Financial Ownership at Jossey-Bass vs. Inclusive Multi-stakeholder Ownership at Berrett-Koehler Leads to Different Outcomes
by Sarah Stranahan
In the second of our paired study series, we examine the starkly disparate outcomes of two publishing companies: Jossey-Bass, which has been bought and sold five times by investor-owned firms over three decades, and Berrett-Koehler, a mission-driven firm owned jointly by employees, authors, customers, and other stakeholders. As with our comparison of Eileen Fisher and Donna Karan International, we find that financial ownership, because it puts profits first, emphasizes short-term performance over long-term success, undermines mission, and harms employees. By contrast, employee ownership—or in the case of Berrett-Koehler, multi-stakeholder ownership that includes employees and other members of the Berrett-Koehler community—empowers employees, preserves mission over the long run, and leads to a stronger, more resilient corporation that can better withstand industry changes and market cycles.
The Early Years
Jossey-Bass was founded by Allen Jossey Bass in 1965 as a niche publishing company specializing in books for professionals in higher education and behavioral sciences. Legend has it that Bass raised the money to start his company by selling stock to college professors. Jossey-Bass quickly became one of the nation’s most respected specialty publishing houses.
In 1977, Steve Piersanti began his career in publishing as an advertising copywriter at Jossey-Bass. He quickly moved up through the ranks, becoming president of the firm in 1989. Piersanti was trusted and respected by the authors, suppliers, employees, and customers with whom he worked.
Robert Maxwell took a very different route into the world of publishing. Born into a poor orthodox Jewish family in Czechoslovakia, Maxwell was the only member of his family to escape the Nazis. In 1951, he invested in a company that published academic and medical journals, which he renamed Pergamon Press. Maxwell went on to create Maxwell Communications through which he would acquire multiple media properties, including Jossey-Bass.
The story of Jossey-Bass demonstrates how financial ownership undermines mission and often destroys lives and communities when jobs disappear.
Maxwell Acquires Jossey-Bass, Fires Piersanti
Maxwell built Pergamon into a major publishing house. Although he was expelled from Pergamon’s board in 1969 for questionable ethics, he bought the company back in 1974 and repeatedly leveraged it to acquire other media properties, including Berlitz, a 50 percent share of European MTV, and the Daily Mirror, a London tabloid. In 1988, Maxwell, bent on building a global empire, bought Macmillan, a major U.S. publishing house. That same year, Allen Jossey Bass sold Jossey-Bass to Macmillan, which is how Steve Piersanti found himself working for Robert Maxwell.
These two personalities came into volatile contact not long after, when Piersanti received a call from corporate headquarters in New York saying that all Macmillan units had to reduce their staff by 10 percent. As Piersanti recounts,
There was no rhyme or reason for this. The company had just finished a record-breaking year in which our sales went up 22 percent, our profits went up 46 percent, and now we were being told you have to lay eight people off. I refused to do that, so I got summoned to New York City where I met at the Waldorf Astoria Hotel with Mr. Robert Maxwell. He made no argument that it made any sense for our company. He just wouldn’t accept this little California unit defying the corporate order. I politely said I just could not do that; it was not the right thing to do; it would not be good for the company. The following week I was fired and out the door.
But Piersanti had built many allies in the industry during his tenure. The next day he started getting phone calls urging him to start a new publishing company; a few months later Berrett-Koehler was born.
Maxwell Turns Up Dead After Committing Massive Fraud
In November 1991, the day before he was due to repay a huge loan, Robert Maxwell’s body was found floating off the Canary Islands where he had mysteriously fallen from his yacht. It soon emerged that he had been engaged in massive fraud to stave off the collapse of his publishing empire, which now included Macmillan, the New York Daily News, and the Daily Mirror. It eventually came to light that he had stolen and mismanaged hundreds of millions of dollars of his employees’ pension funds.
Two of his sons, charged with conspiracy to commit fraud, were eventually acquitted more than four years later. Burdened by more than $2.3 billion of debt incurred in its overpriced acquisition of Macmillan, Maxwell Communication collapsed beneath $4.4 billion of debt and Macmillan became a “solvent chapter 11 debtor.” The result of this collapse was devastating. The employees lost their pensions, and the banks that had lent Maxwell money, including Goldman Sachs, Lloyds of London and others, lost billions.
And the Maxwell story doesn’t end there. In recently unsealed court documents, Robert Maxwell’s Oxford-educated daughter, Ghislaine Maxwell, who, despite her father’s business failures inherited significant wealth, has been identified as a central player in the Jeffrey Epstein sex-trafficking scandal, allegedly helping to recruit young women to Epstein’s circle.
Piersanti Launches a New Kind of Publishing House
While Maxwell’s employees and heirs were sorting through the wreckage of his estate, Piersanti was planning a new venture. Having experienced Maxwell’s criminal abuse of corporate power, Piersanti was determined to create a different kind of publishing business, with a different corporate structure. “My vision from day one was to create a company that valued all of its stakeholders,” said Piersanti. “With the traditional [investor] ownership model, nothing mattered except the decree from the corporate owner. Without adding any real value, one stakeholder was calling all the shots.” In 1992, after careful planning, Piersanti launched Berrett-Koehler (BK) Publishers, with a mission later described as connecting people and ideas to create a world that works for all.
Owned by employees, authors, booksellers, customers, and its foundation, Berrett-Koehler has become a vibrant living community guided by its mission and values.
Leaders with Different Visions
While companies are always defined by more than one personality, Maxwell and Piersanti both left indelible marks on the companies they founded. These two men shared similar traits—leadership, verve, creativity, and immense drive in pursuit of their vision—but the purpose to which they applied these traits could not have been more different.
Maxwell was intent on building an empire under his singular domination. He trusted no one, concealing the convoluted finances of his businesses from his CFO and his sons. Piersanti, by contrast, sought inclusivity and long-term sustainability, not control. These two divergent styles informed the ownership structures that each firm pursued. While Maxwell utilized financial markets to build his empire, Piersanti pioneered a radically different corporate governance and ownership design.
Both men created successful niche publishing ventures, but Maxwell constantly leveraged his assets to acquire new businesses. His insatiable lust for wealth and power ultimately destroyed him and his businesses, and disgraced his family.
Unlike Maxwell, Piersanti built Berrett-Koehler into a resilient living system dedicated to its mission. As BK’s Constitution asserts, “We are embarked together on a journey to do the seemingly impossible—to create a world that works for all. No road map exists for this journey, so we are drawing one as we go, marker-by-marker.”
Berrett-Koehler Puts Mission into Practice
Not only does BK emphasize a values-aligned product offering (BK frequently publishes books about business stewardship and sustainability), the firm also practices many of the innovative ideas advanced by its authors. It sees its three publishing divisions—BK Life, focused on individuals; BK Business, focused on organizations; and BK Currents, focused on society—as a means of advancing its core mission, noting on the company website, “We aren’t really in the book business; we’re in the business of connecting people and ideas to create a world that works for all.” In a twist of what could be seen as poetic justice, one of BK’s earliest bestsellers was Confessions of an Economic Hit Man, an exposé of corruption in the global financial markets.
Berrett-Koehler’s Unique Ownership Design
Under Piersanti’s leadership, BK has created a culture of stewardship and participation: employees, authors, and business partners are all partial owners and are represented on the board. The company uses open-book management and community-wide meetings to cultivate stewardship and engagement. It also partners with a mission-aligned nonprofit organization, BK Author’s Inc., which offers marketing training, retreats, and scholarships to its authors.
Piersanti understood that BK’s stewardship culture needed to be supported by multi-stakeholder ownership design.
Piersanti understood that BK’s stewardship culture needed to be supported by multi-stakeholder ownership design. In 1996, BK created an Employee Stock Ownership Plan (ESOP) to give employees a stake in the company; the ESOP now owns 12 percent as a result of company contributions. In 2005, BK expanded its ownership to other stakeholders—authors, customers, service providers, sales partners, suppliers, investors, and community representatives—by offering them a chance to buy in with a minimum investment of only $800. In 2012, stakeholders created the Berrett-Koehler Foundation to support the company’s independence and advance its mission; each year, the company donates a share of its profits to the foundation.
Today, BK is a successful independent publisher with more than 650 titles, 30 employees, and about $10 million in revenue. It is owned by a community of nearly 250 stakeholders, including the company’s employees and authors. They have grown stronger as a firm, not simply bigger. They’ve also continued to put their values into practice in new ways.
In 2011, BK became a Certified B Corporation, and in 2015, the firm became a California Benefit Corporation, which means that it measures and tracks a triple bottom line that considers environmental and social impact alongside financial performance. The company has encouraged and supported its suppliers in becoming more environmentally responsible; one of its principal printers, for example, created a zero-waste policy and offset 100 percent of its carbon footprint. To reduce its use of paper, BK was one of the first publishers to fully commit to digital distribution; it is also expanding its audio book selections. Piersanti is still seeking ways to pursue and protect BK’s mission; the last time we spoke he was exploring purpose trust vehicles as a way to permanently preserve the company mission.
The stories of BK and Jossey-Bass couldn’t be more different. Jossey-Bass was viewed as a commodity, and as such was passed from one media conglomerate to another like a hot potato, sold four times in just six years. When Macmillan finally came out of receivership in 1994, it was bought by Paramount in a court-supervised auction and became a unit of Simon & Schuster.
Jossey-Bass was viewed as a commodity, and as such was passed from one media conglomerate to another like a hot potato.
Shortly after Paramount bought Macmillan, Paramount was acquired by Viacom in an epic battle between two other media moguls, Sumner Redstone and Barry Diller. Like Maxwell, they were driven by the personal pursuit of global power and wealth that has reshaped journalism and perhaps democracy itself. In 1998 Viacom sold its educational and reference properties, including Simon & Schuster, to Pearson PLC. Finally, in 1999 Pearson sold Jossey-Bass to John Wiley and Sons. Amidst this constant transition, employees and other stakeholders suffered. Ultimately Jossey-Bass lost its independence, becoming an imprint of much larger publishing house.
The story of Jossey-Bass demonstrates how financial ownership, which sees companies as objects, the sole purpose of which is to generate profit for external shareholders, undermines mission and often destroys lives and communities when jobs disappear. As technology has changed and financial owners have sought to find a publishing model that can generate large profits, the entire industry has been rocked by mergers, consolidations, and bankruptcies.
Berrett-Koehler, by contrast, demonstrates how the right ownership model can enable innovation and strong performance, and sustain mission over the long term.
Berrett-Koehler, by contrast, demonstrates how the right ownership model can enable innovation and strong performance, and sustain mission over the long term.. Owned by employees, authors, booksellers, customers, and its foundation, the company has become a vibrant living community guided by its mission and values. This has allowed BK to stay nimble and adaptive—introducing e-books, partnering with other independent publishers on distribution, and engaging authors in promoting and marketing their own books—thereby, successfully navigating the disruptive business climate of the last three decades. Deeply connected to all its stakeholders through its ownership structure, which protects its mission and values, BK is a thriving example of next generation design.