12/2/11

Glocer Steps Down: Has Thomson Reuters Become the Next General Motors?

By now you may have heard that Thomson Reuters CEO, Tom Glocer will step down at the end of the year and the current COO, James Smith, will take over at TRI. In a year of turmoil for TRI, plus watching its stock value drop over 36 percent this year (see chart), it wasn't surprising to see this move coming. In a way, the whole TRI situation seems to look a lot like another industry that had three major players, all of whom did extremely well during the good times, and all of whom thought that they were pretty much invincible in the marketplace because people knew their brand, were loyal to that brand, and would buy them year after year without question.

In my opinion, Thomson Reuters made a major mistake under Glocer's time as CEO. They went Big… very big. As much as we in the legal area of their wing would love to point out the problems that TRI ran into with their WestlawNext platform release and "modest premium" selling pitch, it was really the Eikon fiasco on the financial side of the TRI empire that has stung the most, and has caused the Thomson family to sit up and take notice of what was happening to their company, and their wealth. Although Eikon and WestlawNext are two different products, they suffer from the same error in judgement. Somehow, TRI thought that what its customers needed was more "SUV" type products. Big, expensive databases that packed as many luxuries as possible, and each of those luxuries came with a premium price tag. Now that we are nearly two years into the process for both Eikon and WestlawNext, sales are sluggish, stock prices are down, and customers are not happy. That is not a good combination for a CEO, and Glocer took the fall for the bad planning.

Customers aren't locked into the TRI products, and what's worse, they are quite happy to go to a faster, lighter, cheaper model of resources such as Morningstar, or even use low-cost or free products like Fidelity Investments or the SEC website instead of the TRI alternatives which are massive and expensive. It's just not the 1990's and early 2000's anymore… we're in a time when customers have choices, and are quite willing to move to different platforms that will work almost as well, at a much greater savings to their own bottom line.

One of the funny things that I've seen throughout this year is the nostalgia of what the old Thomson Publishing company used to be. Usually, it comes from those of us in the library field that remember when we had a good relationship with our local vendor representative, and that relationship was built on understanding each other's needs and building a trust between each other. Now I'm seeing the nostalgia coming out of the Thomson family and what their company used to mean to them before they went public and turned it over to those who only care about the next quarterly statement and how to impress the stockholders. TRI somewhere along the line lost its way and forgot what it was that made it a good company. Now it just looks like any other company out there pushing to improve its stock price by cutting staff, increasing prices on services, and all the other tricks that make stockholders happy, and at the same time, make their customers start looking at other places to take their business.

The Old Thomson is dead. It will never be back. The new TRI isn't necessarily dying, but I'd say that it is very sick and needs to take another look at how it is going to go forward from this point. I'm hoping that James Smith has been given direction from the Thomson family to take a look back at what the customers are needing, rather than what Wall Street, or the Toronto Stock Exchange is needing. If they don't, there won't be an Occupy TRI movement to worry about, there will be a flee TRI movement.
 

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6 comments:

Ed Walters said...

Great thoughts, Greg. I think it's a shame, in part because Tom Glocer seems like a thoughtful, interesting guy.

But there's no doubt about the global dynamics in this industry. Unless TRI and others can embrace the fact that legal information is a competitive market, there's no way to maintain their market share.

I wrote about this dynamic a bit on Joe Hodnicki's Law Librarian Blog last summer: For Westlaw and Lexis, an AOL Moment.

There isn't a too big to fail anymore, and you can't win with SUVs in a Tesla world.

Greg Lambert said...

Thanks Ed. Having just taken a look at a Tesla while I was up in Denver, I'd have to say that I'm still more of a Prius price-range person… although the Tesla's are so cool!

I wonder if the Thomson family is going to be calling the shots for the next year or two? Information is competitive (legal, financial, public, etc.) and it will only get more competitive in the coming years. Perhaps TRI suffered from bad timing (launching big products like Eikon & WLN in the middle of a global recession), but I also think that they have opened the door to a number of additional competitors through their merger and acquisitions over the past 10 years. (This goes for Lexis as well.)
I just couldn't imagine someone telling me five years ago that they would be perfectly content dropping the big financial resources that Thomson and Reuters offered and going with an upstart like Morningstar. These days, no one blinks an eye about such things.
The way we used to look at the big Wexis vendors was that they offered us a single-point of entry to almost all of the information we needed. We gave lip-service to those 5%, 8%, 15% price increases, but still thought that we "needed" these products to conduct our day to day business. To paraphrase something I've heard, customers haven't let a good recession go to waste. It took the economic downturn to shake some of us up a little and realize that we don't need to rely upon the big publishers for everything, and that we have power in negotiating what we will and won't include in our subscription packages.
If TRI handled their Eikon customers like they've handled their WestlawNext customers, then they only made a bad situation worse by still believing that the customer needs them, rather than they need the customer. Whenever a seller of a product thinks that they are in control of the relationship, then they have fooled themselves and usually pay the price in the end.

Anonymous said...

With the ill-advised acquisition of Reuters, which brought Glocer with it and the closing of US content centers to move responsibility for publication of many legal titles to ill-trained, ill-paid staff in India, China, and the Phillipines, this comes as no surprise. TRI management was shortsighted and working at constantly changing goals. Basis strategies changed by the monthh and marketing efforts were poor. This result was to be expected.

Anonymous said...

Now I'm lucky if I can remember my customer service representative's name. Last month was Mike, this month is Steve, next month: Amy.

Anonymous said...

I don't think this is a fair or accurate assessment. Eikon is not a SUV, it was designed to simplify an absurd amount of different products into a more comprehensive common platform. The product would still be quite module where you would only have to purchase the parts you need.

In my opinion Glocer was a fall-guy for a spiraling financial sector that is laying off thousands of employees. That and the fact that Eikon has had some development challenges certainly doesn't help, and I don't see how a new CEO is going to change that at all.

Anonymous said...

Hmmmm.. maybe TRI's best customers didn't like it when TRI started competing with them for business (by acquiring overseas legal-process-outsourcer Pangea3) Hmmmmm...

 

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