Overview of How Barnes & Noble made a comeback, with CEO James Daunt
This episode of Masters of Scale features James Daunt, the CEO credited with helping turn around both Waterstones in the UK and Barnes & Noble in the U.S. The conversation focuses on how he revived struggling bookstore chains by trusting booksellers, decentralizing decision-making, resisting overreliance on data, and preserving the human, curated experience that makes physical bookstores special. Daunt also shares his views on introverted leadership, the power of fiction for leaders, and how AI may affect publishing and bookselling.
How James Daunt Got into Bookselling
From finance to bookstores
- Daunt says he left finance early because he wanted work that aligned with his interests, especially reading.
- What began as a small bookstore business quickly became a long-term commitment because of investors, employees, and obligations.
- His first store opened during a difficult period: the Gulf War and recession hurt sales, and the business struggled to cover rent.
Early lessons from failure
- He credits stubbornness, consistency, and constant improvement for getting through the rough start.
- Over time, sales improved month by month until the business reached a tipping point.
The Philosophy Behind the Turnaround
Bookselling is about judgment, not just data
- Daunt argues that bookstores are won through:
- presentation
- service
- assortment
- inventory
- local judgment
- He believes the best store decisions often come from “defying the data” rather than following it blindly.
Why central control hurts bookstores
- He warns that data can lead to centralized uniformity, which destroys the local character of stores.
- His approach is to reduce centralized control so each store can respond to its own community.
- He sees bookselling as a craft that depends on human curation more than optimization.
A simple example: shelf space
- Toddler board books sell well but don’t need much shelf space because kids reread the same few books.
- Older children and young readers need far more variety.
- Poorly allocated shelf space can make both customers and stores unhappy.
Turning Around Waterstones
Why he took on the challenge
- Daunt believed Waterstones was underperforming because stores were bad and confidence in bookstores was collapsing under Amazon’s rise.
- He thought the chain could be fixed using the same principles that improved his independent stores.
- He also believed keeping the chain intact preserved bookstores in many communities.
Finding an investor
- After private equity firms rejected the idea, Daunt found a Russian entrepreneur who loved books and saw the opportunity.
- Daunt says the investor understood the purpose of bookstores and backed the turnaround.
A different response to e-books
- Rather than fearing Kindle, Daunt sold it in the stores.
- His goal was partly financial, but mainly to reduce fear among booksellers and reinforce that stores are places for discovery.
Barnes & Noble: Same Playbook, Bigger Scale
Why the model translated
- Daunt says Barnes & Noble’s problems resembled Waterstones’ earlier struggles: declining sales and weak stores.
- He felt the same approach could work because the customer behavior and the bookselling culture were broadly similar in the U.S. and UK.
- The timeline for turnaround, however, was not faster the second time; culture change still took time.
Culture changes slowly
- He compares culture change to stretching a rubber band: relax too soon and it snaps back.
- Success comes from persistent improvement across the organization.
Leadership Style: Flattening Hierarchies
Collective responsibility over command and control
- Daunt prefers flat hierarchies and shared responsibility.
- He believes hierarchy can make people wait for orders instead of thinking for themselves.
- In his stores, autonomy helps teams become more engaged, responsive, and durable.
Why bookstores need this model
- Retail is hard work: long hours, modest pay, seven-day operations.
- Because the job is demanding, he thinks booksellers need a strong team culture and a sense of vocation.
How he handles mistakes
- He says he is not especially “cuddly,” but he tries to remove fear around mistakes.
- His rule: acknowledge errors quickly, don’t dwell on blame, and move forward.
- That helps people at all levels feel safe taking initiative.
BookTok, Social Media, and Organic Marketing
The surprise strength of younger booksellers
- Daunt says BookTok has been fantastic for bookstores, especially because young staff members understand and drive it naturally.
- He does not believe bookstores need a big central marketing department to capitalize on it.
Why he avoids central amplification
- He thinks authenticity is what makes BookTok work.
- Instead of turning local posts into corporate campaigns, he lets staff create and share content organically.
- Books spread store-to-store “like a rash” when booksellers are empowered to recommend them.
Where he does invest
- He prefers spending on infrastructure that helps booksellers:
- IT
- distribution
- operational tools
- In his view, the center should make store teams more effective, not control them.
Being an Introverted CEO
Leading from the backseat
- Daunt identifies as an introvert and says it keeps him humble.
- He believes introverts can lead effectively if they create a team that is confident in:
- strategy
- direction
- culture
- He doesn’t need to be the loud frontman; he prefers to support from behind the scenes.
Why his background matters
- He spent 21 years working on the shop floor, which helped him deeply understand booksellers.
- That experience makes him feel connected to the people doing the work, even if he doesn’t express it in a highly emotional way.
What Fiction Teaches Leaders
Literature as leadership training
- Daunt recommends reading great fiction, especially novels that explore:
- human relationships
- rivalry
- jealousy
- insecurity
- motivation
- He specifically mentions Middlemarch as a great starting point.
Why fiction matters
- He believes books are a civilizing force.
- Reading widely helps leaders become more reflective, empathetic, and better at understanding people.
- He also points to Shakespeare as a source of insight into ego and internal conflict.
AI, Authorship, and the Future of Bookselling
Strong skepticism about AI-written books
- Daunt says bookstores have a natural suspicion of AI-generated writing.
- Barnes & Noble and Waterstones try to filter AI books out of online catalogs.
- He would like publishers to disclose whether books are AI-assisted or AI-generated.
Transparency over prohibition
- He does not expect to ban AI books entirely if customers want them.
- But he believes transparency matters so readers know what they are buying.
What AI may change
- He thinks AI will likely affect categories like:
- study guides
- formulaic reference books
- He is doubtful AI will produce the next great novel.
Why human authors still matter
- Daunt argues that readers connect with authors, not just content.
- Booksellers help build authors’ careers and connect them with readers.
- In his view, that human bond is central to the future of bookstores.
Key Takeaways
- Bookselling is a people business. Human judgment and curation matter more than centralized data.
- Turnarounds depend on culture. Changing culture is slow and requires patience.
- Local autonomy wins. Store teams should have freedom to respond to their communities.
- Authenticity matters. Especially in social media, organic voices outperform corporate campaigns.
- Introverts can lead powerfully. Strong systems and clear values can replace constant spotlight leadership.
- AI will change publishing, but not replace the value of human authors and booksellers.
Practical Lessons for Retail and Leadership
For operators
- Trust local teams to make decisions.
- Use data as a tool, not a rulebook.
- Invest in systems that make frontline work easier.
- Keep the customer experience human and distinctive.
For leaders
- Build confidence in your people rather than control them.
- Normalize fast recovery from mistakes.
- Read widely, including fiction, to better understand human behavior.
- Protect the culture that makes your business unique.