9 February 2022
Nancy McKinstry on Wolters Kluwer’s digital transformation
This is the condensed 10min version of the interview. Click here for the full version.
Nancy McKinstry, CEO of Wolters Kluwer propelled the company from the print age into the digital era while growing the share of digital revenue from ~30% to ~90%.
In this CEO story summary, Nancy McKinstry shares her key insights from 18 years at the top and explains
- Why it takes a decade to complete a successful transformation
- How she kept stakeholders and shareholders on board during times of significant investments and flat profits
- How she turned Wolters Kluwer into a customer-first tech company
Alexandra Jankovich: Nancy, welcome! Thank you so much for taking the time to talk with me.
Nancy McKinstry: It’s my pleasure. Thank you.
Alexandra Jankovich: Let’s dive right into the first topic, a very important one, which is diversity. How would you define diversity?
Nancy McKinstry: My strong belief is that in order to get diverse talent at the top of an organisation, you have to have a strong pipeline. So, we really started to focus very much on the middle management in the company, making sure that was very diverse such that as a result and when promotions emerged, we now have sort of a 50% female representation at many levels. A little tougher in tech. I have to say that is where we have under 50%, it is an area we are working on but in general we have a fairly broad, diverse population.
Alexandra Jankovich: Exactly. And why do you think it is so important, diversity?
Nancy McKinstry: Again, this was really my own experience. During the transformation, particularly in the early years, the most diverse teams were the most creative and innovative and had the best results.
Alexandra Jankovich: Then, to take the step from diversity and inclusion to the digital transformation, where you have the unique experience of an 18-year digital transformation time. Who are your customers?
Nancy McKinstry: Yes, so our customers are professionals in health, tax, legal, financial services. And the common kind of component, because obviously they have different functions, but the common issues or challenges that they face really have been consistent over the last 18 years. They have become more accelerated, but really consistent. And the first is that they really struggle to keep up to date with new developments. And so, the amount of information is just overwhelming at this point, and they need help kind of separating what is important from what is not important. They need help to comply with the rules and regulations and that is our area of expertise. So, if you go back in the history of the business from the 1800s to today… what we have always been known for is our expertise and our ability to curate vast and complex information and make it digestible for our customers.
Alexandra Jankovich: And if we talk about the transformation journey, could you point out whether you have to divide it in different phases? What would they be?
Nancy McKinstry: Particularly the first six years that was really the period of major transformation. And when I came on board as CEO, I would say we had a burning platform at Wolters Kluwer. You know, the company was not growing, it was struggling financially, and it was because we had been late to the internet. As a result of that we had to move quickly. What did we do? We did three things that in hindsight have turned out to be absolutely critical. The first was to make many portfolio changes. The prior strategy had been an acquisition-led strategy. So, we had acquired probably 300 businesses over, say, 20 years and a lot of the businesses were not core. So, we shed a lot of assets. We also bought assets that represented the future, digital assets to strengthen our core positions.
So, the goal was to get very strong market positions, and why is that? When you go out and actually talk to our customers, what you find is they want fewer suppliers, and they want the products to work together. So, what that meant is that in order, for example, to go serve the tax and accounting market, we wanted to be in a position to say: We have everything you need from a product perspective to be a successful accountant. We needed to make sure we had those products in the portfolio, so we had to get rid of some things that were not core, but also acquire things – and of course building things organically to get that strong breadth. Those portfolio changes were absolutely essential to creating the market positions we have today.
The second critical factor was reinvestment. So, we started a plan, which we still deploy today, of reinvesting 8 to 10% of our revenues back in new and enhanced products.
The third area that was very critical was talent. At the time, we did not have a lot of digital skills and technology skills. It is interesting today our largest group of employees are technical people. Back in 2003, we had very few, so that talent transformation was also critical.
Alexandra Jankovich: How many of the original people, when you started in 2003, could you take along and maybe retrain, how many did you have to let go, and how many new talents did you attract?
Nancy McKinstry: I would say at the senior levels of, say, the top 500 people, we switched out about 60% of them, either because they did not have the skills set or they did not align around where we were heading with the business; but that occurred pretty early within the first three years. And then a lot of the skills was really around as we begin to grow again. You not only grow revenues, but you grow jobs. So, as we moved into a growth phase, a lot of the job growth is in development so technology roles, and in sales and marketing and those had been our fast growing areas. If you look at our experts that population has been very retained and has not changed that much because we still require that expertise to build the products. So, it really was around technology so today about a third of our jobs are technology-oriented. Again, that was one or two percent back in 2003.
Alexandra Jankovich: How did you get the shareholders along, while, as you said, the financial results were pretty flat for six to ten years and you invested an enormous amount of money?
Nancy McKinstry: Yes, it required a huge amount of work, again, to make that happen and it starts with being very clear on where you are going with the business. We spent a lot of time developing the strategy, making it extremely clear to people setting expectations, that was a big part of any transformation. You have to be clear on where you are going, what you will do to get there and how long it is going to take to get there. And then, of course, on the benefits, not just for shareholders, but customers and employees.
Alexandra Jankovich: How did you make sure you stayed close to customers and made the relevant stuff?
Nancy McKinstry: We do a three-year plan that represents the corporate focus but then every year within our business units we do a rolling annual plan. And in that annual plan, part of the goal of all the units is to talk to customers. We talk to customers every day. We have a very clear process that all the units follow in terms of how to innovate. That innovation process, it starts from day one, with getting customers working hand in hand with us.
Alexandra Jankovich: I can imagine that you also got more customer insights because you moved from print to online. What did this do to the business?
Nancy McKinstry: Yes, that is such a remarkable element of the transformation which makes it exciting, because in the print world, you spend a lot of time developing a product and throw it over the wall, but you didn’t really understand what the customers were doing with the product. In the digital world, we have tremendous usage statistics, so what we can do is, not only from a marketing perspective, figure out certain bundles that customers will likely want to buy because products are kind of linked together. But, very importantly, we use it as a source of innovation because these professions are highly complex, so it allows us to know that if a lawyer is looking at something in security law in a certain area, they are likely trying to solve a certain topic, so we can guide them. We can provide them with more insights: you may want to look at this or at that. We can provide them with certain tools, so those usage statistics are critical for getting insights into what customers are actually doing with the products
Alexandra Jankovich: What do you think should be a CEO’s minimum term to do a transformation like this?
Nancy McKinstry: Well, you know the average CEO, McKinsey actually does that survey, I think. I don’t know if they still do it, but in the past the average was four years. I think that is too short to do any kind of transformation. So, I would say for something at the scale of Wolters Kluwer, where we had to change literally every aspect of what we do, you need at least five to ten years to get it done. I would say the last eight years have really been about the next transformation. So, we are in the second phase. The first phase was print to digital. The second phase is digital information to expert solution. If you think about one transformation, it is probably a decade.