Richard Harrington: The Transformer
Richard Harrington, president and chief executive officer of Thomson Corp., knows firsthand how information technology can be used as a powerful tool to change businesses. He has led the transformation of Thomson from a print publisher to a provider of integratedinformation services.
Thomson, at one point, published some 200 newspapers and trade publications in North America and the United Kingdom. But it has divested those properties—disposing of $8 billion of assets—and turned itself into an electronic information services provider to professionals in targeted market segments, such as Westlaw for legal research and First Call for financial research.
Harrington met challenges along the way, but he kept Thomson moving forward. Over the last five years, the company has seen profits grow from $561 million on revenue of $7.2 billon in 2001, to profits of $934 million on revenue of $8.7 billion in 2005.
Harrington, in an e-mail exchange with Baseline editor-in-chief John McCormick, talked about the company's transformation, corporate information-technology challenges and the role of the CEO in information management.
You have said that the future will be all about information optimization. What do you mean by that?
Many professionals today are overwhelmed by the mass proliferation of information. The Internet, as you recall, was expected to be the great equalizer in terms of the public accessing information that had previously been reserved for professionals. And in some cases, there has been a true democratization of information. But at the same time, the Internet has brought with it a host of information-related problems as well. Knowledge workers are suffering from information overload.
Moreover, quantity of information does not equal quality or reliability. That's a crucial concern if you are a lawyer, broker, accountant or doctor whose career depends on making well-informed decisions and giving accurate advice.
Thomson is a knowledge partner to its customers, which requires doing much more than merely aggregating information onto databases and distributing it electronically. It means understanding how professionals use specialized information and then offering solutions for information overload that include value-added content, software tools and services. Because Thomson has deep industry experience and customer knowledge, we can help our customers optimize information, maximizing its utility and business value.
Isn't information quality an issue that all CEOs and all companies have to deal with—at least in some form? What lessons have you learned about how organizations deal with information?
My experience is that organizations often don't realize the value of all the information they have. At Thomson, we seek to maximize the value of information as a strategic asset. Maybe the most important lesson we've learned is that if you want to make information work for you, you have to understand how work flows.
We have found it useful to observe what our customers are doing three minutes before they make an important business decision and three minutes after. Armed with this knowledge regarding their workflow, we can deliver precisely the information that customers need to make and follow through on their decisions—at exactly the moment they need it and in a form they can readily use. We tailor information and tools to flow seamlessly into the customer's own I.T. system and daily routine. That enables customers to optimize the value of information.
Thomson's business depends on information technology. How involved are you in the company's information-technology strategy and purchasing decisions?
Together with our new CTO, Mike Wilens, I am highly involved with our technology strategy but I am less involved in purchasing decisions for the individual pieces of technology. I am very engaged with our overall technology strategy because it is integral to our business strategy.
Over the last 10 years, Thomson disposed of $8 billion of assets and spent $12 billion on acquisitions as we transformed our company. A lot of that acquisition activity had to do with expanding our skills, product portfolio and markets related to electronic solutions, software and services. As CEO, I led this transformation of our business model with the full support of Thomson's chairman and board of directors, who realized that these investments were necessary to position Thomson for long-term success in the digital economy.
What is your company's annual information-technology budget?
Thomson's annual information-technology spend is about $1 billion. This budget is increasing as Thomson completes its transformation into a technology company that provides electronic information solutions, software tools and applications. Of our 40,000 employees, more than 9,000 are technologists, and an increasing percentage of those are in front-office roles developing and supporting technology for customers, rather than back-office positions supporting internal Thomson I.T.
CTO Wilens had been the president and CEO of one of the company's largest businesses, the North American Legal unit of Thomson Legal & Regulatory. How important is it for today's corporations to hire and promote executives who have good understanding of what technology can do for an organization?
It is imperative for organizations to take a close look at whether they are pigeon-holing their technology staff. At Thomson, our technology team is a huge factor in the overall growth strategy for the company. They are integral to everything we do here, and I would suggest that this is becoming more the norm than the exception at a large percentage of companies.
Because technology has become the backbone of our business, a new type of position is emerging here at Thomson—roles that mix technology talent with business acumen and market-specific experience. Our executives need to understand not only the business model, but also our customers and the technology that enables us to serve those customers effectively and efficiently.
The shift from an old-line media company to an information distributor clearly changed the company's focus and culture. What's been the toughest management challenge the company faced?
First, let me clarify something that is very important. Thomson is not just an information distributor. We offer proprietary, high-value content plus the software, tools and services to put that content to work. Thomson's transformation from print to online information, and now to workflow solutions and services, has been successful—but I regard our company's transformation up to now as our warm-up act. We will continue to evolve with the changing needs of our customers.
That said, whenever you are leading major change, the most important success factor is the people involved. The biggest challenge is not developing and integrating new technology. It is developing your people, making sure that the right people with the right skills are in the right positions, not only to advance the technology but also to implement changes in the organization and culture. You have to make sure that employees understand and believe in the new strategy. They have to understand exactly what the company expects them to do. And they need to be rewarded consistently for doing it.
We have made talent management an integral part of our operating mechanisms. At all levels of the company, we try to set individual performance objectives that align with the company's strategy, and then we provide development opportunities that help the individual employee meet or exceed those objectives. At the leadership level, we invest a lot of time making sure we have people with the right talent in all the key roles that drive our business and culture, and we constantly create opportunities for these leaders to stretch.
What's the biggest technology challenge you had to deal with?
In terms of technology, I think the biggest challenge was being aggressive enough in making the move from being a content company with good technology to being a technology company with good content. Looking back, I think that we could have moved faster from print to digital in some areas.
By contrast, though, one of our markets—higher education—has not shifted from print to digital as fast as we, and many others, thought it would. It is always a challenge to evolve products and services at the same pace thatcustomer needs evolve. It's easy to get a step ahead ofor behind the market. But on the whole, I am mostly concerned about leveraging technology fast enough to keepup with our markets and ahead of our competitors.
On the whole, our timing in driving the shift from print to digital has been pretty good—but the challenge is ongoing in some areas.