I recently went to the annual Software Information Industry Association (SIIA) conference for their Content Division. There were several interesting speakers, but a few of them really stood out. Dick Harrington (CEO, The Thomson Corporation) was one of those speakers. In keeping with my theme, I thought I’d share some of what he had to say about effectively changing the strategy and direction of a large established company. I have notes on his full session so please email me if you’d like them. What follows deals only with the direct actions he took to manage to change!
When Mr. Harrington took over as CEO in 1997, his focus was on getting Thomson ready for the future. He sold off the travel and newspaper businesses for $2.7B and $3.5B, respectively (thereby cutting his company in half). He didn’t see these business models as sustainable. He then began to rebuild Thomson with a series of acquisitions. His goal was that the acquired companies would work together with some interoperability. He was aiming for size and scale in markets where he felt large investments would be needed to grow the business. In many cases, he was focused on knowledge workers and the integration of Thomson information into his customer’s workflow.
One of his biggest challenges in becoming customer focused was Thomson’s culture. In his view Thomson was not creating long term value. He immediately started confronting the people issues and communicating a strategy to get the company focused on the customer.
He followed his strategy definition with action. In order to prove his commitment to the customer, he instituted the front-end customer strategy review as a way to align the organization. He had every business review their market, challenges, and priorities (he still does this annually). Each business needed to articulate how the organizational structure and resource assignments would need to change for them to achieve their goals. He also continues to spend 20 days a year personally reviewing the top 700 people in Thomson.
According to Thomson, decision support and high-end analytics are the value-added part of the information market. Mr. Harrington said that Thomson needs to worry about competitors that can “pick off” that high-end value, or even worse, change the game and reframe the market. He had some great insights in this area as well. He said that in order to reframe the market you must consider where the discontinuities are and how you can eliminate them. You must learn from your customer and understand how they work.
In building Thomson solutions, he and his team approached their customers and said “when do you use our content?” and “what are you doing 3 minutes before and 3 minutes after you use our products?”. Thomson kept building out their solution 6 minutes at a time! They hired the expertise to teach them how to consult with their clients and map their workflows. Then they transferred that knowledge to internal people.
It cost $200M to get Thomson focused on the customer and their workflow. Harrington shifted that money to the front-end (understanding the customer and their needs) from the back-end (where it had been used to incrementally improve existing products – adding bells and whistles that the market had never asked for!) in an effort to make Thomson more relevant to their customers.
A few of his underlying, and in my opinion, healthy philosophies:
- No company can take their market and their standing within it for granted.
- Thomson is positioned for the future but they’re certainly not done yet.
- “We can’t own everything”. He was referring to some of Thomson’s content partnerships and one product they’re currently developing that’s 51% owned by Thomson and 49% owned by their customer(s). Wow – what a concept!