Cover

FORTUNE’S CHILD

The cerebral new boss of Thomson Corp. is unique, operating so far outside the box he’s not even in the warehouse

Peter C. Newman May 6 2002
Cover

FORTUNE’S CHILD

The cerebral new boss of Thomson Corp. is unique, operating so far outside the box he’s not even in the warehouse

Peter C. Newman May 6 2002

FORTUNE’S CHILD

Cover

The cerebral new boss of Thomson Corp. is unique, operating so far outside the box he’s not even in the warehouse

PETER C. NEWMAN

Shortly after I first met David Thomson, he invited me to his Rosedale mansion in Toronto, which was really an art gallery with kitchen, bathrooms and bedrooms attached. Of all his many art objects he showed me that day, the most memorable was a magnificent depiction in gnarled, almost petrified wood of the Crucifixion, with a suffering, near life-size Jesus mounted on a cross. The carving had been the focal point of an unidentified church in southern Germany during the last quarter of the 12th century. “The agony of Christ is pronounced with the hips slightly tilted,” he explained. “The profile of Jesus’ head is quite spectacular. In this piece, one confronts the beginnings of Gothic carving and the tremendous expressionism of the northern world.”

He went on and on, praising the creative genius of the holy sculpture adorning his living room, speaking in a guttural monotone, his throat muscles stretched by the force of his concentration.

Overcome by the emotional intensity of the moment, I reacted with one of the great gaffes of uninformed art commentary.

“Look at those nails,” I offered helpfully, “how honest and raw they are.”

“Well, no actually, I put them there myself,” he shot back, looking at me as if I had just thrown up on his floor. “They’re what the cross is hanging on.”

Bad start.

I remembered that small incident of a decade ago as David Thomson prepared to move into the top job next week as chairman ofThomson Corp., one of the world’s largest electronic information providers, with 2001 revenues of $11.2 billion. Its stock, 73 per cent of it owned by the Thomson family, is currently worth $34.8 billion. Ken Thomson, David’s 78-yearold father who is stepping down as Thomson Corp. chairman, is Canada’s richest man, and the family’s total holdings, worth $23 billion, put it at 13th place on the Forbes list of the world’s richest. With his corporate ascension, David Thomson becomes the custodian of the country’s largest privately controlled enterprise. (The next largest Canadian fortune, owned by the Weston family, is worth less than a third as much.)

Burdened with an original mind, its brew of ideas constantly in ferment, the 44-year-old heir is starting out on the journey for which he has been training all of his precocious adult life. As new titular chief of the clan, he will guide a digital information empire which operates in 143 countries and is radically changing the way business is done.

It will be a fascinating spectacle. David Thomson may well be the prototype 21st-century global executive, a corporate space cadet who follows an existential path to highly profitable self-enlightenment. His

thought process is original and daring. No head of a major Canadian firm behaves or acts like him. He operates so far outside the box he’s not even in the warehouse.

A cerebral energy-bunny, he relies on a strictly instinctive approach to business decisions, which these days are more often based on whatever data overheated computers care to spit out. “In the end,” he told me in a lengthy recent interview, “judgment and instinct are still the elements of great success. One can have all of the numbers prepared, all the logistics, all the statistics run, but until one faces a human being or a corporate entity, one really has no sense of its service, let alone its potential. How can one quantify success or failure? Is it a failure if it is not a financial success but revives a purpose, if it makes one move in another direction that is successful, that, in fact, is absolutely necessary as a learning curve? I really believe in that. I’ve experienced it.”

There is a touch of extrasensory perception about the man and his post-modern gibberish, which reminds me of nothing so much as Miles Davis improvising his way to melodic truth. Sheet music is for losers; it’s the loosey-goosey character of jazz that gives it energy and allows it to regenerate itself. Thomson understands that hip approach. He lives it. “I am absolutely compelled to follow my feelings,” has always been his mantra, “or I forfeit the right to live.”

Even before he takes over, the youthful chairman made a tough decision. Despite heavy pressure from within that company headquarters ought to be moved south of the border, where most of its business originates, Thomson Corp. will remain based in Canada. “Absolutely, our head office is staying in Toronto,” Thomson told me. “It feels good. It feels right. There is nothing more to say, really.”

Thomson has made it to the top with almost no public profile—until recently he granted no mainstream print or broadcast interviews except for the two occasions he has talked to me. (The last time was in the 1980s when I was researching my history of the Hudson’s Bay Co.) He spends much of his spare time joyfully raising his daughters by his first marriage, Thyra Nicole, 11, and Tessa Lys, 8. “They’re a real source of inspiration,” he says. “They’re the centre of my life.”

Thomson is extremely fit, tall and wispy, with sandy hair and penetrating blue eyes.

Intensity characterizes his thoughts and actions. Ask him the meaning of life or the time of day and the brows furrow into deep scars (the forehead is too youthful to show supporting wrinkles), the eyes grow reflective, and the brain cells almost audibly start churning. There is no small talk. Ever.

Educated at the Hall School in England and Toronto’s Upper Canada College, the youthful David stayed away from the sports and military training in which both schools then specialized. He went on to read history at Cambridge, concentrating on studies of the civil service in India from the late 18th to the mid-19th centuries.

But one of Thomson’s most significant formative influences was his grandfather Roy, Lord Thomson of Fleet. “He was very lonely and we conversed for hours about

business and people,” the younger Thomson once told me. “His curious mind was always questioning why things were done in a particular way, seeking to understand the forces that affect people’s judgments. He was an optimist with an uncanny ability to seize opportunities that others couldn’t see. This approach was in complete parallel to my own nature.”

As a reminder of the old man’s spirit, David Thomson used to wear the copper bracelet his grandfather wore to ward off arthritis. The bracelet wore out, and Thomson now wears a replica.

The trusts set up by Roy Thomson, who died in 1976 after accumulating corporate assets worth at least $750 million, formally designated David for future corporate responsibilities. “David, my grandson, will

CASHING IN ON THE DIGITAL INFORMATION REVOLUTION

Unlike other Canadian media empires which remain bogged down In the muddy pursuit of convergence, Thomson Corp. has moved with lightning speed into new technologies that have revolutionized every aspect of business in the 21st century. By 2005, an estimated 80 per cent of Thomson’s revenues will flow from products and services delivered electronically, mostly through the Internet. The rest will come from advertising and traditional ways of delivering information such as books.

That revolution in information delivery has been led and nurtured by David Thomson’s father, Ken, whose hands-off management style has helped transform the once sleepy company. (Day-to-day operations are handled by president and CEO Richard Harrington, who is based in Stamford, Conn.) When Ken Thomson became chairman after his father’s death in 1976, what has become today’s Thomson Corp. was dominated by its newspaper holdings in North America and Britain, with assets of about $750 million. Now, it has assets of $28.5 billion with 44,000 employees throughout 53 countries.

Thomson Corp. is divided into four information divisions: Learning, Financial, Legal & Regulatory, and Scientific & Healthcare, with the first two producing annual revenue jumps last year of more than 30 per cent. Its Institute of Scientific Information provides 1.6 million links to full-text journal articles, and another company, Derwent, boasts a database of 1.7 million genetic sequences. For doctors, there are databases that allow them to learn instantly which antibiotic combination will help a patient-for example, one in shock with fever and seizures. Lawyers can access a billion records, including statutes and past case histories.

The key to Thomson Corp.’s modernization was

the decision to shed its newspaper and travel divisions. The family first grew rich on producing the dullest newspapers in the history of print, so bland that no self-respecting fish could bear to be wrapped in them. The chain, which once owned 240 North American daily newspapers from Newfoundland’s Corner Brook Western Star to Iowa’s Council Bluffs Daily Nonpareil, treated its severely underpaid reporters and editors as expendable eccentrics. The one exception was Toronto’s Globe and Mail, which the company sold control of two years ago to BCE Inc. The travel division was spun off in 1998, after becoming Britain’s largest charter operation with 41 jumbo jets. Sales of these two non-core divisions yielded $6.6 billion, which has since been re-invested into electronic publishing.

In the Thomson world, knowledge is not only power, it’s profit. P.C.N.

THE THOMSON EMPIRE

Chairman: David Thomson (as of May 8)

President and CEO: Richard Harrington

Revenues (2001): $11.2 billion

Operating profit: $2 billion

Employees: 44,000 in 53 countries (1,223 in Canada)

REVENUES BY MARKET GROUP

have to take his part in the running of the organization, and Davids son, too,” the dying Thomson wrote in his autobiography, spelling out the rules. “For the business is now all tied up in trusts for those future Thomsons, so that death duties will not tear it apart. These Thomson boys that come after Ken are not going to be able, even if they want to, to shrug off these responsibilities. The conditions of the trusts ensure that control of the business will remain in Thomson hands for 80 years.”

It was during his time in England that David Thomson first became seriously interested in art, as his father was before him. It quickly became an obsession, but has never been based on financial gain or social acceptance. Aware that any cultural hobby pursued by a rich kid was bound to

be dismissed as dilettantish, he developed a close relationship with the owner of a small London shop that rented antique props to the film industry and who was also an expert in medieval art. Thomsons other significant art mentor was his father whose collection, David has said, “should be celebrated in its completeness; even the frame mouldings are harmonious.”

David Thomson’s fealty is genuine and profound. “Given my passionate experience in so many realms, I have never felt more admiration for an individual. Father’s contributions to the family and business have been absolute inspiration. Like sculpture, it is the space that surrounds them, rather than the space they occupy, that truly matters.” He adds: “My father’s relationship with me has also

been combustible, as you might expect.” Becoming a world-class collector has been a wake-up call for the younger Thomson. “The art world has taught me harsh lessons on human nature,” he has said. “Money does not open every door. A real collector will rarely sell a work unless he can replace it with something even greater that has more personal meaning.” Thomson’s most valuable acquisition was J.M.W. Turner’s magnificent Seascape, Folkestone, which Kenneth Clark, the former director of Londons National Gallery of Art, described as “the best picture in the world.” David Thomson bought it at auction in 1984 for $12.8 million; five years later it was valued at $38.8 million. He has since sold it as a favour to a fellow collector who “needed it more than I did.” Thomson’s most lasting dedication is to John Constable, the miller’s son who, along with Turner, dominated English landscape painting in the 19th century. He began collecting Constables as a teenager and his private collection now ranks as one of the world’s best. “His sensibility has had a strong influence on my personal philosophy, which I carry forward in all walks of life, including business,” Thomson has said. “So few people openly see and question scenes and events as he did. All too often subjects are viewed from a narrow perspective. Being possessed by imagination, curiosity and such dreamlike qualities doesn’t mean one is incapable of pragmatism and tough decision-making. Whenever you lose that sense of idealism, you lose your reason for being.”

That sense of idealism has taken Thomson into the soggy pastures of existentialism, at least in the sense that he feels diminished unless he meets the challenges he sets for himself. Intensely attracted by the idea of war and danger, he has put together a London-based collection of photographs, diaries and letters documenting first-hand experiences of combat and other adversities throughout history. He once told me that he often imagines himself in battle: “I become excited at the thought of measuring myself in varied situations, alongside Wellington in India, or being in a fighter aircraft attacking a formation of bombers and being vastly outnumbered. It’s an interesting way to test yourself because you set your own limits.

“The existential idea of life’s journey is very important. It’s all too easy to become cynical and to forget that we are all children at heart, that when you leave those

youthful dreams behind, you leave a great part of your being forever, you abandon your sense of wonder and astonishment, the idea that you can be spiritually moved by something or someone. I take art so seriously because its one of the few pursuits in which I can totally unravel my soul. For me, the act of creation comes through in a better appreciation of business.”

His artistic impulses have recently expanded to collecting works reflecting “a northern tradition of light” ranging from 15th-century Flemish and German paintings to 19th-century Scandinavian art. Thomson, who regrets he can’t find enough time to indulge his own passion for drawing, also has extensive holdings of 20th-century Canadian paintings, as well as photography from the 19th and 20th century. He holds one of the largest private collections of drawings by the 19th-century British painter and art critic John Ruskin. In 2000, selections from Thomson’s Ruskin collection formed the basis of a lavish, 198-page book, part of an art and culture series published by Pilkington Press of London.

As well, Thomson is gradually moving away from his penchant for maintaining his collections strictly for private pleasure. Now, he regularly lends canvases to public exhibitions, and his own collections will almost certainly end up, as will his father’s, at Toronto’s Art Gallery of Ontario.

The young Thomson’s learning curve in business realities received its most valuable spurt during the 1980s. He spent most of that decade with the Hudson’s Bay Co., then owned by his family, working as a retailer, right down to selling socks at the Bay’s Toronto department stores and at a fur-trading post in Prince Albert, Sask. “The juxtaposition was dramatic,” begins one of his favourite stories. “On July 4,1980,1 bid successfully for an Edvard Munch woodcut; the following week I was in Prince Albert, being taken to the post’s backyard where 10 bear claws were positioned on the cement floor, with fresh bloodstains and tissue intact.”

At the time, some of his co-workers accused him of grilling underlings about their superiors’ performance, then attacking those in charge on the basis of what he’d heard. They claimed that he could operate at only two speeds, full throttle or total indifference, and recalled HBC management meetings where he would grow bored, slump at his desk, and finally start reading a book. “David used to phone

from Liechtenstein on a Sunday night and say, ‘Hey boss, can I get Monday off?’ complained Winnipeg businessman Marvin Tiller, then in charge of the HBC’s northern stores where the young Thomson put in some time.

Now, Thomson says the secret to successfully managing people is “patience and a great deal of empathy.” He adds: “One has to be prepared to listen to colleagues, to expend enormous energy in their worlds and support them, encourage them.”

Will his retail experience help him run a

digital information empire? “Absolutely,” he replies. “The retail business requires constant interface with the market, in terms of the ability to read and respond to reality. The electronic delivery system to which we have moved opens up a different customer segment with endless possibilities.”

A useful guide to Thomson’s plans for his empire can be deduced from a favourite reading of the moment: Good to Great, a book that documents the road to corporate excellence by American business guru Jim Collins. Its main theme, says Thomson, is that most successful organizations are led by eccentric individuals who feel passionately about their businesses and about the people who inhabit their companies. “For me that was not a revelation,”

he emphasizes, “but it was really thrilling to have that reinforcement and to understand how basically unknown these individuals are, even today, and yet they charted new waters and perpetuated the strength of their organizations.”

After his adventures with the Bay, including stints as the boss of Zellers and Simpsons, Thomson in the mid-’90s became deputy chairman of Woodbridge Co. Ltd., through which the family controls its empire. This private company, under Ken Thomsons chairmanship, holds the family’s nearly three-quarter stake in Thomson Corp. Woodbridge also holds 9.9 per cent of Bell Globemedia, which owns, among other properties, CTV and the Globe and Mail. (Thomson Corp. owns a further 20 per cent of Bell Globemedia, with BCE Inc. owning the remainder.) After last week’s corporate shakeup at BCE (page 42), there was widespread

speculation that the Thomson family, through Woodbridge, might take back control of the Globe, which Thomson Corp. sold to Bell Globemedia in 2000.

Woodbridge’s only other known holdings are Jane’s Information Group and a half interest in the Augusta Newsprint Co. in Georgia, both of which were purchased last year. In the early ’90s, David Thomson created his own private real estate company, Osmington Inc., which owns office buildings in Winnipeg and Toronto.

The downtown Toronto office where Thomson has been patiently waiting to take over from his father features such incongruous objects as an original, dark green ejection seat from a Second World War Luftwaffe fighter and large abstract canvases by Patrick Heron, a contemporary British painter. Herons work also decorates Thomson’s Toronto home, hanging on either side of his vaulted living room. Other walls display works by Munch and Paul Klee, among others. And then there are his objets d’art, including animation cels from Dr. Sems’ How the Grinch Stole

Christmas! that hang in his daughters’ rooms, an original Charles Schulz cartoon of Charlie Brown and several 15th-century coloured German woodcuts.

In the past, each new experience has provided the bounce that determined David Thomson’s next direction. Now, there is no escape from ultimate responsibility. “I feel that I have enough platforms in my life that level me,” he contends, “whether it’s my little girls or my other passions. I hope I am able to balance all of these emotional forces for the good of all. I feel extremely humble and determined.”

He is not a man who nurtures doubts about his past performances or future prospects. But a shadow hangs over him: can he channel all his high-fizz intensity and passion into corporate pursuits, or will he, one day, quiedy implode? He recognized that dilemma early, in 1975, when he chose an anonymous quote to place under his graduating picture from Upper Canada College: “We are never so much the victims of another as we are the victims of ourselves.” The jury is still out. CD