Why might MBA students care about independent bookstores?

A glance at financial news will tell you we are living through an unprecedented shift in the way people shop. “Retail apocalypse” is not just a poetic phrase, but a widely recognized term bandied about on trading floors and boardrooms as brick and mortar institutions fail while e-commerce surges.

Yet between 2009 and 2015, the American Booksellers Association reported that the number of independent bookstores increased from 1,651 to 2,227. This revelation caught the attention of Harvard Business School professor Ryan Raffaelli, who studies how industries respond to technological disruption. Over the past few years, he has spent hundreds of hours studying independent bookstores, trying to figure out how they had not just survived the age of Amazon, but thrived in it.

Within the literary world, independent bookstores are sacrosanct. Announcing their value is almost cliché at this point. It’s a feeling most of us live. Intrinsic. But it’s interesting to hear about the nature of their recent success from someone for whom their virtues are not a natural or obvious fact. While Professor Raffaelli’s full findings will be published later in 2018, he identified three central mechanisms in an abstract published late last year—“community”, “curation”, and “convening”—by which independent bookstores have flourished.

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Maxwell Neely-Cohen: How did you arrive at studying bookstores?

Ryan Raffaelli: I’m an organizational ethnographer. What that means is that I’m sort of like an anthropologist. I’ll go into an industry for three to five years and try to understand why and how it is behaving the way that it is. Usually, I’ll pick industries based on the fact that there’s something unique going on, something that breaks the rules of how we would anticipate them to behave.

I often look at mature industries that are facing a large technological or business model shock, where the incumbents are now having to grapple with questions of both who they are and what they do. So for bookselling, I got really interested in the fact that starting around 2009, there was this growth in the number of members in the American Bookselling Association. I’d been looking at several industries that, when faced with a similar shock, were counted out. I wanted to know, under what conditions do businesses actually reposition themselves in ways that allow them to survive on different dimensions?

So I immersed myself into the field. I conducted several hundred interviews, then did quite a bit of participant observation. I started attending all of the industry events, and also just observing and going into bookstores. I can’t remember the number of stores that I’ve now observed to try to get a sense for what’s going on here. I coupled that with a series of focus groups.

And in addition to all of that, I’ve been interested in trying to understand how this shift happened over time. I downloaded every article about bookselling. Anytime the word “bookseller” appeared in an article in the New York Times, the Wall Street Journal, USA Today, and Publishers Weekly, I coded it. And then the American Booksellers Association has been very generous with also opening up their archives to me, so I’ve been coding all of the ABA presidential letters over the last 15, 20 years to try to understand what they were communicating to their members.

What’s fascinating about what’s going on here is that, particularly today, more and more businesses in the larger world are now faced with the threat of online commerce—more specifically, with trying to grapple with the question of “How do we survive in a world of Amazon.com?” This is a challenge that independent bookstores have faced from day one, because books are where Amazon started. From a generalized ability perspective, there are a lot of lessons that can be learned here for other organizations that have nothing to do with books about how you can compete with Amazon on your own terms. This is what I think the indies have begun to help us understand better.

MNC: On the way over here, thinking about this interview I jotted down, “The indie bookstore solution to Amazon’s ‘last mile problem’ is to make that experience meaningful.” It’s one solution to the culture of consumers thinking “I want it and I want it now.” If the experience of actually going out to the store is meaningful, if you feel you have as stake in it . . .

RR: Yes that’s exactly right. What I see from my research is that when you’re an incumbent and you face one of these large shocks, the natural tendency is to race against the new model. This goes back hundreds of years. If you look at, for example, when steamships came out, sailing ships for cargo were very much at risk of being displaced. What you saw them doing was actually putting steam engines in the middle of their holds so they could compete head on. You see in a lot of industries these periods where they go through this sort of hybrid approach.

What my research has been looking at are the categories where that’s not what happens. Where industries pull themselves out of that fight and just compete on their own terms. That’s when you start to see growth again.

MNC: Hearing you talk about this, I can understand how you’ve also studied the watch industry

RR: For watches it was, if we’re going to talk about making precise watches, we’re never going to win against a quartz watch. It’s 30 times more accurate. But if we’re willing to talk about precision and then couple it with this notion of craft, now it becomes a piece of art and that’s actually something that people are willing to pay for and we’re willing to invest in because of a different set of dimensions. And the indies did the same thing.

MNC: So you’re a field researcher. And this time your research took you on what was effectively a grand tour of independent bookstores. Forgetting the academic angle for a second, what was it like, for you personally, being immersed in that? Seeing all those stores? Talking to all those people?

RR: Academics and journalists have similar benefits from their chosen careers, in that we get to study the things that we find most interesting. So I pick topics that I just find fascinating, people that I want to be around. For me, being around independent booksellers was so captivating because, first, this is very much a value driven industry. Particularly as someone who studies business and teaches about leadership, I think that what we’re learning is that values can drive growth and engagement in ways that can trump what we often think about as economic viability.

This grand tour of independent booksellers was a chance to really tap into people who are completely committed to the idea of what it means to be an independent bookseller. There’s something unique when you’re around those who are passionate about their work, something contagious. For me, being around these independents was a chance to see people doing work many of them have devoted their lives to in a way that we would think of as like a calling. That’s always very inspiring to be around.

MNC: How much has author advocacy for the value of independent bookstores, particularly by famous authors, helped these businesses?

RR: This is a huge part of the story, and it’s very much tied to the fact that authors are very loyal to the independents. For many writers, the independents were the ones that originally helped them with their start, or helped develop their voice by selling them books. They were the ones hosting their events and book signings early on. And I also think that translates to the customer side. There’s a group of readers who are very loyal to the indies because they know that the indies will help them curate the next up and coming thing that extends beyond the New York Times best seller list—that they will connect them to those authors.

MNC: Right. They’re making and breaking books in some cases.

RR: And they’re also finding the diamonds in the rough. I think the author community is attuned to the fact that, with the indies, they have someone who is aligned with them. Independent booksellers are also sympathetic to what it means to be an author. Because I think a lot of people who read books have no idea how hard it is to actually get a book published, let alone sold. And independents get this; they’ve always gotten it. I think we are also starting to see publishers understand that if they want to begin to promote certain types of authors, who may not be the classic ones that you can find on the Amazon front page, that indies are a channel where one can actually begin to see new talent flourish.

MNC: Are there any other lessons that publishers can take from your work?

RR: Publishers are grappling with a lot of different dimensions in terms of where they’re going to find margins. But regardless, what holds true is, where do I find my most excited customers, the ones who drive taste for the larger consumer base?

I think publishers are starting to realize that indies have been pretty good at tapping into this; they are doing a better job at seeing that aha, not only is this channel committed to great work, but its consumers are really committed to great work. Independent bookstore customers are the ones willing to tell their friends about what they liked; they become a type of trendsetter. They’re the ones that often other people ask, “What was the best book you read recently?”

MNC: You mentioned the role of the ABA in your research. In what ways is the ABA a model for a business organization?

RR: I approach this work trying to understand, how is it that you create a collective category, while at the same time allowing for independence? Right? Each bookseller by definition is meant to be independent, and each is doing something a little bit different.

But at the same time, in order for the category to survive, the consumer has to be able to recognize it as distinct from other forms of bookselling. And so that’s where the ABA comes into play. They help define the category, and they also bring booksellers from all over the country together. The biggest surprise was the level of cooperation that I saw. It sort of makes sense because the indies are geographically positioned where they can share best practices without threatening their own business model.

I’ve spoken to a lot of booksellers, in this newer generation particularly, who are now coming in, often from other sectors, and taking over bookstores. The first thing they keep saying is, “I can’t believe how much collaboration and practice sharing there is.” And I think the ABA has played a big part in that. They have been successful because they haven’t over-reached; they’ve embraced the diversity of what it means to be an independent bookseller.

MNC: I keep thinking about what you said about values.

RR: To give an example, one of the things booksellers were not going to let go was the notion of community. We’re at a place where information can be shared and ideas can be debated anywhere. But these are things that extend back to the early 18th century reading groups that were taking place in bookstores. So indies decided, we can’t let go of this community. And that is a separate consideration from questions like “should we try to have sales” and “do we have to worry about how many titles do we need in the store to compete?”

When you have a clean idea about a higher order value system that also is aligned with a consumer value system, it becomes less about the product and more about those values that attach the two together.

Independent booksellers realized and were clear about, “this is what we have to hold onto and this what we have to let go of.” And those decisions were based on values.

For a lot of organizations, when they’re making those decisions after facing sort of a technological shock, those choices often aren’t values based. And I think for the indies, they were principled.