Thursday, January 10, 2008

Play Big

Arms wide, legs apart, the coach used to yell. Play big. Expand the area you take up and intimidate the other players.

HM Riverdeep is playing big these days, intimidating any and all educational publishing players. McGraw-Hill has been the first to flinch.

According to Harold McGraw, the third of that name, the company is well-positioned to capitalize on the long-term trends driving global economic growth. Doesn't the globe need knowledge, and isn't McGraw-Hill the company to deliver it? With that in mind, they've made plans to sack about 600 employees.

HM Riverdeep was created with an eye to the electronic future, where hard copies will lose out to computers. Houghton Mifflin saw it coming soon enough to get bought up by Barry O'Callaghan's little minnow of a firm that was steering a course towards the future of educational materials. The mighty McGraw-Hill, stodgy and set in its ways, may have moved too slowly and HM Riverdeep Harcourt Greenwood et al. passed them by.

McGraw-Hill realizes that it must go digital, but Barry O'Callaghan was already heading off in that direction. All well and good for McGraw to consolidate departments now, after HM Riverdeep Educational Media and what have you has already started streamlining operations. If Riverdeep gets its products into general use before McGraw-Hill develops some killer apps, it will be an uphill slog for McGraw-Hill to win market share.

600 people to be let go, mostly from the educational publishing component of McGraw-Hill. How many will lose their jobs as HM Riverdeep Harcourt and friends trim down to a fighting weight? Who will come out a lean, mean fighting machine, and who will wither away?


Peg Leg O'Sullivan said...

Looks like the leavings are one-sided. Lori Benton, who headed Harcourt's children's division, is following Dan Farley out the door.

It's Betsy Groban of Houghton Mifflin who's to lead the kiddie section of the combined companies.

Anonymous said...

Well that's very interesting. McGraw is laying off on the educational side, but HMH is shedding one side of children's trade. I'm sure more will follow...but from where? From where I sit, not sure which way to bet. Education and Trade are very different businesses, and the decision-makers mostly come from the education side.

O hAnnrachainn said...

Better to concentrate on a strength where a competitor shows weakness? Or has HM Riverdeep shown their hand, focusing on the educational end, leaving trade to someone else?

My feeling is that O'Callaghan's clan will focus on education, digital in particular, and let trade slide. Play to your strong suit, perhaps?

Anonymous said...

Coming from Harcourt, it makes sense that the first to go would be the redundancy in Trade. I'm sure you can understand that a single trade unit can continue to be very strong with twice the titles now available. Certainly, Mr. O will be developing the digital side, but we're also betting on the fact that now with twice the work force and only half the states being customized that HMH will be shaping the future of the text book market. The reduction in staff, I'm almost certain, will come from the support structures and not the "talent". Look out Pearson... here we come! :)

O hAnnrachainn said...

I agree that redundant support staff would be cut to reduce expenses. The corner office cuts have more to do with who Tony Lucki and Barry O'Callaghan want on their team, along with the usual spoils going to the victors.

My feeling is that Mr. O'Callaghan has a notion to be the biggest purveyor of educational materials, digital and print. But he's betting that digital is the future.

Anonymous said...

So if Elsevier sold Harcourt, what is with Elsevier, (legal department) still maintaining a workforce at the Harcourt location in Orlando.

O hAnnrachainn said...

Reed Elsevier sold Harcourt, yes, but they also bought into the deal. They have a vested interest in making HM Riverdeep work because they're keen to unload the stock.

Elsevier helped to pick up the tab but they've been very open about finding a buyer for their portion of the HM Riverdeep Harcourt conglomerate.

Anonymous said...

Layoffs across most divisions this past Thursday, on the Houghton side--talent as well as support staff. Don't know about sales yet. I've heard the same happened on the same day for the Harcourt divisions, but don't know the particulars.

O hAnnrachainn said...

Barry O'Callaghan is under tremendous pressure to prove that he can, indeed, realize his promised synergies.

He needs numbers to show the creditors, and soon. No surprise then that the lay-offs have come so swiftly after the Harcourt acquisition was approved.

Anonymous said...

Harcourt has received layoffs in Editorial, Production, Design, Marketing, IT. A major restructuring is taking place with divisions shifting responsibilities and reporting structures. Most notably, a Project Management Office has been instituted to run throughout all of the K-12 companies. This is an effort to achieve the synergies that Barry O is needing to make this work. Also, the leadership for each discipline is being divided between the Boston and Orlando locations. Orlando will be the lead for Math and Social Studies and Boston will lead Science. No word on Reading yet because both companies are hard at work getting the CA submission ready.

O hAnnrachainn said...

You'd have to expect that department restructuring would be massive, to bring together two large companies (and one small minnow that was Riverdeep).

Indeed, before it's over, you won't recognize the place it'll be so changed. Whether change will yield positive results remains to be seen.