Tuesday, March 27, 2012

Prevent the stonewalling librarian from becoming the stone anchor on your library


(c) iStockPhoto


We all know we're facing an ever-increasing pace of change today in life and certainly in libraries.  Library managers are grappling with how to handle these changes while at the same time, trying to instill in their staff the skills, training and confidence to handle new ideas and the related processes and workflows associated with them.

Change management, the process by which managers are taught to cope with this topic, is filled with case studies of the typical problems and methods for resolving them.  Yet, when you consider the amount of change being undertaken in libraries today and the fact that some efforts seem plagued by extreme difficulty while some run smoothly, it seems apparent the techniques are either not well defined or not very easily implemented.  Usually, implementation problems aren’t because of flawed processes or procedures, both of which are easily changed, but rather the problems occur because of the way individuals involved react to the change.

It would be an unusual library, indeed an unusual organization, if some members of the team didn’t resist changes.  Frequently, there is resistance to the point of being a virtual stonewall that appears insurmountable.  Yet, overcoming that resistance is something that management needs to happen in order to keep the organization moving forward.  How can the stonewalling staff member be overcome?  The best answers are either to work with the person to break through their reasons for not wanting to change, or if that is not possible, going around them to implement the change.  While there is a third answer I’ll mention at the end, it really is not an acceptable answer for today’s modern library, although you do see it happening!

Break through the stonewall

Personally, I’m a strong advocate of those change management techniques that focus on implementing new ideas by first working with the individuals involved. Having been involved for decades in the processes of implementing major new systems in all types of libraries, I can honestly say the most successful projects were those that began work with the individuals.  J. Stewart Black and Hal Gregersen endorse this technique, in their excellent book  “It starts with one” where they say: 
“Lasting success lies in changing individuals first; then the organization follows.  This is because an organization changes only as far or as fast as its collective individuals change.”  
I totally agree.  It’s a very powerful statement:  It’s especially powerful in light of their research that showed 50-80% of change initiatives in organizations fail. 

Their book does a great job of outlining how to be successful when performing change management.   So I won’t repeat those techniques here, other than to recommend you read their short, excellent book.  However, I do want to add some thoughts based on my experiences.  

First, choose your words very carefully and thoughtfully when presenting change. As human beings, we inherently know change is inevitable.  Furthermore, we know others often impose it on us, be they colleagues, bosses, organizations or governments.  When we “hear” the word change, we frequently “feel” what we know and what we think is about to be outdated and replaced.  We also realize that if we cannot learn that new way of doing things we might well find ourselves replaced. Understandably that causes concern.  So, let’s try to replace the word “change” in these discussions.  Instead, let’s focus on the perceived benefits that will happen when the new processes and procedures are in place.   

Now the word “benefits”, in my opinion, is often misused.   It will be very useful to prevent that from happening in this discussion, so let’s spend just a moment exploring this concept.  Many times, when someone is describing the outcomes of new process, procedures and outcomes, what they actually end up describing are features. Features are what are owned by the product or organization that makes these processes, procedures and services available.  The outcomes (i.e. the benefits) result from using the features and are owned by the end-user, customer or member of your organization.  This is what the they care about and want to hear about.  For instance, a “cloud computing service” is a feature.  The fact that you, as an end-user of that service, are now benefiting from no longer needing to buy hardware, do software upgrades or worry about power and air conditioning – those are all benefits you obtained from using the feature of software as a cloud computing service.  That’s what matters to you.  A valuable lesson in selling ideas or products is to learn to talk about benefits, not features.  So to successfully sell the idea of change management, use the same rule; talk about the benefits that will result.

Here is an example of what I mean.  In many libraries today, Patron-Driven-Acquisitions (PDA) are being analyzed for adoption.  In order to focus the conversation on benefits, one would need to talk about: a) making the library acquisition process Amazon-like for the members, b) reducing the time from when the member requests a new item be purchased to the time it is in their hands, c) making the member libraries money go further so they can purchase more of precisely what they need and will use.  Moving the discussion to the member/end-user benefits also has the advantage of quickly moving the discussion beyond the “should we even do this?” to the “how are we going to do this?”  Again, the important point here is not to focus on discussing change but to focus on discussing the benefits as a means of getting the needed changes adopted.  

Of course this one step alone will not make a reticent person move forward.  Its goal is simply to lessen their fear and anxiety levels so they too can focus on the positive things that will result.   Beyond that, depending upon the degree of stonewalling they’re performing, here are some other ideas that may need to be used.
If the person’s manager is aware of the resistance and is willing to take action, then there are a variety of steps they can take to help the individuals.  This blog post suggests the following techniques:

  1. “Assign a coach to the person with daily/weekly/monthly meetings without holding anything back. Give the truth as it is, along with advice for improvement.
  2. Recognize that it could be professional arrogance (“I am better than others”) that translates into negative attitude. Introduce them to others who are better and show him the reality.  (Blogger note:  Having them attend a webinar or virtual/actual conferences where successful implementations of the idea are discussed, might be one way to do this.)
  3. Put them on a PIP (Performance Improvement Plan). Make it clear why they are on PIP—which is not because of work, but attitude.
  4. Assign them away from the “critical” nature of the work, which works at times to demonstrate that they are not irreplaceable. It may moderate their behavior. (Blogger note:  This technique is useful if the person is “tenured” or personnel policies make it very difficult to remove them.)
  5. It could also be a genuine case of needing training.”

If those techniques don’t work, then you have to examine the adoption of more difficult steps.

Go around the stonewall

There may be times where you’ll find yourself in a situation where the recalcitrant person’s direct manager/supervisor, typically the library director, will not push the person, or work closely enough with them to bring about the needed adoption of new ideas. If the manager/supervisor is too busy, disengaged or otherwise occupied to do this, the problem can fall on the shoulders of peer level managers.  It shouldn’t but let’s be realistic, it does.  

When this happens, I suggest the management team call a meeting and discuss the status of new ideas being discussed and planned for adoption.  Then, when the stonewalling person (assuming they’re a member of the management team) lists their litany of reasons why it can’t be done (no need, overworked, bad idea, won’t work here, we’ve tried that before), the peers have to jump in and gently apply pressure to examine the reasons and point out the fallacies contained within, or to offer to take over some tasks so that time can be freed up to try the new ideas out.   

If that doesn’t result in movement, then it is time for the team to “think-outside-the box” in terms of working around the stonewalling person.  For instance, this might be done by offering to create an “exploratory committee” to implement the idea and report back to the management team. Staff time might be offered by the other managers in order to support the work of the committee, or other support might be offered to make the ideas happen.  Clearly, other managers are doing this by taking key resources away from their own area, so it doesn’t happen lightly or easily.  Furthermore, it might mean slowing down new project adoption they have underway, but if the management team agrees the idea is important for the total organization, then the value of this approach is to put the idea into place and to show that it will work and can be done.  This helps to remove the stonewalling manager’s fear of failure and shows them the way the ideas can be made to work, thus removing two substantial reasons why people stonewall and prevent new ideas from being adopted. 


There is a final point to remember when dealing with stonewalling library team members.   When you're faced with one (or several), either as a manager or a management team, and you’ve made a reasonable and fair effort to get them to implement new ideas, then you have to realize that you can't let them stop the library team from doing what needs to be done.  All too often, the stonewalling librarians can and will, become a stone anchor on your library.  They’ll drag the library, and everyone associated with it, down.  In today’s environment, this simply shouldn’t be allowed to happen. Nor can you wait to deal with the issue.  The pace of change will no longer accommodate that approach. You have to start now.  Be fair, but deal with the stonewalling librarian quickly.

Wednesday, March 21, 2012

PLQ Article - Construction Zones on the Library Road to the Future

UPDATE!  March 26, 2012.  Public Library Quarterly has announced a full promotion of the article discussed below and is offering free access to the article from now, through the end of June 2012.  You can get the free copy by clicking here.  I hope you'll take PLQ up on this offer.


I'm pleased to say that the latest issue of Public Library Quarterly contains an article I authored entitled: "Construction Zones on the Library Road to the Future."  It's an expanded, more polished version (thanks largely to PLQ Editor, Glen Holt and his team at PLQ) of the topics I've blogged about previously.

The abstract reads: "This article suggests that substantial and often disturbing change is the only way that libraries can achieve a bright future in an increasingly digital world. Libraries must quickly adopt mobile technology, cloud computing, eScience, and the systematic organization and dissemination of quality information—and do so within the context of collaboration with other libraries in the region, nation, and world. Fiscal shortages can not be used as an excuse to postpone imperative changes; money has to be (and can be) found."

Thursday, March 15, 2012

Libraries handcuffed

It's a very disturbing and alarming trend.  There seem to be a number of company announcements lately where librarians are committing to very long term (7-10 year) agreements with their library software automation vendors.  This is, to be quite honest, a mistake.  

Everyone understands libraries are under financial stress. Some automation vendors, in response to that situation, have occasionally forgone their annual maintenance increases. Others have not and libraries have struggled to find money to cover the increased costs.  So, it is not surprising that librarians are receptive to a proposal from vendors that offers them a "no increase" or guaranteed cap in return for signing a very long time agreement. It controls costs and locks up budgetary requirements far into the future?  It sounds like a good idea, right?   

Not really and here’s why:  

The typical library software automation supplier sees anywhere from 25-50% of their total annual revenues coming from those maintenance contracts, and in the case of vendors who aren’t selling a lot of their existing products/services or developing new products to create new sales, this percentage can be even higher.   Obviously, this means those maintenance contracts are a major source of revenue not only for day-to-day operations of the vendor, but of equal importance, in determining the overall valuation of the company.  Valuation is extremely important for a company that is owned by equity investors as these investors are operating within a window of time and they have a exit plan, at which point that valuation will determine, in part, how much money they’ll make in selling the company.  So it is to their distinct advantage to be able to say to the prospective purchasers of the company, that “x” amount of their revenue is recurring and is virtually guaranteed for “x” years into the future.  It simply makes the company worth more, and by quite a lot, if a substantial portion of that recurring revenue is in this classification.   

Plus, as you might expect, all the vendor is obligated to do here is to supply the maintenance services on the product specified.   But here is a key point - most vendors use some portion of that maintenance revenue to fund new releases of the product or in developing totally new next-generation products, which might get offered to the existing customers at a discount.  However, in most scenarios, the vendor is under no obligation to do that.  So, if short-term equity investors own the company, this is money that can be drawn straight down the financials to the profit line, simply by not performing these activities, by stretching out the time interval between deliveries of new versions of the software or by reducing the staff that does this kind of work in the company.  Here is where the difference between working with ownership that has a long-term view and those that have a short-term view comes into play.    Obviously, a vendor who does this type of profit extraction for too long will end up with customers who are displeased and will want to begin shopping around for alternatives.   So, they’ll lose customers, right?  Yes.  Except if the librarians have signed a ten-year agreement, they can’t go anywhere.  They’re handcuffed and for a very long time.  Yet, if the company owners, as happens all too often with equity ownership, have a five year window for their exit, that long term issue isn’t their problem, it belongs to the next owner, so quite honestly, they’re not terribly concerned about it.  They’ve got a plan to make their money and then head for the door, which is what matters to them.  Ownership that has a long-term view, understands this kind of profit extraction will come at a very high cost and thus will not pursue this path.

What makes the short-term scenario all the more disturbing for librarianship is that clearly we’re in a period of massive change when it comes to library management software.  As Marshall Breeding said in his Tech Trends at Midwinter ALA 2012: “Especially for academic libraries, the current models of automation no longer meet current and future needs.”   

When we look at the field, we see two suppliers, OCLC and Ex Libris that are offering true next generation, cloud based, multi-tenant software solutions (respectively WorldShare and Alma).  These products offer the potential to radically restructure the future of library automation and consequently librarianship.  Serials Solutions InTota might well join this class, but it is simply too early to say that for sure.   

Most other suppliers are simply offering hosted (SaaS) versions or enhanced hosted versions of their long-standing products (Innovative’s Sierra and SirsiDynix’s Symphony appear to be in this class) and thus, it is hard to see any alternative but to classify them as anything other than “current models” albeit with the advantages offered by the hosting of systems (but note this is NOT the same as a true cloud-computing, multi-tenant software solution!).    I’m sure some will want to argue this point, but follow my logic here and draw your own conclusions. 

The new products have been built from the ground up and are giving serious attention to the new streamlined workflows that are now possible because they can combine processes that were previously done in silos (for example print & electronic journals, electronic resource management, acquisitions, etc.).  For libraries, this means you’ll be able to run your backend operations far more efficiently and take people previously assigned to these tasks and assign them to new value-add services where the libraries can provide new value for their members (for example, analytic driven services, data set management, eScience and mobile services are just a few that come to mind).   

Products that haven’t done this complete rewrite of their code are carrying much of the logic of  their previous generation software over into their “new” products.  You can tell this is the case when you see a product description contains phrases like this: "maintains vendor's rich history of functionality and workflow integration" or the system “will provide all the benefits of proven, stable business logic", or if says it  “blends the best features of product X and product Y”, two products owned by the vendor but that are now being replaced by the “new” product.   Ask yourself this: If it's really new, how can it be proven?!?   Only if they're reusing existing code, can a vendor say that with any integrity.

The previous generation of ILS products have literally hundreds, if not thousands, of people-years of development in them and yes, rich functionality has been the result. But again, the only way that could be maintained this soon after announcement of a "new" product is if you're using the code from the old product.   It simply and logically is not possible to make that statement any other way.  

This has further implications for the library in that if the “new” product is using the same workflows used in previous products, then the library will have to staff at the levels of the past in order to support the old functionality.   It is yet another way that librarians are handcuffing their libraries when they tie on to this vision of the future of library management solutions.  Really streamlined workflows that reflect today's library environment can't be accommodated by old software logic.   It requires new software to be written (why else would all these other organizations be making the massive investment to do this?!)

Here is the bottom line.  These next generation products are largely going to place libraries on two widely divergent pathways.  Those libraries that understand and use the real power of the next generation of library management software will be capable of focusing their limited resources on offering superior librarianship on top of all types of knowledge and information resources.   Those libraries that have been handcuffed to software solutions and vendors that have “taken-the-money-and-run” are going to be left madly scrambling to catch up from a pathway that lead them far away. 

If you’re a librarian leading a library, think twice before signing long-term agreements for any of today’s offerings, be it the new or old. Your library needs to stay flexible, agile and be able to move quickly to address an ever-increasing rate of change in our environment.   

Please, don’t handcuff your library.

[Notes:  Photos used in this post are copyrighted by iStockPhoto, are used under license and can't be further re-used or distributed without your purchasing them from www.istockphoto.com]

Friday, March 2, 2012

Another equity investment in the library marketplace – what does it mean for librarianship?

(c) iStockphoto

Yesterday’s announcement that Innovative Interfaces, long a privately owned library automation supplier, is now substantially owned by equity investors, created a number of conversations in social media across the library profession. They centered on: What does it mean and what should librarians expect?

As with those that have happened before (SirsiDynix, Ex Libris), these changes in ownership usually represent one of the following things happening within the company:
  1. A company founder wishing to monetize their substantial work and investment for reasons of greater diversification of their personal portfolio or as a move towards retirement. 
  2. An existing equity owner reaching the end of their typical 5-7 year investment cycle.
  3. A desire to bring greater financial resources into the company to finance further acquisitions or for new product or services creation or development.
What it sometimes means is the identification of a firm with low profit margins that the equity investors believe they can substantially improve.  However, despite one site that made such a claim, in the case of this announcement, there are plenty of librarians who suspect from the prices they find themselves paying for this company’s products and services, profitability is not an issue in this case.  

Of course, the mere mention of “equity investors” in today’s highly charged social, cultural and political environment brings to mind the 99% vs. the 1% and tends to taint the entire discussion. However, a more rational discussion is deserved and necessary to understand what’s happening.

Some of the Basics

Understanding some of the basics of equity investing is a good starting point.  Equity investors basically pool financial resources for investment, which, as we all know and understand, means to take measured risks in order to gain measured returns. I also think it is important to understand the following, which I quote from a very informative post about private equity:   
“The capital comes primarily from large institutional investors like pension funds, foundations, and endowments. Large investors in private equity include Calpers (the California Public Employees Retirement System), New York State Teachers' Retirement System, and even the National Public Radio (NPR) Foundation. When private equity fund returns are strong, a lot of workers, teachers, and pensioners benefit.”
So while many of the discussions around private equity firms leave people thinking that only the very wealthy benefit from these companies, the above provides some balance to the discussion.   In fact, your personal retirement accounts might well be a beneficiary from the work of these types of investment firms.  

Once the money is aggregated, the equity firms select and make the investments.  Here, it is also important to understand the basics since debt is one of the tools used in engineering these deals  Again, I quote from the article above when they say that private equity firms:  
“often use debt financing, hence the common name of leveraged buyouts. This is particularly true in the case of more mature companies. These days, the leverage is usually on the order of 60 or 70 percent of the purchase price—less than the leverage in most home purchases.”
The reason why it is important to understand the debt portion of the equation is because this debt must be repaid, with interest, usually by the operation of the company being purchased.  In addition to that, the equity fund management charges a fee for managing all of this process which is typically in the range of 1.5% - 2% of the amount invested.  In addition, they’ll typically take 20% of the profits (after the investors earn their return).  All of this will be important to remember when we later discuss what this means for the profession.

What does this mean for the company purchased?

Inevitably, when a company sees a change of this type in the ownership, one of the most commonly uttered phrases in the press release announcing the deal will be an assurance that it's: “business as usual.”  Rarely does that truly prove to be the case for long.  It is usually more a question of how subtly the changes will be made, when and where.  However, there will be changes.  Private equity firms do not buy companies for the status quo; they see ways to improve market share, productivity, performance and profit. To do that, as outlined in this Harvard Business Review article, they will focus on:

  1. “Reducing idle cash setting in bank accounts”.  For instance, this might be done by using such cash as part of the purchase to buyout the owner or to otherwise help finance the purchase of the company.
  2. “Take on more debt”.  As discussed above, this is done as part of the purchase process, but the goal, in general, is to reduce the cost of capital for the company.
  3. “Design value-enhancing operating plans.”  This is where customers of the company will find the changes more apparent.  As outlined in the article cited and in quotation marks below, these could include: a) “Cutting back costs.”  This will typically soon focus on the staff within the organization, as that is always a major cost for any organization.  Peripheral positions will be eliminated and others consolidated.  Benefit packages for employees may be trimmed and all other operational costs closely examined for possible reductions.  Things like customer entertainment, parties, etc. might be reduced or eliminated, b) “Sales of non-core businesses.”  Obvious in its explanation, but this can also be exemplified by elimination/consolidation of product lines, c) “Investing to expand revenues.”  Likely to be seen as bringing financial resources into new product development to speed the products to market and/or create other new products and services, or d) “Acquisitions… that will consolidate market position.” 
  4. “Tie executive compensation to shareholder value”.   Many founder owned companies will likely have very nice compensation schemes for the founder, but they aren’t necessarily tightly tied to how the company is performing on a consistent basis.  The private equity firm will change this and tie these two things together to ensure, whoever is now managing the company, is very focused.

And while not mentioned in the article, very likely, if it wasn’t already there, a very strong and heightened focus on selling by the company. 

What do these kinds of investments mean for Librarianship?

As with most anything, there is no simple good/bad answer to the effect of private equity investments in the companies serving librarianship.  The very fact that they are investing in the marketplace means they see a healthy enough market, with enough potential growth in it, to warrant investment.   That’s reassuring.

It’s also important to note that there are examples in this marketplace of other companies owned by private equity firms, for instance Ex Libris, which are producing leading products and services for the profession. That’s also reassuring.   (SirsiDynix is another firm owned by private equity but I’ll leave it to the reader to assess if, in this case, it is an equally strong example).  

On the other hand, given the way private equity leveraged buyouts happen, as I’ve outlined above, and the debt they incur, one thing librarians have to realize is this: To some extent, this process diverts money from within the profession to outside the profession.   Whereas the profit these companies made previously was being used primarily within the company, now this money is being substantially diverted to pay the private equity firm enough to service the debt, pay its investors back with a return and finally, pay the equity firm its management fees.   These are not insubstantial amounts of money which are now being invested in retirement and foundation funds that aren’t directly associated with the profession of librarianship.  

In the end, the assessment swings on questions like these: Would librarianship be better off if the money being diverted out of the profession was being invested in products from the open source software community or in a library owned collaborative like OCLC?

Or, do the actions of private equity firms produce stronger companies servicing the profession?  Do they help pull together the necessary resources needed to fund massive scale investment in solutions like cloud computing, citation indexes, digital preservation, etc.?  Do they help to accelerate products and services to the market?  Are they more efficient and effective producers of these technologies and services?

And finally, what about those remaining firms that are privately held by their original founders/entrepreneurs selling to libraries and that, while maybe smaller, are more focused on the customers, staff and not so much on making the highest profit?  Would you be better off spending your funds with them?

The answers to those questions, you’ll have to supply.    

[Notes:  1) In the interest of full disclosure, I've been and still am a company founder/entrepreneur as well as a minority investor in other companies that have, or are currently, selling products to the library marketplace.  2) Photos used in this post are the property of iStockPhoto, are used under license and can't be further re-used or distributed without your purchasing them from www.istockphoto.com]