Circulation management: you can't read everything

Circulation management: You A few weeks ago, I returned to my office after having been away two days. The in-box was overflowing and the top of my desk had disappeared under a flood of paper. There was so much to go through, half a day was consumed in the sorting--and a lot remains unread.

That experience is typical of nearly every executive I know. There is just too much material to keep abreast of. Even when I apply the principles of speed reading, it's easy to stay way behind. The higher up you are in your organization, the worse the problem.

When personal computers first appeared, one selling point was the reduction in the amount of paper an office would consume; all the back-up work could be done on a screen, and final reports would just roll cleanly off the printer.

As it has turned out, personal computers do reduce the need for scratch paper, but the flaw in the paper-reduction theory has been exposed: With the aid of a computer and a trusty printer, any staff member can generate more reports in a day than any supervisor can read in a week. Woe to those managers with five people reporting to them!

About four years ago, just as the first personal computers were making their way into circulation departments, FOLIO: asked me to discuss the most significant trends in circulation at an executive seminar for 30 presidents and magazine publishers. My point to them was that if they would only seize the moment, they would have a tremendous opportunity to reorient their circulation operations from boxcars of clerical chores to engines of strategic innovation. The way to do it, I said, was to use the computer to marshal information and transform the way each executive looks at and does his or her business.

This opportunity would be missed, in my opinion, if top managers simply accepted the same old reports they had always been getting, now spewed out by printers instead of typewriters.

In the subsequent four-year interval as a consultant to magazine companies both large and small, I have observed that, with few exceptions, the worst has happened. Instead of using the potentials provided by computer technology to transform decision making, managers in most companies have become mired down in more detail and larger amounts of paper. Worse, some important detail goes ignored.

Paper avalanche affects productivity

Ironically, this paper avalanche has swelled at the very time that communications companies have carried to the public a related message from political leaders and those concerned about manufacturing: In order for the United States to regain its competitive edge, businesses must increase their productivity. As costs keep going up, publishing companies ignore this national concern at their own peril.

This article will offer a framework that can lead to effective action to increase productivity and reduce waste in publishing by organizing the reams of material that must be read by busy executives.

One solution to the paper glut--"Ignore it and it will go away"--is simply to omit a lot of the reading mentioned. From time to time, there isn't much choice. What a manager must normally read sometimes increases to the point where the only reasonable response is to toss out most of what's there. This is most likely to happen right after a week off, or after a few days away on a business trip. On a regular basis, however, this solution must remain only a theoretical possibility. The larger the organization and the higher up a person is, the less feasible the "Ignore it" system becomes.

A second choice might be referred to as "selective reading." It's the one most often employed by most executives most of the time. Using this approach requires several hours a week set aside for scanning all that is received, dividing it into categories, setting priorities on what to read first, second and third, and estimating additional time required to delve into selected items.

Deciding which reading takes priority depends on the reader's job. Take, for instance, direct mail advertising. Some executives consider it a burden and just throw it out. For many, looking it over is a great way to keep abreast of developments in the marketplace, and to learn which suppliers are offering something that might prove to be an advantage. But to direct marketers, such items are of paramount importance to read--not only for technique, but for content as well. Practitioners of the art and those who must make or recommend subscription marketing decisions might even choose to be placed on lists.

But whether your responsibilities include direct marketing or not, it is important to have a system for dealing with such reading matter. In fact, working out a system for dealing with all the material that comes across your desk presents an opportunity for yet a third approach--strategic reading. The foundation for this method of eliminating your paper glut is to take a self-conscious look at the strategic value of all the information that comes across your desk, evaluate how critical it is to the job you do, and develop some purposeful basis for looking at it.

A case in point is the question of keeping up with the competition. That's becoming harder and harder for executives, particularly for those who have responsibility involving more than one publication or market. Not only is there likely to be a proliferation of titles, but every part of a magazine is revealing, deserving of study and attention. Advertisements show who's in where by category and account. Art, design and pictures declare what is being emphasized, and disclose shades of change that may reflect, or possibly lead, trends in audience taste. Choice of stories and their tone and length say a lot about who a publication might appeal to, and how. Insert cards, mast-head information, statements of ownership and wrappings can tell the circulation department about pricing, personnel and distribution.

Although all these pieces of information and how they fit together over time are useful during strategic decision making, few companies track them well. In fact, in a recent FOLIO: seminar where strategic uses of competitive information was a topic, top managers from 35 different companies, both large and small, admitted that their organizations failed to track their competition adequately. The monitoring process is difficult. And the more competitors a manager has to follow, the more difficult it is.

Another approach is to assign monitoring activity to specific individuals. For example, a person in advertising needs to be responsible for a set of tear sheets and related files by advertising account. Or the function could be assigned to individual salespeople.

During one reorganization of a major company's circulation department, it was recommended that one person receive the competitive magazines in each market, and track, on a systematic basis, pricing, offers and other related information. Once the system was set up, reporting was to be on an exception basis--i.e., management was to be alerted only when a price or offer had changed.

Although a manager can generally get away with overlooking solicitations and competitive publications for a short period, or can work out a way to delegate the responsibility, correspondence and internal reports are personal must-reads. Because personal correspondence is a highly individual subject, the focus in this article is on the management of internal reports. Because the heaviest volume of reports is in circulation, we're going to use that department as our example of how to set up, on a strategic basis, to cut the workload.

In the circulation department of any magazine that has subscriptions, most reporting originates in the fulfillment house. If there is any doubt about the truth of this statement, consider these measures: The number of reports generated regularly for each magazine by one large fulfillment house is 72. (That's right, 72.) No other department, or part of one, comes close. Then there's paper. Stacked from the floor up, one month's reporting for a single publication might vary from two feet to five feet, depending on the size of the magazine, the number of sources in use, the number of promotions in the works, and whether a detailed source-to-source report is used.

Several innovations have been developed to assist in the storing and the eventual manipulation of this volume of information. For example, hard copy is no longer shipped on 11" x 17" computer paper. Instead, it may be sent on microfiche or microfilm. More often, it is forwarded via stacks of 8-1/2" x 11" paper.

Certain essential information that requires a great deal of follow-up manipulation, such as production by source and key, can be downloaded to programs for personal computers. Additionally, all large fulfillment houses now offer the capability to download expire and liability tables directly into computer models. These innovations save clerical time in transferring numbers. But the questions remain: How is this information to be manipulated? And what is important for managers to consider?

In reviewing your own paper glut, there are two essential heuristics:

1. What decisions do you have to make and what information is important to bring to bear?

2. How often and when do you have to know?

Figure 1 presents a sample of typical decisions that have to be made regarding circulation. It also spells out a possible configuration of the relationship of different managers to each decision. Obviously, this description will vary from company to company and department to department. For example, in some companies, the publisher is, in reality, responsible mainly for selling advertising and may only recommend rate base or prices.

Figure 2 outlines various kinds of circulation information that needs to be considered in making some specific decisions. Regardless of any rational model of circulation decision making, every decision must be made in the knowledge that all information is not perfect and that unforeseen events can influence expected outcomes.

Perhaps the decision made most often in managing a circulation operation is buying more or fewer subscriptions. This decision is a pragmatic result of the operational decisions in managing rate base. In order to execute this assignment, a circulation director has to monitor, on a continual basis, the flow of subscriptions on and off by source; a shortfall in one area necessarily has to be made up by expansion in another.

This kind of day-to-day decision making requires a continually up-to-date knowledge of file inventory. But it also requires intimate familiarity with source dynamics, an understanding of the economic and business consequences of long- and short-range decisions, and knowledge of the publication's overall objectives with respect to rate base and profitability.

To make the necessary judgments well, the responsible person must have detailed knowledge of the flows, and a vision of how they fit together to formulate the big picture. Variables affecting these flows that might be tracked include expires by source, anticipated new business acquisition by source, renewal rates by expire, propensity to renew by month before expire, number of credit subscriptions coupled with amount of bad pay, copy inventories, economics of start issue by source, advertising policy on arrears, single-copy draw and anticipated sales, special promotions, and possible other events that may affect prior forecasts.

It is obvious that performing this particular assignment properly means that a lot of detailed information has to be pulled from various fulfillment reports, as well as from those responsible for marketing. Current statistics have to be compared to budgets and fit together with advertising, editorial and single-copy changes.

Executives with different responsibilities need few, if any, of the aforementioned details on a regular basis. Nevertheless, when variances must be explained, the story should be presented in carefully crafted, reliable reports that record prior expectations and the events that have imposed changes. A strategic approach for the higher level executive is to work from a budget report, with written explanations and interpretation.

In contrast, a decision about rate base is taken periodically, perhaps on an annual basis. Under these circumstances, the kind of information required for day-to-day management is relatively unimportant. (The exception, of course, is where the detailed flows reflect some trend in the market that affects the overall capacity of sources.)

What becomes much more important are data that reveal trends in audience size and direction, and the propensity of this broad group to subscribe. Here it is important to give attention to factors such as the growth of the overall economy, the outlook for advertising, the outlook for the markets of core advertisers, what moves other publications are likely to make with regard to rate bases, prices, product offering and other factors that may influence the distribution of money in the marketplace. Beyond these essentials, it is useful to take into account how unforeseen developments, such as large drops in the stock market, may affect the willingness of consumers to spend.

Although it is obvious that a lot of information is in fact essential, it must be focused by an organizing principle to be brought into the context of decision making. Organizing information on a decision-oriented basis allows executives to evaluate what they are being asked to read on the basis of its utility. What proves not useful can be culled.

The purpose for setting up an executive's information flow is to reduce the level of uncertainty in decision making and the level of risks. The more encompassing the information given to the executive, the greater will be his level of understanding and ability to track, explain and therefore react positively to events as they unfold. That's the meaning of management control. And that is why guessing without an educated foundation, which sometimes passes for decision making, is a problem.

Don't blur the issues

Computers have made it possible to bring so much more useful information to bear on a decision. But in most businesses the problem is that managers are relying on the same old shortcuts that were used before such tools were available. When information is not focused through the application of an organizing principle, it just blurs the issues and much of the data remain unused--to the detriment of all concerned.

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