What a way for Charles Gurassa to end the millennium. A few short months ago, he was widely whispered to be the heir apparent to turn around one industry giant, British Airways.Ê
Instead he has taken over the problems of turning around another, Thomson. It could be suggested he drew the shorter straw.
For the last quarter of this century, Thomson has dominated the package-holiday market. But in recent years much of that has changed. On many fronts the business looked in decline. Last year’s stock market flotation didn’t cause the problems, as some think, it merely served to make them public.
Thomson still has the best product and the best brand, but the gap is ever narrowing – in some areas it is clearly no longer number one. Its profits are in serious decline. Its value as a company has halved.
The management upheavals that were triggered this summer were not without pain.
The internal candidate to replace former chief executive Paul Brett, Roger Burnell, is an excellent manager.
But shareholders had made it clear from the start that they wanted complete change. In stepped Gurassa.
He is certainly not the high-profile, quick fix, do-what-I-tell-you manager that some had, wrongly in my view, suggested was what the company needed.
But there are urgent things to be done as soon as possible, as he admits.
“Of course the business needs change. But I am not coming in with a masterplan from day one, saying ‘do this’. I think it is dangerous and irresponsible to act too quickly,” he said.
“Lots of people have given me lots of opinions about Thomson – there is lots of tittle tattle. But I just want to hear what the very bright people in this business, who are already committed to change, think. And I want to talk to key people outside our business partners.”
He added:”I don’t think it’s a simple ‘it’s about this’ or ‘it’s about that’. Everything needs to be looked at.”
Of course he is right, the needs are complex. But two key things stand out. Firstly, Thomson is a classic marketing-driven business, which grew not only a brand and a product, but shaped the sector itself. But today’s market place is mature, where product and brand values are a given.
What shapes the business now are sales-driven, street-level, trading capabilities. This is not a Thomson strength.
The second is what might be called the Marks and Spencer syndrome – some have called it arrogance.
Thomson thought itself to be much further ahead of the competition, much more important to the consumer and the agent than it actually was, or is.
It failed to notice that it was quickly being caught up on every front, and that agents in particular were happy not to support the company if there was an alternative.
It would have seemed inconceivable only three years ago that Thomas Cook and Going Places did not sell Thomson.
Now Thomson accounts for no more than a couple of per cent or so of each chain’s sales. And increasingly, independents are becoming less dependent too.
Gurassa is perhaps aware of this.
“It’s a bit early to judge, but any business I run I want to be absolutely the best, and I do not believe that any business succeeds with a culture of corporate arrogance, however good you might think you are.
“If the attitude [towards agents] was wrong, and I don’t know if it was, then if we want a productive relationship that would be completely unforgivable.
“There is a very clear role for independent agents. Customers want them because they provide choice and advice. I don’t see that changing,” he said.
Thomson will of course need a much better relationship with distributors if it is to remain the market leader.
But does he want to be the market leader, at least in market share? With memories of Brett’s demise in mind, this is a tricky subject.
“So I want Thomson to offer better value than anyone else and holidays on which we can make a good return for our shareholders, yes absolutely I do. What that means in terms of bigness in the current trading cycle, I don’t know yet. The number one priority is to restore the commercial fortunes of the business.”
This brought us on to another tricky subject – the City. Some thought that in making this appointment, the big investors would look for a quick fix, and bring in a wham-bam person who would do lots of short-term things to get the share price up as soon as possible. First Choice was often mentioned as a possible model to follow.
Gurassa said: “What the shareholders say is that the financial performance over the past 12-18 months has been disappointing and now they want good, predictable financial results in the medium to long term.”
He has gone down well in some City quarters. Credit Suisse First Boston, one of the City’s largest brokers, recommended him and the company’s shares as a good buy.
One area where the City could really help Gurassa is in the new chairman it chooses.
There has been some comparison between Gurassa’s arrival at Thomson and Colin Marshall’s arrival at British Airways.
They are not dissimilar as people and managers. Both are detailed strategic managers, more technocrat than entrepreneurial.
Marshall was brilliantly balanced by the appointment of the archetypal businessman in Lord King.
I think Gurassa could be helped in the same way. What does he think?
“Well first of all the situation is not quite the same. Colin entered BA when its product and customer support were terrible; these are Thomson’s biggest strengths.
“But I agree the chairman role is an absolutely critical partner for the success of the business. He or she should be very different, like King was for Marshall.”
He added:”I want someone who will be an outstanding support, mentor and coach to me; someone who knows the City, and knows the difficulties of turning things around.”
Gurassa has got potentially the best job in the business, even if life is going to get much tougher for the company and its chief executive over the next 12-18 months.
Airtours, First Choice and JMC see a big opportunity to steal Thomson’s business. There will need to be painful change of people and process within the business.
The current group strategies are clearly not right. And Gurassa is, at present, short of the top-level support he will undoubtedly need.
But as Gurassa himself said: “Thomson is potentially a great company; at present it is only a good company which has lost its way a little bit.”
But even if it is only a little bit, it will need to be a quite different company in the future if it is to find the right road again.
Its cure will not come through whizz-kiddery but through a thorough rethink of all of its being, which is where Gurassa’s strengths lie.
He is a first-class manager, a good listener and a thoughtful man.
I have no doubt that he can make the difference at Thomson.