Twenty years ago, people thought 'creative industry' was a contradiction in terms. Industry was about profit, creativity about inspiration. Nowadays, creative businesses are central to our economy. As traditional industries have bowed out, they have powered ahead. Managing creativity is now a mainstream necessity, not a peripheral skill - but balancing creativity and profitability is not easy. There is no right way to do it, and even trying to define it involves contradiction and paradox.
The first paradox is in being big and small at the same time. Random House is the UK's largest trade publisher, but our business - producing books that sell - depends entirely on the efforts of a chain of individuals.
This begins with our authors. Some of them are household names; many are unknown.
But each expects individual attention, and although we publish more than 1,500 new titles a year, that industrial scale should not disguise the fact that we are effectively launching 1,500 separate enterprises. We put the power of a large and professional organisation behind our books, but the initial creation comes from just one person.
When I became chief executive, I took over a group of 20 publishing imprints - to which we have since added another 10 - sitting unhappily under one corporate umbrella. Each operated as a publishing business in its own right, but it made sense to consolidate those functions that were being duplicated.
This would be sensible in any industry, but what differentiates publishing is that this consolidation would not have worked at the creative cutting edge. Our imprints operate in small teams, led by a charismatic publisher.
Working for an imprint gives its members a dual sense of identity - with both the imprint and the larger entity of Random House. The emphasis is on collegiate co-operation. There is competition, but only when healthy for the firm as a whole.
No-one gets lost in a vast corporate environment. People take pride in their part of the business, but they also benefit from the larger group in the way that they are supported and rewarded. Authors can see the benefits of this 'large-small' structure. They like the intimate, boutique feel of working with a close-knit team, but they also like being published by a company large enough to get them to the front of the major book-retailing chains, which dominate sales in the UK and overseas.
A second contradiction is publishing's inherent mix of organised practices and unpredictable results. I can tell you today almost exactly what books we will be publishing next year. I know how most of them will look and how they will be marketed. But what I can't do with any precision is tell you which are going to sell.
Of course, there are exceptions - a new novel by Ian McEwan, Terry Pratchett or John Grisham will shift volumes - but I can rarely tell you who the new bestsellers will be. Kathy Reichs may have had a hit with her first book, but Dan Brown wrote several before The Da Vinci Code became the biggest adult bestseller of all time.
Word-of-mouth is a powerful, authentic but unpredictable form of communication.
It starts as a publisher's vision, spreads across the company and can often translate into instant success. For others, like Louis de Bernieres' Captain Corelli's Mandolin, it takes time before the book reaches cult status, spurred on by countless personal recommendations.
This uncertainty is hard for people outside publishing to understand - a new CFO once complained: 'Why is it that we don't just publish the bestsellers?' What he was lamenting was not the inefficiency of creative industry, but its unpredictability. Who would have thought that a story told by a teenager with Asperger's Syndrome - The Curious Incident of the Dog in the Night-Time by Mark Haddon - would sell well over a million copies in paperback? New books are a risk - the skill for publishers is to make more right decisions than wrong ones.
Finally, there is the increasing homogeneity of the retail trade, which wants a tight focus on best-selling books it can discount easily in '3 for 2' deals, but also wants the freshness and innovation of new authors.
In any one year, up to half of our fiction output could be from first- or second-time novelists, backed by significant campaigns. But if we were to listen to the trade, 'the long tail' of our publishers' tastes and passions, based on their accumulated skills and experience, would be cut off.
Rather than fall into the trap of too narrow a focus, we prefer to leave every publisher a breadth of personal creativity, and seek new ways of selling our diverse list. And simply because the process isn't predictable doesn't mean it isn't driven by commercial imperatives.
Contrary to stereotypes, editors tend to balance their passion for an individual book with sound commercial judgment, since for a book to work it has to sell. Profit and publishing success are inextricably linked, and this will seem a paradox only to those who persist in an outdated belief that creativity and business are foes, not friends. mt
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Gail Rebuck CBE is chair and CEO of the Random House Group. She was a trustee of the Institute for Public Policy Research and a member of the Government's Creative Industries Task Force. She is currently a non-executive director of BSkyB, a trustee of the Work Foundation and on the council of the Royal College of Art.
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