Nearly a year ago, Nancy McKinstry moved from New York to the Netherlands to take over as chair of the executive board of Wolters Kluwer, the company that owns CCH and Aspen Publishers. That job puts her in charge of a multi-billion dollar operation with more than 20,000 employees. McKinstry met with Accounting Technology to discuss her role.
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How would you grade yourself on the first year?
We are encouraged by the progress we are making on our strategy. The way I think about the progress is against the three strategic goals we have. These are to invest in growth around our leading positions, to restructure the cost base, and to reorganize to get closer to the customers. We are tracking well against all of those dimensions. Also, we can see more of a change in how we operate ourselves in terms of faster decision-making, given that the division CEOs report directly to myself, and for the first time the divisions are really integrating the businesses. There is more cooperation between the divisions, which there historically had not been.
When you say that the CEOs are reporting to you, how does that differ from past practice?
Previously each board member had a portfolio, and while we were each responsible for the portfolio, it was not the same degree of authority and control over the operations because the portfolios shifted quite a bit. You might be the owner of education today and in a year you'd be owner of health or another division. Now, we've moved to a CEO model, more similar to how 99.99 percent of the companies in the world operate.
Why did Wolters Kluwer need to change its structure?
Wolters Kluwer began buying businesses from 1987 onwards. That strategy made sense for a number of years. We bought family-owned businesses that were operating at relatively low levels of operating income. We integrated some of their activities in our core business and stripped out a lot of costs and used that cash to buy more companies. But at the end of the 1990s, there were fewer companies to buy. Also, we had to invest to bring our companies into the Internet world. Those two factors, coming together on top of a very poor economic climate starting in 2001, meant that we had to change the course for the strategy of the business and to invest for long-term growth.
What are the key elements of that strategy, and how is that different than before?
In the past, we operated the business as a financial holding company, which meant every unit competed with each other for capital regardless of what we thought were the inherent opportunities in our market position.
The second thing that has changed quite dramatically is that we are really integrating the businesses. If you go back five years, every individual operating company acted extremely decentralized and that was the way we wanted them to behave. There was no ability to share customer information.
How has this affected your CCH operations?
We had operated the tax compliance business and the tax research business independently. We have brought them together and we see benefits from how we serve our customers as well as the obvious benefit on the cost side.
Will we see more of the Wolters Kluwer name in this country, or will we continue to see names like CCH?
The brand equity is still at the local level, the CCHes, the Lippincott Williamses. What we are doing is beginning to create an umbrella brand around the name Wolters Kluwer, largely to help the investors and other types of constituent groups to see there is a connection. We won't take the step that Thomson [the Thomson Corporation] did, where they spent tons of money to make a global brand.
What different kinds of services do you plan on delivering?
I think one of the exciting things in the tax and accounting arena is the business outsourcing line. That is providing us with additional ways to add value to our customers. I think you'll see us do more and more of these kinds of things as these opportunities emerge.