Transforming Strategy One Customer at a Time

A decade ago, the Thomson Corporation, like most B2B companies, had a much better understanding of the people who purchased its newspapers, journals, and textbooks for their organizations than of the people who actually used them in their daily jobs. Facing an internet shakeup of its market, Thomson realized it needed to bridge that critical knowledge gap. The company began systematically scrutinizing its end users--in much the same way that Procter & Gamble tackles consumer research--as part of a new front-end customer strategy that would become the cornerstone of the firm's transformation. In this article, Harrington, Thomson's CEO, and Tjan, a consultant who advised him, describe how the company adopted a user-centric mind-set--initially in the Thomson Financial division and then throughout the organization. First came a redefinition of the division's market, which was mapped not by type of purchaser but by eight end-user segments. That gave Thomson a clear view of the division's real, addressable market and of corresponding opportunities. After conducting surveys and "day in the life" observations of users, Thomson charted their entire work flow, beginning with what they were doing three minutes before and after using a product, and saw where the organization could add value. Then, through cluster and conjoint analysis, the company determined how pain points and product preferences varied among the users. With that information, Thomson was able to identify three clusters of customers in one segment and develop three categories of offerings. Since beginning to implement this approach, Thomson has changed radically. Its revenue now comes mostly from digital, not print, products, and it generates twice the operating profit and four times the free cash flow it did 10 years ago. In a market that changes by the day, Thomson's revenue is unusually predictable and profitable.

• Organizational transformation
• Customer analysis
• Target markets