Case | HBS Case Collection | May 2010 (Revised November 2010)

Investment Technology Group

by Clayton S. Rose and David Lane

Abstract

Investment Technology Group (ITG) CEO Robert Gasser wondered if the financial crisis had permanently affected the firm's business model. A leader in trade analytics and execution for institutional equity investors, ITG had grown since its establishment in 1987 in step with the dramatic rise in equity trading volumes. During 2009, however, investors curbed their equities trading, depressing ITG's heavily commission-based revenues, and earnings plunged by 63%, resulting in ITG's first unprofitable quarter since 1988. Gasser was convinced that ITG's challenges were not simply a function of shrinking trading volumes; 2009's downturn revealed limits of client willingness to pay for the value ITG delivered, and the infrastructure ITG had constructed to support clients with customized software tools and technical support had grown well beyond sustainable levels. With his management team, Gasser had developed a two-part response to the challenge: a reduction in staff and a focus on clients that most valued what ITG offered. While significant cost savings goals would be realized in part through employee layoffs, he wondered about ITG's ability to deal with these changes. Adjusting its customer portfolio meant that ITG would be pulling back products from some clients while reaching out to others in new ways, and he was unsure how clients would respond.

Keywords: Customer Relationship Management; Financial Crisis; Investment; Resignation and Termination; Crisis Management; Product Positioning; Organizational Change and Adaptation; Financial Services Industry; Information Technology Industry; New York (city, NY);

Citation:

Rose, Clayton S., and David Lane. "Investment Technology Group." Harvard Business School Case 310-064, May 2010. (Revised November 2010.)