Augsburg Fortress Publishers Endorses New Business Plan

CHICAGO (ELCA) -- The board of trustees for Augsburg Fortress Publishers (AFP), the publishing house of the Evangelical Lutheran Church in America (ELCA), endorsed a series of strategic priorities aimed at positioning AFP as "the premier Christian communication organization" and refocusing AFP's business systems "to create a market-driven organization."
The priorities call for Augsburg Fortress to focus on ELCA congregations and expand to the ecumenical market, develop and launch a new marketing effort at select consumer markets and expand through alliances, mergers and acquisitions. The board adopted the priorities without dissent as "directionally correct" at its April 22-24 meeting here.
The board also directed AFP management "to begin timely implementation" of the business plan. Each priority included a series of action steps.
The business plan was developed by Manchester Companies, Inc., a Minneapolis consulting firm.
In 1998 the board directed the Rev. Marvin L. Roloff, AFP president and chief executive officer, to work with a consultant to develop a business plan for the publishing house. The request resulted from the board's concern about "excessive inventory, declining sales and unprofitable years."
"I think what the board did was take some very bold but necessary steps as we look at the role of Augsburg Fortress as the publishing house of the ELCA and beyond in the ecumenical world," Roloff said after the board meeting. "That's big news as far as I'm concerned. It's challenging, but it will be very fulfilling."
The priority to become "market-driven" resulted in some questions from board members. Some members suggested a market-oriented philosophy may conflict with the publisher's mission as a church-related organization. Without dissent, the board decided to retain "market-driven" when it adopted the plan.
"It obviously calls for a shift in philosophy within the publishing house," Roloff said. "This adds a perspective that says, before we develop a product, we know there is a market and there is a use for it."
The plan was prepared over a nine-month period. The consultants' report included interviews with people throughout the company and the ELCA, studies of similar companies and a detailed examination of trends in the publishing business, said Mark W. Sheffert, chairman and chief executive officer of Manchester Companies.
Having a detailed business plan is not the only solution, Sheffert said. "The real key is execution," he said.
"If Augsburg Fortress continues the way it's been continuing, it's not going to survive," Sheffert told the board. "Our goal is to help Augsburg Fortress Publishers achieve its mission. That's what we were hired to do. It's not going to do anyone any good if it's not around."
One trouble spot for the publishing house is persistent sales declines, which have become the most significant threat to the long-term health of AFP, said Robert McNulty, AFP vice president for finance, in his report to the board. AFP has been plagued by declines in sales every year since 1990, with the exception of 1995, he said.
"While the overall financial condition of the house remains quite strong -- with positive cash flows, excellent liquidity and substantial reserves available for investment in growth -- our inability to reverse the slow erosion of market share poses a long-term threat which is becoming increasingly significant," McNulty said.
Recommendations in the business plan include hiring a vice president for marketing. A search is already under way, Roloff said. It also calls for reorganizing some AFP staff into "strategic business units" -- three institutional units (ELCA, ecumenical and special needs) and three consumer units (children and families, "teens plus," and adults).
In addition to priorities, the plan adopted by the board suggested business and financial goals for AFP:
-- expansion of market share of ELCA congregations from 70 percent to 90 percent by broadening business efforts to serve "special needs and mega-church segments;"
-- increase revenues per congregation by 15 percent to $6,000 per year "by deepening penetration of AFP's existing congregational relationships;"
-- increase relative productivity, as measured by revenue per AFP employee, by 10 percent to $165,000 per employee; and
-- achieve a 10 percent revenue growth rate by 2003 with a 5 percent operating profit in the same period.
Profits should be "reinvested into increasing the mission of AFP," said Bruce Senske, vice president, Manchester Financial Group Inc.
"As a publishing house, we have not been a good steward of the mission -- not only in dollars but in lost opportunities," said Timothy I. Maudlin, AFP board member, Eden Prairie, Minn. "Being a good steward is part of the mission of AFP."
During its discussion of the plan, the board adjourned into executive session for more than an hour. The purpose of the session was to discuss personnel matters, said Richard E. Lodmill, acting AFP board chair, Seattle. AFP Board chair Todd P. Engdahl, Denver, was unable to attend the meeting.
After the board meeting Roloff said he would share the plan immediately with all AFP employees.
"They will be fully informed, so that all understand this is the plan of Augsburg Fortress," he said.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
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