The Wiley family’s binding ties

John Wiley & Sons has been in the hands of the Wiley family for 205 years. That’s a record in the U.S. publishing industry. After decades of consolidations and the merger and acquisition frenzy of the 1990s, family-owned publishing houses were a vanishing breed. John Wiley & Sons was one of the few independent, family-governed publishers left standing. Today it is flourishing.

Wiley, an academic publisher headquartered in Hoboken, N.J., specializes in print and digital products for scientific, technical, medical and scholarly fields; higher education; and the professional and trade markets. Once known as a textbook publisher, it now reaps almost half its revenues from its online products and services. It operates in 20 countries with a staff of 5,350. Last year, its revenues reached $1.734 billion.

Wiley’s staying power comes from its emphasis on quality (it’s published the works of 450 Nobel laureates), as well as its ability to self-correct in a rapidly evolving industry and make strategic acquisitions. Over its long history, it had missteps. At times it misjudged changing markets and struggled with falling revenues; once, it teetered on the brink. Amazingly, it managed six generations of family leadership transitions without a formal succession plan. That changed last year when the family created an organizational structure to prepare the seventh generation for leadership.

A literary legacy
Throughout the company’s ups and downs, the one constant has been the Wiley family. Family members are proud of Wiley’s dedication to delivering high-quality content to its customers and the family’s role in safeguarding Wiley’s independence and stability.

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“We were raised in a house full of books,” says Peter Wiley, chairman of the board and member of the sixth generation. “We all read voraciously, and that translated into a love of the business and a responsibility to keep it going. Our generation and the next is in the midst of the most significant transfer of information since Gutenberg developed the printing press. I can’t think of a more exhilarating place to be.”

After 195 years in Manhattan, Wiley moved its global headquarters to Hoboken in 2002. Peter also maintains an office in San Francisco. Wearing a plaid shirt and casual pants, Peter, 70, looks at home in his cozy Bay Area office, which is lined with books. An editor, journalist and author, he wrote several chapters of the comprehensive company history, Knowledge for Generations, published in 2007 to celebrate Wiley’s bicentennial.

“We’re a case study of what works and what doesn’t,” says Peter. “In telling Wiley’s story, we aimed for absolute candor in acknowledging mistakes. We didn’t want to create a myth around the business.”

Charles Wiley opened his print shop in Manhattan in 1807. When it became a meeting place for writers, Charles’ interest turned to publishing and bookselling. His son John followed his father, publishing notable American and European writers such as Herman Melville and Charles Dickens.

By mid-century John, later joined by his two sons, capitalized on publishing opportunities created by the Industrial Revolution. In shifting from fiction to science and technology, they set the course for the future of John Wiley & Sons. By the early 1900s, the company was an established leader in science and technology publishing.

Over the next few decades, Wiley expanded to serve the social sciences, business management and higher education markets. When World War II broke out, the company was well positioned to meet the military’s need for science and technology books. Wiley’s biggest growth spurt occurred after the war, when millions of GIs entered college on the GI Bill, increasing the demand for college- and graduate-level textbooks.

America’s victory in World War II favored Wiley yet again, establishing English as the international language of science and technology. But as the GI Bill waned and the Korean War heated up, textbook sales plummeted. Wiley was forced to cut its staff and reduce shareholders’ dividends. Acknowledging that the company hadn’t kept pace with advances in financial and corporate practices, its senior managers enrolled in Harvard Business School.

In 1956, fifth-generation member W. Bradford Wiley became president and CEO. Ambitious and energetic, he set out to expand the company. In 1961, he oversaw Wiley’s first acquisition, Interscience Publishers, which opened the company to European markets. To raise cash for further growth, Wiley went public in 1961, trading on the Nasdaq until 1995, when it moved to the NYSE. During the 1960s, Wiley more than tripled in size.

“My father was a smart publisher and charismatic leader who had a loyal group of people working with him,” says Peter. “By the time I started working on the board with him in the ’80s, he had become more authoritative, more like an aging patriarch.”

Brad and his wife, Esther, had three children: Brad II, Peter and Deborah. When Brad Sr. prepared to transition from president and CEO to board chairman in 1971, his children were in their twenties. Deborah had recently joined the company; Brad II and Peter were pursuing their own interests. For the first time in Wiley’s history, it hired a non-family president, Andrew Neilly, a 37-year veteran of the company. Neilly was later promoted to CEO.

To lessen its dependence on the fluctuations in the textbook market, Wiley entered the promising field of corporate training when it purchased the Wilson Learning Corporation. Sales got off to a good start, but by the mid-’80s the quality of the programs had slipped, along with profits and staff morale. While the Wilson acquisition proved disappointing, Wiley learned a valuable lesson, which it applied to future acquisitions: A transition team made up of leaders from both companies would smooth the integration process.

Wiley continued to make acquisitions to strengthen its scientific and professional and trade divisions, but during the 1980s the company was in crisis. Its weaknesses attracted takeover offers, which Brad Sr. vigorously resisted.

“We had starved our textbook line to invest in a new business,” says Peter. “We weren’t growing fast enough to cover our costs. Senior management had designed a good plan for improving profit margins, but it didn’t have the capability to implement it.”

Turning point
Brad II and Deborah joined the Wiley board in 1979 and Peter in 1982. Neilly, who had been with the company for almost 50 years, was approaching retirement. Brad Sr. had hoped that Deborah would be the next CEO. She had started working in the business in 1969, one of the first women to work in sales in the publishing industry, and had held several managerial positions. Brad II started working as an editor in Wiley’s Higher Education Division in 1990 after having been a newspaper and magazine editor. Peter had never worked in the business. Neither Deborah nor her brothers aspired to be CEO.

“We asked ourselves what was the appropriate role for the family in the business,” says Peter. “After assessing our capabilities, we concluded that we didn’t have the skills to be CEO and that it was best for the company to have professional management. Redefining the family’s role as governance marked a real turning point for the company.”

“The key to running a successful family businesses is the family’s ability to recognize its managerial limitations,” says Charles Elson, professor of finance at the University of Delaware and chair and director of the Center for Corporate Governance. “If they don’t have a family member capable of running the company, they have to find the best professional talent and provide rigorous oversight. The Wiley family has done that.”

Wiley began a search for a business executive with the experience to manage the company’s global enterprise. Ruth McMullin, a member of Wiley’s board of directors, was named to the post. Although she had held responsible positions in several large corporations and had the financial expertise Wiley needed, she lacked management experience and an understanding of the publishing industry. After a year, it was clear that her corporate style did not fit with Wiley’s culture. In 1990 the board removed McMullin and replaced her with Charles Ellis, who had been president of Wiley’s Publishing Division.

With the most tumultuous decade in Wiley’s history behind it, Ellis began the company’s rapid turnaround. Under his leadership, Wiley refocused on its core publishing businesses, divested underperforming programs and dramatically increased investments in technology and acquisitions. Ellis’s successor, William Pesce, further increased Wiley’s growth and profitability. Between 1989 and 2007, Wiley made 60 acquisitions. Among the most significant were Jossey-Bass Publishing; J.K. Lasser tax and financial guides; and Hungry Minds, publisher of the For Dummies series, CliffsNotes study guides, Frommer’s travel guides, and Betty Crocker and Weight Watchers cookbooks. But Wiley’s crowning acquisition was Blackwell Publishing Ltd, one of the world’s foremost academic and professional publishers, in 2007 for $1.1 billion. Wiley has already paid down a substantial portion of the loan.

New technology has continued to change the way consumers buy and use Wiley’s products and services. To keep pace with the fast-moving market, the company recently announced the sale of a number of its general-interest publications, such a travel, culinary and CliffsNotes titles.

“There’s a global demand for high-quality content and services related to lifelong learning,” says Peter. “We’ve decided to focus our resources on the accelerating digital transformation and on building leading market positions in professional fields like business, architecture and psychology and through our For Dummies brand.”

Over the past decade, Wiley has simultaneously expanded its Internet presence with Wiley Interscience, which provides access to 3 million articles and 1,500 journals, and WileyPLUS, which offers digital higher education texts and interactive resources for online study. The company has also negotiated 750 partnerships with research, scholarly and professional societies.

Professionalizing the board
By the late 1980s Brad Sr. had become distracted by the poor health of his wife, Esther, who died in 1989. Although he was losing touch with the business, according to his family, he stayed on as board chair, with Brad II serving as de facto chair for several years. In 1993, Brad Sr. relinquished the chair to Brad II. Brad Sr. died in 1998 at age 87.

With the business now under the control of the sixth generation, the three siblings initiated the long overdue changes to professionalize the board. “The board had been composed of friends of my father, who were perceived to be beholden to him and do as he suggested,” Deborah says. Lacking their father’s corporate connections, they hired a search firm to find knowledgeable directors who were independent-minded and collegial. The current board has 13 members: nine outsiders and four insiders. Deborah stepped down, leaving Brad II and Peter as family directors along with Will Pesce, the former CEO, and Steve Smith, the current CEO. Wiley’s two-tiered board preserves the family’s control in selecting board members.

“The Wiley family subscribes to an ‘eyes in/hands out’ philosophy of governance,” says Smith. “They know what’s happening in the company and give support and guidance through critical questioning, but they allow the executive management team plenty of scope in setting strategy and managing the day-to-day business. The company has high standards for performance, but it’s less driven to compete quarter by quarter than most corporations, and that’s to everyone’s benefit.”

Today, the Wiley family maintains what it calls “a listening presence.” Peter and his sons Jesse, 41, who focuses on digital and new business initiatives, and Nate, 31, a Web publishing manager working in the Wiley-Blackwell office in the U.K., interact with Wiley employees at all levels. They talk with employees in the warehouses and send at least one family member to every sales meeting.

“We don’t stay in executive suites and helicopter into meetings to make an appearance,” says Peter. “We sit and listen and take people out to dinner. We learned from our parents that publishing is about sustaining relationships. Nurturing a family atmosphere is peculiar to our DNA, but it’s a challenge in a big, global corporation.”

In 2002, Brad II handed over the board chair position to Peter. In 2010, Deborah retired as senior vice president of corporate communications after a 42-year career at Wiley. Her early success in managerial roles paved the way for women to take on more responsibility in a company long dominated by men. Deborah was also a presence in the publishing industry, having served on the boards the Association of American Publishers and the National Book Foundation. She is currently chair of the Wiley Foundation.

The sixth-generation members, who had learned about governance on the job, wanted future generations to have the benefit of formal training. The seventh generation is made up of Peter’s five children, who range in age from 44 to 14, and Deborah’s 25-year-old twins.

Together they created a family organization with two components: The Family Assembly is a legislative body; the Family Council serves as the executive committee. With the help of a consultant, the family recently completed its 14th draft of a 17-page constitution, a four-year effort. The document codifies the cumulative experiences of the family, starting with the fifth generation, and covers matters such as relationships among family members and between family and management, requirements for board membership and performance evaluations.

Peter raised his children on the West Coast. Although he had told them about the business, they really knew little about it. “We lived very modestly,” says Celia Wiley, 44, Peter’s oldest child and unofficial manager of the family archives. “We knew our grandparents lived in a big house and were rich, but we never had much money. Now we have to think about one day having ownership of the company and what that means.”

The education program is the cornerstone of preparing the next generation for leadership. It focuses not only on teaching family members how to read complex financial reports, but also on what it means to be involved in a family business.

“Moving from an informal to a formal generational transfer is a huge change for us,” says Peter. “We’re in the process of a massive exchange of information, knowledge and experience between the generations. It’s already sparked the younger generation’s interest in the business and helped them see how they fit in. Family engagement with the board, management and colleagues has protected Wiley’s independence and guaranteed its stability. We want future generations to carry on the tradition.”

Deanne Stone is a business writer based in Berkeley, Calif.

 

 


 

 

Copyright 2012 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

 

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