At the end of 2013, Thomson Reuters made a pronouncement: Our 100-year-old media corporation was no longer going to rely on growth through acquisition.
That was a big deal for a company that had made more than 300 acquisitions in the preceding seven or eight years alone. Revenue growth was strong — the company brought in $12.6 billion in 2014 — but the costs associated with all those acquisitions were proving to be too high.
Here’s where Katherine Manuel, Thomson Reuters SVP of innovation, comes in.
Manuel has been with the company since 2005, when she entered the Thomson Reuters rotational program fresh from Duke University’s Fuqua School of Business. She steadily worked her way up through the ranks, and by the time the innovation edict came down, she was the vice president of corporate strategy for the Office of the CEO.
And she got it.
“Our growth just couldn’t keep up with our cost structure,” Manuel explained from her office in Raleigh, N.C. “We needed to generate innovation.”
That meant investing in it — literally. In 2014, Thomson Reuters kickstarted its innovation efforts with the launch of the Catalyst Fund. Manuel was tasked with running it.
How the Catalyst Fund works
A panel comprised of the CEO and about five of his direct reports comes together once a month to listen to pitches and evaluate the ideas presented. The effect is twofold: The employees within the company (there are roughly 53,000 worldwide) get an audience with the CEO and an opportunity to lift their profile internally. The company gets to tap into its existing talent and turn the ideas generated into revenue opportunities.
In its first year, the fund was so successful that Thomson Reuters CEO James C. Smith expanded Manuel’s role beyond the fund, making her responsible for developing the tools, programs and funding that generate innovation across all Thomson Reuters businesses around the globe.
Another bonus: As it turns out, Thomson Reuters employees who have seen their ideas move through the Catalyst Fund have not yet exhausted the $6.7 million the company has committed to it thus far. Only about half of that war chest has been spent “due to teams leveraging lean methods or market insights to better target outcomes and eliminate waste,” Manuel said.
“We’re realizing that it’s tapping into people’s desires to do great work,” Manuel said. “It’s hard in some ways because you have cynics that say this is the fad, that this isn’t actually going to continue. And it’s why I’ve felt that we need to keep this Catalyst Fund rhythm vital.”
The lean enterprise trend
Thomson Reuters is in no way alone in its push for innovation. Google’s X – The Moonshot Factory is perhaps the most grandiose example, with its work on “moonshot ideas” such as self-driving cars and balloon–powered Internet for everyone.
And it’s not just the Googles of the world. Wells Fargo continues to add to its innovation initiatives. And Lowe’s, Target and Sears are among the big companies that have built innovation labs in the San Francisco Bay Area in recent years.
The value in these efforts goes beyond how innovative products can help the business; it’s also about how the business can tap into the potential of its employees. Bill Gross, founder of Idealab in Pasadena, describes the benefits of creating incubators and accelerators within big corporations like this: “ It means looking at what models it takes to actually give people equity stakes so that they can act like true entrepreneurs, to give them the autonomy but still have them be connected to the corporation,” he said in a McKinsey report last year. “Because the thing that actually unlocks human potential is when people feel they have control over their own destiny and they can make a killing if they really succeed on their wild bet.”
The enterprise product development lifecycle
Here at Thomson Reuters, the “wild bets” have taken a variety of forms. Sometimes it’s a new product or business line. Sometimes it’s about taking data already available in one business unit and using it for another — a two for the price of one, so to speak. For example, one idea that came through the fund looked at taking health care analytics data from Thomson Reuters IP and science business and using it to help investors in Thomson Reuters financial business.
Before that, two business lines within the company were collecting the same data — and wasting time, Manuel said.
Those moments show her the company is moving from growth fueled by acquisitions to growth built on innovation.
The journey makes her think of farming, oddly enough. She wrote about it in a post on LinkedIn, comparing the four primary phases of the farming cycle — land preparation, seed sowing, growing and harvesting — to her journey at Thomson Reuters.
The comparison still rings true, even as we embrace the shift.
“It’s OK to kind of lay fallow a little bit because that’s when you start generating the next round of ideas,” Manuel said. “That’s what gives you the perspective to take that next challenge on.”
This post was originally authored by Mary Johnson, Editor, on bizwomen.com.
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