Thomson Reuters – HBS Case analysis
David Craig joined Reuters in Mar 2007 as group strategy director when talks of merger with the Thomson Corporation were in progress. He oversaw the integration of the two firms. Craig, as the CEO of the GRC business was therefore in a unique and advantageous position of being familiar with the cultures of the two constituent firms of the joint entity. During the global financial crisis following the bankruptcy of Lehman brothers, Craig as the group strategy officer was tasked with examining the GRC business since it was felt, that following the crisis, the regulators were bound to abandon their current laissez faire approach and come out with a slew of regulations to address systemic failures and prevent recurrence. Craig’s study and an independent research found that the GRC business was worth USD 25 billion in 2009 with financial services accounting for 55% of the GRC spending and growing at 10% per annum. Craig, in the process of examining the issues, developed a good understanding of the business and realized that the GRC business was fragmented with different activities like risk identification, risk evaluation, development and implementation of compliance policies etc all being handled separately leading to dissatisfaction among the clients. Although some of Thomson Reuters competitors were active in the GRC space, their services were not integrated and hence perceived as sub-par by potential clients. Craig as the CEO of the GRC business, leveraged the insights he had gained as the group strategy officer to direct the firm towards employing some sound policies: (a) He organized the firm’s GRC business around an integrated approach since Thomson Reuters was already a dominant player in the data business and had the necessary technical skills in this domain. This differentiation of the firm’s offering afforded it tremendous competitive advantage.
(b) Craig recommended consolidation of the firm’s existing small business offerings in the GRC space like ‘Westlaw Business’ providing on-line legal research, ‘Paisley’ providing GRC software etc into one integrated offering. Consolidation helped focus the efforts of the firm in a coordinated manner and the complementary strengths of the individual entities became force multipliers.
(c) To further strengthen its capabilities in the GRC space for financial services Craig helped acquire ‘Complinet’ a leading provider of regulatory solutions for the financial services sector.
(d) Craig also resisted the impulse to convert Complinet to the Thomson Reuters way of working and in recognition of the merits of Complinet’s unique processes let them retain their processes. (e) Craig had two options available to him - integrate GRC into Thomson Reuters as one sub-division or keep it a separate business. He maintained it as a separate business and as a separate business entity it was meant to complement all the vertical silos of the Thomson Reuters parent company.
(f) He put in place a new leadership team with the express purpose of focusing their undivided attention on growing the business.
(g) The existing processes of the parent were not adopted for the GRC business. General rules and processes in place for a different business would have been unsuitable and constraining for a new and a radically different business such as GRC. Instead, new rules and processes were evolved with less structure. This helped GRC be agile, since as Davis, Eisenhardt and Bingham in their paper ‘Optimal structure, market dynamism and the strategy of simple rules’, point out, in an environment of business flux, too much of organization structure adversely affects performance.
(h) Craig, in order to address GRC businesses beyond financial services, such as insurance focused on acquisitions. The acquisition of ‘Complinet’ was a move in this direction.
(i) Craig believed that policies in an organization gain traction when they...
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