The essential Orbach
28.08.07 | Philip Jones
Ever since its chief executive threw me out of his office about ten years ago I've kept an eye on the fortunes of Quarto, the publicly-quoted publisher and packager. Not because I wished the company any ill-will but rather because I've come to admire the public pronunciations of founder and c.e.o. Laurence Orbach.
It is rare for a Quarto financial statement not to include some kind of treatise from the former history professor once characterised in The Bookseller as "the original grumpy old man".
The press release that accompanied today's financial statement was not untypical:
"These words are written against a backdrop of continuing volatility, turmoil, and rumbling in financial markets," writes Orbach. "Only the imprudent would expect that there will be no consequences in the wider commercial world, and we're not rash enough to predict what they may be."
In the UK, "the trend of large retailers to focus most of their attention on newly published titles is a concern and seems bound to drive the 'long tail' to web retailers".
I was also particularly pleased to see his comments on the use of phrases such as "underlying" and "adjusted" when companies report their financial figures. Such terms mean that it is possible for sales and profits to be both down and up in the same financial period. For example, Quarto's reported revenues are down 5% but there has been underlying growth of 2%.
Orbach points out what I've always thought: "Of course, we don't live in a make-believe world of 'adjusted' and 'underlying' results, but in the real world where businesses have to adapt, in an ongoing way, to currency fluctuations, just as they have to adjust to other market and financial changes."
"I don't know most people in publishing and most of them don't know me," Orbach once told my colleague Katherine Rushton. I can't help thinking that this is a bit of a shame.
Orbach on discounting
"Retailers continued to use pricing as a major marketing tool, and this reached ludicrous proportions in the UK at the end of the year, as if a collective death wish had infected the major chains."
On Quarto's board
"Our management and executive structure is a work in progress and, so long as I am in charge, I hope that it will remain so!"
On budgets and performance measurement
"The budget exercise is valuable as a stimulus for sustained reflection and analysis of the business. It has always seemed to me both futile and faintly absurd to measure performance against our informed 'guesstimates'. At Quarto, we concentrate on what we can control in all circumstances, and at all times, more than we agonize over variances from budget. If budgets are drawn up in difficult times, they will probably reflect low expectations; in times of over-exuberance they may well become over-confident. The only certainty is that they will be wrong and, in evaluating the performance of our senior people, we prefer a more nuanced approach that acknowledges the dynamic context in which we operate, and offers a more balanced assessment. We don't appoint people to senior positions based upon their skills as prophets, so it seems more sensible to hold them to account for how they have performed 'in the circumstances'."
On high street booksellers
"The bricks-and-mortar retailers deserve consideration. Their environment is competitive, is compounded by the competition from the electronic catalogs of Amazon and others, and they have little alternative but to meet the competition. This is a particularly acute problem in book publishing because, by the standards of other consumer goods, books are not expensive, the average book purchaser doesn't spend very much money on each shopping trip, and the velocity of sale of most titles is slow. In order to pay the rent for the prime sites that booksellers believe they need, and their other overheads, it's understandable that retailers focus on moving large quantities of best-selling titles. It's an unsatisfactory state of affairs but, with the outpouring of new titles each year showing no signs of abating, it's difficult to see this changing greatly in the near future. Perhaps - and one can but hope - the growth of internet retailing will put downward pressure on rents in prime shopping areas, and so restore greater profitability to brick-and-mortar retailers."
On sales directors
"They will always bring you yesterday's news, but publishing has got to be forward-looking. Change is rampant in the world. You have to revolutionise yourself, not look at last year's bestsellers."