New CEO Punit Renjen is telling anyone who will listen—Deloitte is in ‘a category of one’ when it comes to solving clients’ most complex problems. In November, Punit Renjen was elected chairman and CEO of Deloitte Consulting, and thus made him accountable for the firm’s $6.5 billion in consulting and advisory services revenue. Renjen, who was named one of
Consulting magazine’s Top 25 Consultants in 2007, has been with the firm for 23 years, most recently as the global and U.S. leader of the Strategy & Operations practice. He succeeds Doug Lattner, who served as CEO for the last six years and helped re-integrate Deloitte’s consulting practices into the broader Deloitte professional services organization. From 2003 until 2008, Deloitte Consulting posted annual growth rates between 18 percent and 20 percent, but 2009 was a different story. What now? Renjen sat down with Joseph Kornik, Consulting’s Editor-in-Chief, to discuss his new role, the firm, the marketplace and the profession’s future.
Consulting: You took over the firm late last year in difficult times, what are your immediate plans and goals? What’s your overall vision for Deloitte Consulting?Renjen:
This once in a lifetime event that we just went through was actually a proving event for us. It proved to us what a wonderful partnership we are. We are an exceptional firm on multiple levels. I truly believe this. We are part of this fabulous, larger firm and my vision is to take our firm to a very distinctive and unique place. Of course, I’m biased, but I firmly believe there isn’t another firm like us in the world. We bring a broad swath of capabilities that nobody else can.
When you have difficult, complex problems, the firm to go to is Deloitte. We have the ability to take world-class insights and use those insights to develop tangible results. I don’t think there are very many firms that can do that, and that puts us in a very unique place. By the time my tenure finishes, I want that widely acknowledged. We know it, and we believe it, but I want it to be widely acknowledged by everyone in the profession and all of our clients—we are a
category of one.Consulting: And just how do make that happen?Renjen:
It really starts with us emphasizing our core beliefs. There are a few core beliefs and tenets that we subscribe to as a firm. The first is the notion of serving clients with distinction—making sure that every client interaction we have generates that measurable and tangible result. Client service for us at Deloitte is the ultimate destination.
The role that I’m playing, I believe, is a transitory role. The ultimate destination that I aspire to—like every partner at Deloitte—is to be that consummate client service professional. That’s easier said than done, especially for a large, complex organization like us—we have $6.5 billion of revenue in consulting and $15 billion globally. That notion of client service with distinction is core to who we are.
The second core value is a real passionate focus on our people, hiring the very best people and developing them into great partners or directors—or great clients if they decide to leave us. The third core belief for us is we must generate world-class, bottom-line results. Our intent is that we’ll be second to none when it comes to our results.
The fourth is what I referred to earlier—we are part of this larger exceptional firm. There are many assets that Deloitte has that we intend to leverage. The fifth core belief is that we are a partnership; that means that people like me are first amongst equals. We are all partners and directors in this wonderful firm together.
The last core belief is that we are called upon to do things that are greater than just what we do at Deloitte. We must take into account the larger good. We must influence society in ways that are both tangible and intangible. Those beliefs really inform what I intend to do with this practice. Consulting: What would you say is the best way to describe your management style? Renjen:
I really believe this is a calling. It’s a practice, and we are all practitioners. We are all becoming master craftsmen. I learned my craft by being mentored and apprenticed by others and that’s what I do with people that work with me. I have a very collaborative style. We are, by culture, a very collaborative firm. And we are, by culture a very caring firm. A Deloitte professional doesn’t let another Deloitte professional down. That is critically important for us. Personally, my mindset is this: I’m answerable to my partners. That means I’m required to be very transparent and also very accountable.
My partners and directors are my shareholders—and I’m just using that word as an analogy. Every month, we get together and we have a town hall meeting. We’ve got a set of goals that we want to accomplish over the year and we break the year down into three, 120-day sprints. It’s a very simple set of plans that I go over each month. It’s very transparent, and I’m accountable to them for the role they’ve given to me. Consulting: I think you’ve touched on this a bit already, but what do you view as Deloitte’s main differentiators from your competition?Renjen:
First of all, we are not affirmed or defined by comparing ourselves to someone else. There are a lot of firms out there that are wonderful at what they do, and that is wonderful for them. But, I honestly believe there isn’t another firm on planet Earth that’s like Deloitte. We certainly watch our competitors and take note of what they’re doing, but we are not defined by them because of who we are. We are unique. We produce insights that produce results.
We are a firm that has world-class insights on various topics, whether it’s a large merger, transformation, a large human capital issue or finance… we have insights, but we also have the ability to take the insights and help our clients execute on them. That is a unique capability that we have.
Also, we are not bound by a quarterly mentality like many of our public brethren. We can take a longer-term view and actually work with clients to make sure we do the right thing by them. We don’t need to focus on meeting stakeholder expectations every quarter. Consulting: Speaking of quarterly results, just how challenging of a year was 2009? As the new year begins, what did you discover about the firm, your people and the marketplace?Renjen
: The year 2009 was a difficult year for everyone and, I believe, a clarifying moment for our profession. It has allowed very strong firms, like us, to take advantage of the situation. I’ll give you an example: We made a $350 million investment in BearingPoint’s federal practice. It was a bold play and that has turned out exceptionally well in terms of the presence it has given us in the federal marketplace. I really think it’s been a great investment. We also made a big investment of our partner capital into Deloitte University. That’s a $300 million investment we’re making in our talent and our future.
But overall, it was very difficult year. I believe we navigated it as best we could—in the most intelligent and appropriate ways. We had to make some very heart-wrenching and difficult decisions, especially around cost and people.
As we navigated the recession, we had to do some belt tightening. We, like most intelligent enterprises, really did focus on cutting expenses. Some of that probably will permeate into the upturn, which I anticipate in the next number of months. We did decide, however, to make long-term strategic investments in the areas. I mentioned because we thought they were important to the long-term health and competitive position of Deloitte.
From a relative position, I’m confident we will come out of it in a much stronger position than our competitors will. But we’re incredibly busy. We are operating at levels in terms of utilization that I’ve never seen in my 23 years with Deloitte. We finished the last period with over 80 percent utilization practice wide. For advisory, we’re running at least at that level and even higher, maybe into the mid-80s. I’ve never seen that. We are incredibly busy and many of our market offerings are as active as they’ve ever been.Consulting: Are those types of utilization rates sustainable?Renjen
: I think those utilization rates will moderate. We’ve got a very robust campus recruiting process. Last year, we were active on campus, and we plan on being very active on campus again. We also are looking at other hiring opportunities. That will help us moderate the utilization levels back a bit. They’ll still be much higher than levels we’re used to operating at, but they’ll be lower than where they’ve been over the last couple of months. Consulting: As you continue to do more work with fewer people, are there specific plans in place to address the culture and make sure people aren’t getting burned out?Renjen:
Our business is relatively simple. There are three things we need to focus on. Serving our clients with distinction, taking care of our people and nurturing the partnership. Those are the three things that matter. Taking care of our people is something that I think about and worry about all the time. I’ve been in this profession for 23 years, and I’ve never seen such a confluence of events with such magnitude and pervasiveness before.
As a result, everyone is working incredibly hard. That re-engagement with our people is something that absolutely needs to happen, and I’ll be heavily focused on that. I’m also concerned that we had to tighten our belt around things that are important to culture—for instance, our ability to go out and celebrate. We still do that, but we’ve curtailed it a little bit.
The fact that everybody is working so hard makes it even more important that people like me—people in leadership roles—go out and connect with individuals and share with them why this is a place that will develop and accelerate their career. We are consciously aware of that.
Consulting: Let’s talk about the marketplace. Where do see the market opportunities in 2010? Where do you see major challenges?Renjen:
I think the U.S. economy is in a state of recovery, but I think it’s still a little tenuous. I think 2010 will be a cautious year. I am still optimistic; I don’t buy the premise that it’s going to be a difficult year given our performance in the first five or six months of this fiscal year, which actually began for us in April. I am confident that we’ll have a good year. It will not be comparable, however, to the years we had in 2006 and 2007.
We are a global firm and therefore impacted by the global economy. However, I believe some of the economies in Asia—China and India in particular—are rebounding very smartly. The same can be said of Brazil. We will benefit as a result of that. We are making some very significant investments in China, India and Brazil. China is a story that’s been told many times over. There’s tremendous opportunity there. Fifty of the Global 500 companies are of Chinese origin.
The opportunity in India is also very substantial. Europe, the Middle East and Africa (EMEA) and the rest of the more developed economies are impacted by this recession in more profound ways. The U.S. is a very important part of our portfolio and always will be. Our U.S. business is about 50 percent of our overall business, and I believe the U.S. will remain a very vibrant, strong portion of our global footprint, but there are tremendous opportunities for U.S.-based professionals in cross-border situations, whether it’s in the America’s or Brazil or China or India or even EMEA. That’s where the growth is. Even U.S. companies have a global component to them. The opportunities have a global footprint. That’s a big advantage for us. Consulting: How about from a client industry perspective, what do you see in terms of growth for specific market sectors?Renjen:
Life sciences and healthcare is a very big growth sector. Healthcare reform will also be big. We are dominant in that space and plan to take advantage of some of those opportunities that present themselves. Energy is another one, especially alternative and clean energy. We are certainly bullish there. In all, we believe there are about eight sectors—and I’m not going to go through all of them—that we think are real opportunities for us.
We also see a lot of opportunity with the federal practice. That’s the reason we made the BearingPoint investment. It is already bearing fruit and has catapulted us into one of the premier providers in that space. That practice has been growing very smartly. The federal practice will be a very significant opportunity for us for quite some time. Sustainability also is very big; risk and finance, as well. Consulting: Can Deloitte keep up the impressive growth it’s had over the last several years? What are the revenue projections for next year... for the next several years?Renjen:
It had been about 18 percent to 20 percent CAGR over the last five years, while the market has grown in single digits. In 2009, with the BearingPoint acquisition, we are growing. But if you look at it like vs. like, 2009 will probably be flat or even a slight shrinkage.
Looking forward, it’s almost impossible to predict if we’ll be able to return to those 18 percent growth rates in the future. I can tell you this: In 2010, I anticipate moderate growth. I’m not prepared to give you an exact percentage at this point, but let’s call it moderate growth. We’re still in the process of finalizing the overall plan.
Again, that’s like to like. Once you include the federal practice, I think we can have more substantial growth. After 2010, I believe we’ll be able to get back to the level of growth we’ve enjoyed over the last several years. There’s no reason why we couldn’t. I believe we are well positioned. There will be, however, plenty of firms that will come out of this once in a lifetime recession impaired. It will be difficult for them to recover—either because they just didn’t have a strong enough balance sheet and client roster or because of specific mistakes they made during the recession.Consulting: For you, what’s the biggest takeaway or lesson learned from the recession that we’re starting to emerge from right now?Renjen:
Clients have become very sophisticated, and I think there’s a new focus on tangible outcomes. That’s a welcome change, actually. It also leads to more expansive discussion about how a consulting firm approaches any particular problem. It’s not just about having great insights or great strategy, but it’s about how do you bring a variety of perspectives on a particular issue.
I think the real change we see coming out of this recession is that clients are much more focused on the value they get out of any particular engagement. That’s a conversation that I truly relish, and I think it’s an appropriate conversation to have. For a firm like ours, I think that conversation with clients plays completely to our strengths.