The debate about public versus private ownership of companies implies a binary choice with one winner. David Craig’s experience of transforming the former data and analytics business of Thomson Reuters, which he recounts in “Bluebook: How Bold Leadership Unlocked A $27 Billion Success Story,” paints a more nuanced picture.
The Finance and Risk (F&R) business, as it was known, was a loosely integrated product of the 2008 merger of Thomson and Reuters when Craig was put in charge four years later. He and his team tried to turn disparate products and systems into a coherent whole but lacked the resources for an aggressive restructuring until discussions started with Blackstone, which discovered, as chairman and CEO Stephen Schwarzman put it, “the huge value hiding in plain sight.”
Blackstone acquired 55% of F&R in a deal valuing it at $20 billion in 2018. Craig rebooted and rebranded the business as Refinitiv, enabling Blackstone to sell it to London Stock Exchange Group (LSEG) in 2021 at a $27 billion valuation.
Aligning capital with strategy and empowering people to act like owners was the key to success, Craig said: “You have to set high goals and expect people to meet them.”
Craig, who now co-chairs the Taskforce on Nature-Related Financial Disclosures and sits on a number of private equity and corporate boards, spoke recently with John Romeo, CEO of the Oliver Wyman Forum, who advised LSEG on the acquisition.
How did you transform Refinitiv from a collection of assets in a large corporate to a business attractive to Blackstone?
The data business Reuters built was great, operating under the floorboards of every single trading floor around the world. The 2008 Thomson acquisition brought together a very strong position in the US East Coast buy side with Reuters’ global sell-side business.
The logic was sound, but execution was a challenge. We didn't really address the cultural side of that integration, the complexity that was built up — multiple sales systems, backend systems, overlapping products.
I was brought in to have a blank sheet. One of the lessons learned is never waste a crisis. You can do things that incremental fixes won’t allow: shutting down products, consolidating systems, changing people who weren't ready for the future, and helping those who were. But we could change only so quickly. After five years of hard work, I realized we needed a different strategy and capital beyond the capacity of Thomson Reuters to capture the huge opportunity.
How did you secure that private equity investment?
We received an approach from one private equity firm that we didn't entertain, but it put the thought in our mind. Then I had a conversation with a personal friend, investment banker Matteo Canonaco, who said, “Let’s go for it.” He arranged a meeting in Mayfair with Martin Brand, a senior managing director at Blackstone I had worked with some years earlier, and the light bulb lit up.
Not only did Martin intellectually understand what the opportunity could be, he understood how to build the relationships and trust to take this from an idea into something we could really action. I give Blackstone a lot of credit — they're not just a bunch of smart guys with capital. They build leadership teams, partnerships, and trust.
When we took the idea to Jim Smith, the Thomson Reuters CEO, he saw the opportunity too. He was as frustrated as I was and said, “You go for it, David. We'll keep a share of the upside.”
How did the shift from public ownership to private equity affect your transformation strategy?
When I announced this opportunity to my leadership team, a wow went around the room — we must be worth something if Blackstone wants to invest. Then you could see the second reaction: What’s going to happen to us?
We quickly created an ethos with Blackstone that our leadership team would be owners of the success, emotionally and financially. We made sure they felt empowered to change things and own the solution. And we pushed that culture down into the workforce.
We also took advantage of the operational freedom of private ownership to carry out major restructuring. We reduced management layers, shut down products we didn’t need and integrated others, invested in our infrastructure and skills, and overhauled our performance and remuneration scheme.
In the book, I stress the importance of aligning strategy and capital. Thomson Reuters was focused on increasing the dividend year after year. Blackstone wanted to increase the value of the company, not sweat it for cash. Our interests were now completely aligned.
In the book, you describe “firing” and rehiring — how did this reboot talent and culture at Refinitiv?
I was meeting with a team in Paris, and the ownership mentality wasn’t there. Impatient, I said off the cuff, “You’re fired.” Everyone froze, so I certainly caught their attention. And then I said, “But good news, you're coming back Monday with a clean state. Everything's new and ahead of you, so what are you going to do?”
It was an epiphany. One employee told me, “I can try this workaround on a particular problem. Let's think about this in a completely different way.”
I often see management teams focus on bringing new talent in. That can be an important lever, but if you keep the existing talent and reboot their mindset (and your own), you get the benefit of their history and knowledge as well as the advantage of a reboot. I'm a huge believer that people can achieve amazing things.
Having written a book on transformation, what are the three keys CEOs must master for successful transformation?
First, lead with the “why.” Why are you pursuing this transformation? What are you trying to fix? Second is the ownership mentality. How do you make your leadership team own the change emotionally, financially, and spiritually? Third, make sure that strategy is totally aligned with your capital, the investment you need to make, and the risk appetite you have.
Transformation never starts with technology. It starts with humility and belief. The humility to say, “Maybe there’s a better way, even after 160 years.” The belief and courage that people, and you, can reboot themselves to something better.
The world loves to talk about innovation, but the real work is in helping people remember why they started in the first place. And it worked not because we were clever, but because people believed again. That’s all leadership ever really is.