Friday, April 10, 2015

204

Reflections After 26 Years (from the New Hire Orientation)

My name is Brad Griffin and as of September 1, 2008, I am retiring from the company.  For over 26 years, I have been fortunate to have worked with some of the greatest pioneers in publishing.  I have known or personally worked with every President of Wadsworth, Thomson, and now Cengage, spanning the 52 year history of the company.  I am pleased to be here today to share that history with you, and to welcome you aboard.

The story begins shortly after WWII. The GI bill made it possible for thousands of veterans to attend college, thereby increasing college enrollments dramatically. Traditional college publishers like Prentice-Hall and Houghton Mifflin were all headquartered in the North East centered around educational institutions in New York and Boston.  Three young editors James F. Leisy, Charles A. Jones, and Richard P. Ettinger, Jr., risked their successful careers to convince Prentice Hall to let them found a competing college publisher on the West Coast of the United States as a division of Prentice-Hall.  How were they able to do that?  Well the “P” in Richard P. Ettinger stood for Prentice as in Prentice-Hall, a company his family founded.  It seems Richard P. Ettinger Sr. was then chairman of the board. His son Dick, as he would later be known, was tired of being called Junior, so he took Daddy’s money and followed Horace Greeley’s advice and went west. After all, there were several great educational institutions in the Bay Area such as Stanford, Cal, and Santa Clara.

Wadsworth Publishing company was founded November 1, 1956, in a tiny office on Market Street in San Francisco but soon moved to the second floor of a rundown, former firehouse on Clay street.  It was a team office, with no walls separating the employees.  There were bare pipes, no hot water, and holes in the floor.  One of the original Clay Streeters was Becky Hayden, who would go on to become an author and editor, as well as one of the first female managers to break into the “good old boys club” that was then publishing.  This was the first of many new ideas that would come out the upstart CA company.  The Clay Streeters quickly became a publishing family.  In fact, editorial retreats, sales meetings and company picnics were held at Dick Ettinger’s house with all of the staff in attendance.  Their principles were to found:

A COMPANY THAT WOULD
  • Give authors individual attention
  • Attack the market more aggressively, and
  • Allow employees to measure success by their own results
They published their first two books in 1958, Process in Writing, and The Elementary Teacher in Action, with the first sale being made to the University of Santa Clara bookstore, who subsequently returned the book.

Undaunted, Wadsworth made plans to expand that required re-location.  Dick was tired of commuting to the city and wanted a location closer to his home in Atherton.  And we all know that executive assistants run the company.  His executive assistant Carol Hagge (to whom the courtyard fountain is dedicated) lived in Belmont and lobbied hard to move closer to her home.  So the CFO at the time, Rud Scholz, who was a trustee at Notre Dame, convinced the church to sell off the hillside above Waterdog Lake. Wadsworth had taken yet another risk and purchased 25 acres of land to create a publisher’s enclave to be christened “Ralston Business Park.” The site was to be managed by Wadsworth with full architectural control over all of the buildings, and housed the Prentice Hall western warehouse at 6 Davis Drive and Wadsworth at 10 Davis Drive. Other successful publishers getting their start here were Ziff Davis at 19 Davis, IAC at One Davis, and many years later, Oracle at 20 Davis. Belmont was a sleepy residential town that was the country home of William Ralston, the SF banking baron.  His home is now on the campus of Notre Dame du Namur University, much the same way that Leland Stanford, the railroad baron, turned his country farm in Palo Alto into Stanford University.  For many years, Wadsworth was Belmont’s largest employer, and the HR director served as the President of the Belmont Chamber of Commerce.

The coincidences don’t end their. 10 Davis Drive was designed by the same architectural firm that designed the Sunset Magazine building and gardens in Menlo Park, in the CA Mission Ranch style that was also popular on college campuses. It was thought that it would make potential authors feel more at ease when they visited for signings. Again, office furnishings were meager. A picnic table and benches served as a shared desk for Finance and Production.  Instead of a receptionist, there was a locked lobby with a phone which visitors could use to call in to the inner sanctum.  Phone lines had to be shared with a light panel on the wall to indicate who had a call waiting.

Wadsworth was still  a small intimate organization in which “people, not numbers, made the difference”.  However, to Prentice-Hall, the division was not an immediate success.  So in 1964, Prentice-Hall spun the division off as it’s own public company, Wadsworth Publishing Company, Inc. where the largest stockholders were the 85 employees themselves. Thus began the period known as “The Public Years”.  The timing could not have been better.  From 1961 to 1970,
  • College enrollments doubled
  • California pioneered the junior college system, expanding educational opportunities, which quickly spread across the nation
  • Paperbacks became increasingly important, allowing new competitors to enter the market at a lower cost hurdle
  • Author advances, grants and royalty guarantees attracted new authorship.  In one classic example, Wadsworth signed a computer science text by a well-respected professor, only to find out that they had actually signed his son who it turned out was a computer wizard on the cutting edge of technology.

This was a decade of organic growth, highlighted by the founding of Brooks/Cole in 1966 by math editors Jack Thornton and Terry Henricks, and the founding of Duxbury Press in 1968 by statistics editors Bob Gormley and Alex Kugashev.  In addition, in 1969 Wadsworth built it’s own warehouse in Salt Lake City closing down 6 Davis Drive. 10 Davis  also continued to grow throughout the 60’s, with additions in 1965 and 1969 that enclosed the original courtyard and added a second story for the first time.  With an expanded employee population, NSMs and editorial retreats were now held in the employee lunchroom with the sales reps indoors and editors sitting outside on the south 40.  There were no homes on the hillsides at the time and the views were stunning. The employee lunch room also doubled as the music room. It held an antique spinet piano that was used for weekly sing-alongs, hootenannies, and the occasional Christmas pageant.  Jim Leisy was an ardent musician and jazz fan, and encouraged everyone to join in on his jam sessions.

By 1970, Wadsworth had surpassed $10M in revenue.

During the 1970’s Wadsworth expanded and grew by focusing their attention on under-served markets. This meant:
  • Re-emphasizing basic textbooks, focusing on large classroom adoption opportunities
  • Developing a vertically integrated publishing program
  • Founding an international division in 1975 that was headquartered in Belmont
  • Founding Wadsworth Publishers of Canada in 1975 by purchasing the Golmet Mine & Trading corporation and changing it’s charter to cover textbooks.
  • And in 1977, founding Lifetime Learning Publications, thus expanding into the Career channel

In 1978, Pearson wanted to enter the U.S. education market by buying Wadsworth.  They were negotiating with Jim Leisy in a conference room at the Holiday Inn in Belmont (now a motel 6). Unbeknownst to them, a holding company called International Thomson was in the conference room next door negotiating with Dick Ettinger, the largest shareholder.  Thomson did not have a contract.  They merely presented a letter to Dick that agreed to whatever contract terms had been negotiated with Jim but at a much higher price.  That sealed the deal and in March 1978, Wadsworth, Inc. became the first U.S. division of International Thomson, a company that was 70% owned by the Canadian Thomson family, with headquarters in London.  Major holdings included Thomson travel, the Sunday London Times, Britannica Airways, Hudson’s Bay department stores, regional newspapers in Canada and the U.K, and most importantly for us, oil well rights to the recently discovered North Seas oil fields that Lord Roy Thomson had been given in exchange for favorable editorials in the Sunday London times.  It was excess cash from the oil fields that was used to purchase Wadsworth. When asked why they purchased Wadsworth, Gordon Brunton said “Oil is a finite resource that will run dry some day.  Education is an infinite resource that will never run dry”.

In the 80’s, the industry faced new challenges, such as:
  • Flat college enrollments
  • Price resistance
  • Increased reliance on used textbooks
  • New competitors
Wadsworth also faced additional challenges being the only U.S. infrastructure for Thomson.  This was compounded by the fact that Thomson tried to restrict senior management to British citizens who had no U.S. operating experience.  While Thomson eventually set up offices at 245 Park St. in New York, they were used to having low overheads where much of the accounting was handled by Canadian or U.K. institutions.  But the contract that they signed with Wadsworth required them to set up a U.S. pension plan and a U.S. profit-sharing plan, along with health benefits for employees.  In addition, they had no experience with multiple state sales, property or income taxes.  As a result, Thomson relocated the HR director from Belmont to NYC to mirror our benefit plans, and relocated our tax manager to establish multi-state tax reporting.  In fact the first Thomson tax conference ever held was at 10 Davis Drive, and the tax agreements that today still govern inter-company transfer pricing, (the basis for international student edition accounting) were developed at 8 Davis Drive (where the Wadsworth International corporation known as WINC had since moved).  Originally these books were known as WISE books which stood for Wadsworth International Student Editions.  In 1984, Belmont developed the cash flow model of financial reporting for Thomson, and saw such programs as the cash lockbox and banking systems, and the U.S. fleet car programs migrated to Thomson. Every one of these programs was still in use when Thomson sold us.

Throughout the 80’s, Thomson was known as “Daddy deep pockets”, providing Wadsworth with the money to grow and acquire new businesses. After paying for Wadsworth to build a state-of-the-art warehouse at 7455 Empire Drive in Florence, KY, Thomson bought Litton Educational Publishers Inc. (a.k.a. LEPI) which had a warehouse three times bigger but much older right down the street at 7625 Empire Drive.  Wadsworth sold off the new warehouse and migrated everything to the ITEPI warehouse, taking over management for Thomson who again had no operational experience.

Back in Belmont, Wadsworth founded an electronic publishing company known as WEPCO, that would become the basis for electronic publishing by Thomson. Other ventures started or purchased by Wadsworth that are still active today included:
  • Schools Not Visited, a tele-partner service started by the executive assistant in her spare time to reach out to remote campuses.  This grew into an entire division that is now housed at the KY service center
  • Anaheim Publishing, a low-priced computer science division whose Shelly-Cashman series is now part of the core products of Course Technology
  • Heinle & Heinle Publishers were acquired along with the Macmillan FL and Harper Collins FL lists, products that formed the basis of today’s Heinle
  • The Newbury House ESL list and the Macmillan ESL list, products that formed the basis of the modern Thomson ELT program
As a result of all of the acquisitions in the 80’s, Wadsworth pioneered the concept of shared service centers.  All accounting, royalties, finance, information technology, sales support, and central marketing groups were managed in Belmont. Management priorities were
  • First, Eliminate whatever doesn’t need to be done so that new ideas have time to be heard, then
  • Automate whatever can be done faster, cheaper, and more accurately, leaving more time for the fun stuff
The 1990’s for the industry were characterized by:
  • The rise of courseware, with an increased emphasis on testing, assessment, and course management systems.
  • Success of internet browsers in expanding personal computers and computer networks on college campuses
  • Introduction of electronic books and readers to the college market
But these were costly and risky investments. As a result, in the 1990’s Thomson began to consolidate their various publishing assets, creating both The Higher Education Group and ITP Inc. This brought together Wadsworth, Course Technology, Delmar, and South-Western, merged our Canadian assets with Nelson Canada, and brought all of their International publishers under one umbrella.  It also saw the start of centralized shared service centers, based on the successful programs that had been put in place in Belmont.  Once again, the Belmont managers became the de facto management team for ITP to develop group-wide systems including the volume scales program and centralized paper purchasing programs, the building blocks upon which GPMS was founded. And now we were taking these programs global, creating mirror images of our infra-structure in Andover-England, Toronto-Canada, Singapore, and Australia.

And in 1995, Thomson gifted us with the West acquisition.  During the 1990’s, and based on it’s success with the Wadsworth acquisition, Thomson had sold off its interests in oil, travel, and newspapers, and had concentrated on buying professional publishers in the legal, scientific, healthcare and financial sectors. Thomson was under-going a major transformation into a global information company who had tried for many years to make West Legal the centerpiece of their legal business.  The college division of West was a secondary consideration that proved a major addition to the higher ed portfolio, bringing us such successful authors as Sizer, Whitney, and Spielvogel.

Throughout the 90’s, management had under-taken several portfolio re-organizations, culminating in the creation of PALMS, the Portfolio Asset List Management System, to qualify and quantify the risk and investment associated with new publications. This was developed and pioneered in Belmont based on the Wadsworth and Brooks/Cole PSR workflow and databases, and would later become the IPS system managed by GPMS. It also led to targeted signings, more focused development, and a reduction in vertical publishing.


The industry in the current decade has been characterized by:
  • Alternate channels of distribution from online retailers and resellers
  • Price resistance from consumers and the government
  • Decrease in perceived value of core text vs. electronic supplements
  • Rise of customization
We have addressed the market through the creation of a value-added custom solutions group, the introduction of specialized sales forces to better match the customer with the right product, menu pricing for product suites, reduced bundling, electronic sampling, and the introduction of iChapters which sent shock waves throughout the industry.

In 2001, now christened as Thomson Learning, we took our biggest risk when we asked Thomson to buy us Harcourt, primarily to expand our offerings in science, economics, business, and English.  In two generations, it would make us the undisputed number two higher education publisher in the U. S., right behind the original company that started it all.  And in order to do this, we had to expand the Belmont campus to include 20 Davis Drive.  The irony of the situation is that Wadsworth had purchased the land to allow for future growth but had been forced to sell it off when Thomson had decided they did not want to be in the real estate market.  So, a developer purchased the land, built the building for Oracle, and over fifteen years later leased the building back to us so we could grow in place.

By now, Thomson needed access to the financial markets to continue to grow. To do that they needed to be listed on the NY Stock Exchange, instead of just London and Toronto, and to do that they needed to put together the story and the requisite infrastructure to demonstrate growth, lower costs, and increased shareholder value.  The emphasis was put on being a global, electronic information provider of workplace solutions.  In 2002, Thomson was listed on the NYSE and programs were put in place to standardize and consolidate infrastructure across all of Thomson.  For examples, since most of their revenues were subscriptions, their income statement did not allow for returns.  And since most of their products were electronic, their balance sheet had no line for inventory. Thomson Learning did not fit their new business model, and the hand-writing was on the wall.

In October, 2006, Thomson announced their intention to sell the various assets of Thomson Learning, with the education companies being the crown jewel. Despite the pending sale, Thomson allowed us to purchase Aplia in March 2007 because it added real value to our portfolio in terms of addressing our response to new technologies and customer solutions. On July 5, 2007, APAX Partners and Omers Capital Partners completed the acquisition of Thomson Learning, and on July 24th we were christened as Cengage Learning, the Center of Engagement.

Wadsworth / Thomson / and now Cengage all share a common belief in the value that people bring to this organization.  This value has been woven into the very fabric of the company and our history.  Wadsworth hired the first female sales reps in the industry, and now more than 50% of our reps and indeed employees are women. Tracy Augustine, Susan Badger, Bebe Pierce, and Kathie Head, are just some of the recent examples of women who have followed Becky Hayden’s lead into management. Diversity has always been a hallmark of our organization. Indeed one of the original Clay Streeters was a gay man from SF.  So in the 1950’s, Wadsworth can say 20% of its work force was gay. This is my way of saying that there are no limits to what you can do and what you can achieve.

I thought I would leave you with a couple of famous quotes from the pioneers of the organization:

Jim Leisy, founder and President of Wadsworth:

“We are convinced that people accomplish most when they care the most”


Dick Harrington, CEO of Thomson:

“People are our greatest asset”


Bob Sass, Vice President of Administration for Wadsworth:

“People wrote our history as they did their jobs”


Howard Hight, Vice President of Sales for Wadsworth:

“Your strength is not in the company.  Your strength is in yourself.  You bring this strength to the company.  The company is you.”



 My association with the company has been a continuous learning process, and a source of great pride and stimulation. I hope yours will be as well.


Brad Griffin
Brad Griffin began in 1982 as the internal auditor for Wadsworth, responsible for real estate, profit-sharing, & pension accounting, including collections for the department coffee fund. He was the custodian for Wadsworth’s first personal computer and the only fax machine, as well as being the first corporate email administrator (mostly because the IT department felt they were only passing fads). In his spare time, he went on to become the Wadsworth domestic Controller, the ITP International Controller, and the Vice President Controller for the Cengage Higher Education Group, where he pioneered shared financial systems and services.  Brad has a BA in Economics from the University of California, Los Angeles, and since retiring in 2009, has been a Mergers & Acquisitions Consultant to the publishing industry. He continues to travel the world extensively and splits his time between Lake Tahoe and Disney World.

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