià and his team have broken through with new ingredients, combinations, culinary concepts and techniques that have transformed our way of understanding food and the development of creativity in haute cuisine.
Appetite for Innovation is an organizational study of the system of innovation behind Adrià’s successful organization. It reveals key mechanisms that explain the organization’s ability to continuously devise, implement and legitimate innovative ideas within its field and beyond. Based on exclusive access to meetings, observations, and interviews with renowned professionals of the contemporary gastronomic field, the book reveals how a culture for change was developed within the organization; how new communities were attracted to the organization’s work and helped to perpetuate its practice, and how the organization and its leader’s charisma and reputation were built and maintained over time. The book draws on examples from other fields, including art, science, music, theatre and literature to explore the research’s potential to inform practices of innovation and creativity in multiple kinds of organizations and industries.
The research for Appetite for Innovation was conducted when Adria’s organization was undergoing its most profound transformation, from a restaurant to a research center for innovation, “elBulli foundation”. The book, therefore, takes advantage of this unique moment in time to retrace the story of a restaurant that became a legend and to explore underlying factors that led to its reinvention in 2011 into a seemingly unparalleled organizational model.
Appetite for Innovation is primarily intended to reach and be used by academic and professionals from the fields of innovation and organizations studies. It is also directed towards a non-specialist readership interested in the topics of innovation and creativity in general. In order to engage a wider audience and show the fascinating world of chefs and the inner-workings of high-end restaurants, the book is filled with photographs of dishes, creative processes and team’s dynamics within haute cuisine kitchens and culinary labs. It also includes numerous diagrams and graphs that illustrate the practices enacted by the elBulli organization to sustain innovation, and the networks of relationships that it developed over time. Each chapter opens with an iconic recipe created by elBulli as a way of illustrating the book’s central arguments and key turning points that enable the organization to gain a strategic position within its field and become successful.
To find a detailed description of the book please go to: http://cup.columbia.edu/book/appetite-for-innovation/9780231176781
Also, Forbes.com included Appetite for Innovation in its list of 17 books recommended for “creative leaders” to read this summer: http://www.forbes.com/sites/berlinschoolofcreativeleadership/2016/05/15/17-summer-books-creative-leaders-can-read-at-the-beach/#7ac430985cef
Tucker Max is most well known as a “fratire” writer, but he’s also an law school graduate, investor, and successful business owner. He recently wrote a column for the Observer about his experience as angel investor and his analysis is highly sociological. The basic point is that the VC field is structured by networks. Yes, the next Google or Facebook is out there, but you can only get a chance to invest if you work with one of a very small number firms who get “first dibs” on the start-ups that have a chance at making it big:
The other problem is that there are, at BEST, only a few of these massive home run companies formed each year. You think you can predict, out of the thousands of start-ups launched each year, which ones will be the winners? A lot of people think they can. Almost all are wrong. But here’s the most messed up part: even if you can reliably pick the winners with some degree of certainty, you’re still probably going to lose. Why? Because you probably can’t get into the winners. This is because the best companies (at least in Silicon Valley) tend to get identified early, and as a result, they have a lot of people trying to put money into them. And to even be able to put money in, you have to have a way in, which means one thing: It almost always takes the right social connections to get into very early stage companies. Let me be super clear about this: all the great deals I got into were because of my social network. That’s it. No other reason.
Another great sociological lesson: good ideas don’t make money, good people make money. The problem is that there are very few people who are “good” entrepreneurs that can successfully turn a small start up in a larger firm. Simply put, there are a lot of immature men and women running start ups and many of them are horrible at taking advice. Thus, the angel investor isn’t just working with products, they are working with people who may be unable to take direction:
Most of the founders are young, and young people are inexperienced, which might be great for a lot of reasons (energy, enthusiasm, flexibility, no assumptions), but it almost automatically makes them stupid at entrepreneurship. I was exceptionally stupid when I was young, so I speak from experience here, but without an experiential framework to fall back on, you have no way to understand and solve many of the hundreds of problems that come up when you start a company. The younger you are, the less experience you have, the harder this whole thing is. This doesn’t mean young people can’t excel at entrepreneurship. Yes of course some young people can and do build companies and become amazing CEO’s. Please, do not point to Mark Zuckerberg and Evan Speigel as your rebuttal; they are by definition the exceptions that prove the rule. For every one of them, there are 50 founders who torpedo their previously hot company by making all the standard mistakes of youth. Ask any VC you know to tell you those war stories. They have way more of the bad than the good.
“there’s no rankings problem that money can’t solve” – the tale of how northeastern gamed the college rankings
There’s a September 2014 Boston.com article on Northeastern University and how it broke the top-100 in the US News & World Report of colleges and universities. The summary goes something like this: Northeastern’s former president, Richard Freeland, inherited a school that was a poorly endowed commuter school. In the modern environment, that leads you to a death spiral. A low profile leads to low enrollments, which leads to low income, which leads to an even lower profile.
The solution? Crack the code to the US News college rankings. He hired statisticians to learn the correlations between inputs and rankings. He visited the US News office to see how they built their system and bug them about what he thought was unfair. Then, he “legally” (i.e., he didn’t cheat or lie) did things to boost the rank. For example, he moved Northeastern from commuter to residential school by building more dorms. He also admitted a different profile of student that wouldn’t the depress the mean SAT score and shifted student to programs that were not counted in the US News ranking (e.g., some students are admitted in Spring admissions and do not count in the US News score).
Comments: 1. In a way, this is admirable. If the audience for higher education buys into the rankings and you do what the rankings demand, aren’t you giving people what they want? 2. The quote in the title of the post is from Michael Bastedo, a higher ed guru at Michigan, who is pointing out that rankings essentially reflect money. If you buy fancier professors and better facilities, you get better students. The rank improves. 3. Still, this shows how hard it is to move. A nearly billion dollar drive moves you from a so-so rank of about 150 to a so-so rank of about 100-ish. Enough to be “above” the fold, but not enough to challenge the traditional leaders of higher ed.