Sunday, October 27, 2013

CONSULTANCY SPECIAL................ The Big PICTURE


The Big PICTURE 

BCG's Richard Lesser on coping with change, volatility and disruption 

E ver since taking over the reins of consulting major Boston Consulting Group (BCG) in January, Richard Lesser has been trotting the globe, meeting clients. As the global economy limps back to normal, these are interesting times to lead a white-shoe advisor with struggling companies needing all the help they can get, with growth, with costs, with strategy, with execution. Lesser took over from a rockstar amongst the consulting firm CEOs, Hans Paul Burkner, who in his ten year tenure nearly tripled consulting firm's revenues to $3.55 billion while doubling headcount to nearly 9000 consultants across 40 countries. Earlier the regional chairman for the Americas, Lesser, now has the challenging task of leading the strat firm in uncertain times when the consulting profession is witnessing new challenges and newer competitors are emerging on the horizon. BCG's sixth CEO was in India recently, where he took out time to discuss with CD, the changes and challenges facing the profession. Edited excerpts: 

Clayton Christensen recently wrote in a Harvard Business Review article that consulting is at the cusp of disruption. What are your thoughts?
    
It is a very dynamic time for our industry and I think it is the most dynamic time since the period just before and just after the dotcom bubble when there were new firms, disappearing firms, and restructuring. We are in another one of those stretches right now. The second thing is that the expectations of our clients continue to rise and the need for investment orientation in how we approach the next few years is critical. That investment will not just be how we are doing traditional things better, but there will be different kinds of tools, different kinds of capabilities and so forth.
    Where I would have a different view perhaps is the belief that small firms and software are going to replace a lot of what is done, because at least the way we practice it, a deep belief we have is that competitive advantage is not about adopting best practices or following what others do but in being unique and differentiated and understanding where you stand out. Finding those insights is quite challenging and it requires really good understanding of the industry, the competitive dynamics and the way different loops will shape that going forward. In the big, complex, global, fast changing organizations, the ability to make change happen in any organization, to get it done and get it right is not so easily replaced. Embrace Change
    There is a portion of the analytical part of our work that will absolutely increase and there will be more leveraging of tools and analytics but the core of what our clients needs is customising, how to have differentiated advantage and the ability to make change happen in an organization. That's not so easily replaced with small firms that may have deep capabilities in one area or with tools and analytics.
How is BCG adapting to the changing industry dynamics?
    
BCG has been adept in tiding over the various waves of that have swept consulting. Over the years, we have seen four waves. The first wave was strategy and getting into recommendation. The second was implementation of those elements. Thirty years ago BCG built a really great reputation in strategy. Then that wasn't enough and you had to be able to help your clients implement the strategy. Ten years ago you did those two things, but you also need to be able to orchestrate large scale change across these issues, functions, geographies. Today, what we are doing is those first three plus also enabling the organization. The world requires more adaptiveness to deal with uncertainty and volatility. You have to build the underlying capabilities of the organization so that it can respond and evolve over time.
    Our clients are not just looking at one time change, they want that because they need the value from it, whether it is top line value or bottom line value. They are now looking to build a stronger more resilient team, equipped with better tools, and an ability to sense what is going on in the environment. That's a big part of what we are focused on.
    We are also building more depth of capabilities in our various practices, simply because our clients expect both the team and the tools to be world-class. Finally, we have to help clients interpret how new technologies can be applied in their business, not just to keep up, but to create advantage.
How has consulting changed in the last five years?
    
There are five things that we would highlight. First is the search for value-creating growth. The world was growing at such a pace that people just assumed growth came easily and was automatically value creating. Now most of our clients are discovering that growth is harder to find in many places, even the emerging markets. The rate of growth will be a couple of clicks lower than would have been in prior decade. They are finding value creating growth in a very intensely competitive world, a tough one to crack. The second is that productivity now is measured at a world class level against the best players around the world, not just locally. The third is around adaptiveness. The fourth is around connectivity, investing not only in digital infrastructure but also in the principal infrastructure. When I talk to CEOs, there is a recognition of managing for the long term, managing in a multi-stakeholder environment, understanding that in many cases doing well and doing good have a very strong linkage.
At times of such uncertainty and change, why is the classic strategy work going down for consulting firms?
Knowledge disseminates very rapidly in this world. It's not a surprise to me that our clients capabilities on many fronts continues to grow, including their own ability to think through strategy, or do a typical three year plan or five year plan or work through an analytic issue. Our clients are very much capable of doing things that they would have turned to an outside crew to do ten years ago. But the challenges continue to go up and our responsibility is to bring new ideas, new tools and capable people to help them work through those issues. Some things are strategy, but in today's world where competition is so intense, it's often about getting more fit, more adaptive, embracing change and strengthening leadership.
Clients have become increasingly sophisticated and know exactly how to structure engagements, measure delivery, and often ask for the consultants' skin in the game. Is that a good thing for the profession?
Sophisticated clients are something I feel great about, because BCG has always been trying to win on quality. The ability to ensure value capture from consultants is an increasing priority for our clients, and we have a shared objective in that, because if I want to be their partner five years from now, I really need to create impact. There are some projects where we are open to having our fees at risk and some are linked to performance results and we are quite happy to do that. But clients tend to go back to traditional methods once they realize that we deliver and they have to pay more.
Do you see more productised services coming from consulting firms in the future?
We have more tools and more capabilities that we can leverage, but labeling them as products is a double-edged sword. The clients want the comfort of knowing you know how to do this and that you are not experimenting on them and that it is a tried and tested, that it yields value. But if you think that solving the most difficult business problems for the best companies in the world is just a cook book, that's going a step too far.
How is BCG India doing compared to firms in other geographies?
It's one of the most robust parts of BCG, and has been for many years. Year after year there is an obsession here with delivering impact and building relationships and attracting amazing people. And when you get in a good loop in such a dynamic economy like India it becomes a very virtuous cycle and that is what we are in. We have another year of 20%- plus growth. We growing at 20 to 30% since a long time.
How desperately do you want to beat Mckinsey?
Honestly, what I discuss everyday is about getting better, because the history of the BCG is when we get better, we outperform and we grow and it offers great opportunities for our people and we deliver great value to our clients. I think it is so easy to get caught up in externalities, some of which you can control. For our team, focusing on the client, focusing on building our capabilities, building our people is the orientation that I have. And then if they to do that, it will bring results, which they have…and that will continue.

Vinod Mahanta CDET131018

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