Employing a Startup Mindset to Help Books Fly off the Shelves

Is there room for innovation in a technology dating back to the 15th century? For our special reunion radio broadcast of Mastering Innovation on Sirius XM Channel 132, Business Radio Powered by The Wharton School, we spoke with Brendan Cahill (WG’08), founder and leader of Penguin Random House Labs, the team that focuses on innovation in printed books. With a background as a software startup founder, Cahill spoke about how he implements quick, small-scale changes in his entrepreneurial role within the major publishing company.

To keep up with the fast-changing world of retail, Cahill employs rapid product development and strategic partnerships. Guided by a combination of lean startup, human-centered design, and consumer-centric principles, his team creates and iterates prototypes that they hope will open new revenue opportunities for the company. He also leverages key partnerships like working with Shopify to develop new cart technologies and doing direct-to-consumer sales at comic-cons to learn how customers like to discover and experience books. Additionally, Cahill discussed the importance of building a brand around a mission that matters to society.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Brendan Cahill (WG’08)

Saikat Chaudhuri: Tell us about your role and what your innovation lab does. How did you get here?

Brendan Cahill: Sure. I joined Penguin Random House a little over five years ago. I was on the cusp of taking a job in Comcast doing strategy development after I left being CEO of a startup. In fact, I had verbally accepted the offer, but before I signed the dotted line, I got introduced to Marcus Dola, the global CEO of then Random House, which was on the cusp of merging with Penguin, which was interestingly the company that I worked at prior to business school when I was a book editor.

We had a very interesting conversation that went from being super informal to very serious and very formal lightning fast. And I wound up joining him. And there’s even more to that, which I know we’re going to get into, but I wound up joining him doing strategy work for the first couple of years as we merged the two companies together. Doing everything from working on the global brand of Penguin Random House to figuring out how to handle bringing together the house of brands that was Random House with the unified brand of Penguin. We had to think about what that meant and how the company would operate. I had a lot of technology questions, having been a software startup CEO and dealt a lot with the architecture of the company from an API and CRM standpoint.

Ultimately, that evolved to a role where I began to want to look at how we could use the technologies with which we’ve been modernizing the company to create a strategic lever for new revenue opportunities. That led to the concept of taking a product development approach to implement innovation in a small way that could then be scaled. We used small, rapid-fire tests while incorporating some lean enterprise and human-centered design principles as we were pivoting the company to become more consumer-centric. We were finding ways that we could do things that were fast to market.

“I began to want to look at how we could use the technologies with which we’ve been modernizing the company to create a strategic lever for new revenue opportunities.” – Brendan Cahill

In the first year, I brought in the CTO for my startup, Kyle Gerard. He had a fantastic business and product mind, in addition to being a phenomenal engineer. And then we built a very small fast-moving team together where we could be a force multiplier joining with different pieces of the company to create rapid, particularly consumer-focused prototypes in the first year.

Now, as we moved from the second year into the third year, we’re really looking to leverage those into new types of partnerships that then have bigger market meaning in a very disruptive marketplace.

Chaudhuri: Can you give us an example of a specific product or service with which you have done that?

Cahill: Sure. Of course. For example, we did a lot of work in direct-to-consumer retail. We did experiments about retail out of a traditional store type of context, about how people buy and discover books. We worked with Shopify to develop and build off of their platform of APIs to create cart technologies that can be both mobile checkout as well as online checkout, and that powered experiments that we did with a pop-up store in Puerto Rico that we enabled with a local partner that then became a permanent store. They wound up taking over. We did direct-to-consumer sales at comic-cons, where we were able to gather consumer information using mobile technologies we previously did not have.

We did direct-to-consumer experiments around products, including with HBO’s “Game of Thrones,” where we created a collectible box with a collectible book and other items for George R.R. Martin fans. We took online orders as well as in-person orders at comic-cons with using those technologies. That allowed us to see how consumers wanted to acquire, discover, talk about, and experience books, and now we’re able to use those as conversation pieces as well as knowledge points that we can bring to our retail and other partners. This knowledge will enable their businesses to grow and evolve in a very rapidly changing 21st century retail environment.

“We did direct-to-consumer experiments that allowed us to see how consumers wanted to acquire, discover, talk about, and experience books.” – Brendan Cahill

Chaudhuri: Okay, this is extremely fascinating to me. And the reason is that we often hear about how the print and physical medium and brick and mortar is on its decline. We see a lot of doomsday predictions, and there have been trends in that direction, because everything seems to be going digital. You are actually looking to buck that trend and really challenge and counter that. And it’s really interesting, because if we look at someone like Amazon, too, with their purchase of Whole Foods or their creation of these stores, I recently saw one in New York as well and in a very prominent mall location, we’re seeing a little bit of a movement towards maybe having some physical presence as well or physical products, even when they could go online or go digital in some form.

About Our Guest

Brendan Cahill is the founder and leader of Penguin Random House Labs, a cross-functional innovation team under the US Chief Operating Officer. PRH Labs leverages human-centered design principles, rapid-product prototyping, and new technologies to create go-to-market tests for new business opportunities, including disruptive D2C and partnership models centered on PRH’s core physical book business.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

Somina Lee is a Production Assistant for the Mack Institute’s radio show, Mastering Innovation. She is a junior in the Huntsman Program, concentrating in Finance and Marketing & Operations Management at the Wharton School and majoring in International Studies in the College of Arts & Sciences.

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