Pearson invests in an IT growth strategy

February 28, 2012

Marjorie Scardino

Pearson group led by Dame Marjorie Scardino has been investing in innovation to secure its future, and that of its flagship product The Financial Times

LWD has followed the successes of the grande dame of organizational leaders since one of our earliest posts [2007].

More recently we grumbled at the FT policy of restricting extractions from its e-content which we saw as part of the new emerging models for IT businesses, and not unlike Rupert Murdoch’s efforts to reinvent his own business model [2009], now threatened by the legal morass News International finds itself in. So it is somewhat more pleasing to report positively on this week’s news [28th Feb 2012] of Pearson’s efforts to reinvest its profits in innovation.

Dame Marjorie Scardino, the head of Pearson, has again scotched stories that the Financial Times could be sold as she earmarked another £1bn for acquisitions to drive the education group’s international expansion. Pearson, which also owns the books publisher Penguin and Edexcel, Britain’s main exams-testing body, spent £900m last year as it began to recycle proceeds from the sale of its stakes in the data provider IDC and the FTSE indices business. The money went on testing, technology and work-training firms in China, the US and Britain.END
According to the Thisismoney website

The publisher’s chief executive Dame Marjorie Scardino said the proportion of sales derived from digital output and services – such as teacher training – was more than 50 per cent. She fleshed out a rosy future in which the Pink’Un – as the Financial Times is affectionately known – would no longer be published in print format in some regions.

‘In places where our print run is very small, they’ll become digital places,’ she said, citing parts of Australia and west coast USA. Pearson reported rising sales in all divisions except North American education, where lower school funding has hit sales.

She added that she was ‘a bit sad’ that FT staff threatening strike action had refused to accept an offer including a 3.5 per cent pay rise and no compulsory redundancies. Pearson (down 47p to 1204p) has £1bn firepower for acquisitions. Directors have agreed not to take a 2 per cent pay rise this year, said Scardino, who earned a pay and bonus package worth £2.5million last year.

For a contemporary knowledge-based company, Pearson has a powerful statement of intent: Always Learning.

To go more deeply

See the thisismoney website post


Mattel co-founder Elliot Handler dies

July 26, 2011

Elliott Handler founded Mattel which became a great and at times controversial business empire. The creation of the Barbie Doll concept has been attributed to his wife, Ruth, and was named after their own daughter

Elliot Handler lived a full and lengthy life before dying in July 2011 at the age of 95. His story is a fascinating one.

Away in a cradle

Mattel was started in a garage, that mythic cradle of entrpreneurship. The company website provides a time-line on its website from its foundation in 1945 to the year 2005 showing its rise to a global corporation. It shows highlights such as the ‘Birth of Barbie’, now an astonishingly well-preserved 52 year old. It also traces the acquisitions and mergers through which the company has grown.

Mattel Inc. incorporates Fisher Price, and produces a wide range of famous products such as Barbie dolls, Hot Wheels and Matchbox toys. The company name is derived from Harold “Matt” Matson and Elliot Handler. After the release of the Barbie doll, Mattel went on to revolutionize the toy industry with a range of innovations such as talking dolls and toys.

In the shadow of Barbie

Perhaps Elliot Handler will be remembered as living in the shadow of a fictional child. However, he was no mean inventor and entrepreneur. One of his successes was the product line Hot Wheels. The die cast range became a classic collectable. Elliot had pushed ahead when others showed little confidence in his concept.

Triumphs and disasters

Major successes in the 1960s propelled Mattel to its premier position as the number one toymaker in America. The triumphs were accompanied by several dark episodes.

Ruth Elliot had become President, and was mourned at her death as ‘Mom of Barbie’. By that time, Ruth had also been ousted from the company for financial wrongdoings, and Elliot had also been forced out off the board.

In 2002, outsourcing production to China led to a scandal involving lead contamination. The toys were recalled and public apologies made to the Chinese people. The episode anticipated the more recent strategies of companies such as BP and Toyota facing a hit to their corporate reputation.

Rewriting history

What you will not find on the company website is much about the board room coup which ousted founder Elliot and his wife Ruth.

A leadership mission

Matell today offers a leadership mission:

“Leadership” at Mattel is the ability to develop and communicate a compelling picture of the future that inspires and motivates others to take action. Leaders at Mattel align themselves with Mattel’s core values, exhibit leadership competencies and drive for success in our business strategies. In this way, we will work to achieve our vision, “Creating the Future of Play.” Every day as Mattel’s 30,000 employees worldwide strive to realize that vision, our leadership team is guiding the way.


Innocent in a naughty world

April 8, 2009
Smoothies

Smoothies

The Innocent company has accepted an equity deal with Coca-Cola and risks damaging its valued image as an ethical organization

The story has an appealing simplicity to it. Innocent has built a brand as an ethical company from its UK base with its range of smoothies and a branding message that its products are 100% wholesome and good for you. Its decision to accept a £ 30 million equity investment from Coca-Cola seems to risk that image. It was the theme of a BBC interview with co-founder Richard Reed [7th April 2009]. PM’s Eddie Mair brought a tone of righteous indignation to his interview. He dismissed Coca-Cola as the sort of company that any self-respecting organization should avoid at all costs.

The Wall Street Journal offered a more balanced view of the deal . Journalists Patrick and Bauerlein outlined the financials, suggesting that Coke would own between 10% to 20% of the corporation which places its value around £150 – £300 million sterling. They pointed to the ‘quirkiness’ of Innocent, contrasting it to the staid old lady of Atlanta.

Coca-Cola’s investment in British smoothie maker Innocent not only connects the beverage giant to a fast-growing product but also to a company known for good social and environmental behavior. By giving 10% of its profits to charity and using recycled bottles, Innocent was one of the first consumer brands launched in Britain to develop a big following through ethical marketing. Innocent cuts a quirky public figure. Some of its trucks are covered in fake grass and daisies. Those trucks are mounted on hydraulics that make them appear to dance, with drop-down windows for giving away samples.
The deal’s structure should allow Innocent to keep its funky attitude rather than risk being assimilated into a vast corporate culture whose focus remains carbonated soft drinks. Coca-Cola won’t have any management control over Innocent, but Innocent will share its expertise with the Atlanta-based beverage company, Mr. Reed says. The Coca-Cola money will be used to expand Innocent’s operations in Europe, where only 25% of European supermarkets sell smoothies to pay for distribution, stocking fees, sales staff and advertising.

While Innocent has run TV- and newspaper-ad campaigns, it has also specialized in less-traditional advertising. Some 200,000 people turned up to a Innocent musical concert in London named Fruitstock in 2006. In following years it replaced the event with smaller village fetes. Its Web site features a “Daily Thoughts” blog where employees not only post items about new products, but also offer random tips such as what to feed tadpoles. Next month, [May 2009] Innocent is inviting customers to come to an AGM (A Grown-up Meeting), to solicit feedback.

Innocent’s charitable giving is also interactive. Volunteers knitted more than 506,000 little hats for smoothie bottles last year, which were then sold, raising £250,000 in proceeds to provide meals, blankets and other help for older people during the winter.

To be sure, Coke has been sporting its good deeds, expanding its recycling plants, reducing water consumption and using environmentally friendly coolants in vending machines and coolers. Coke and its foundation made more than $82 million in charitable donations in 2008, in areas ranging from college scholarships to water stewardship and disaster relief. But the 123-year-old company has been known to kill ads that were deemed too edgy and is vastly bigger and more buttoned-up than a closely held newcomer such as Innocent.

Coke appears to be embracing the model of taking a stake rather than buying outright, after previously struggling to integrate niche nonsoda companies. Most notably, Coke bought Planet Java coffee drinks and Mad River Traders teas and juices with great fanfare in 2001, only to phase them out two years later. Coke has had more success with its 2001 purchase of Odwalla Inc., a maker of premium refrigerated fruit and vegetable juices whose product line is closest to Innocent’s line

An Independent
view

Janet Street Porter provided an informed view for The Independent drawing on research she had carried out for a channel four film. She pointed out the dangers of treating Innocent as a totally altruistic venture.

Innocent, the company that made its name on two points of difference, ethical credentials and healthy products, has sold a large chunk of the business to Coca-Cola – a predictable move. Coca-Cola makes money flogging sugary drinks that are brilliantly packaged as part of an attractive lifestyle option – and so does Innocent.

What’s the deal?

It’s no big deal for the mighty Coca-Cola which may have reached the conclusion that its evolution lies in responding to increasing agitation against products on like style and health grounds. Innocent epitomizes values that Coke admires, but for all its efforts finds hard to build into its brand.

But this is a big decision for Innocent. Despite the robust defense offered by Reed, the dilemma of leadership was clear. Together with co-founders Adam Balon and Jon Wright, Reed has the strategic goal of building a global corporation with all the ethical values that are captured in Innocent’s products and activities. To do so he has to accept the financial reality of obtaining funding from sponsors. Increasingly, investors are being assessed for their ethical credentials. Would Innocent have preferred investment from a different source? Probably. The contrast with Coke makes for an easy story of lost innocence.

I have likened strategic business decisions to difficult chess moves. Sometimes you make a decision because you want to, sometimes because the opportunity and timing seems right, and sometimes because you have no obvious better alternative.

This seems to fall into the final of the three categories.