Cesare Mainardi, Booz & Company’s new CEO, says it’s a great time to be at Booz. And he’s right. The firm’s focus on its differentiated approach of capabilities-driven strategy is paying off in a big way in the marketplace.
Cesare Mainardi likes to talk snack food. Well, a company that makes snack food, that is. Frito-Lay to be exact. The reason Mainardi likes to talk about Frito-Lay, the snack
division of PepsiCo., has nothing to do with Cheetos, Fritos or Doritos, but rather, how the snack-food company has been laser-focused on key capabilities that set it apart from its competitors. The company has implemented strategies and built a value chain that few others could replicate—it stocks its own products on store shelves, for starters, which is pretty much unheard of today.
Mainardi likes to point to Frito-Lay as a prime example of what Booz & Company’s capabilities-driven approach looks like in the real world.
“Frito-Lay is amazing at being able to sell in racks up and down the street; they have a highly motivated sales force; they were the first to use hand-held technologies to get the job done, and the company has an ability to innovate around flavors, put a particular product on the shelf, interpret if it’s selling or not, change out the product if it’s not. All in real time,” Mainardi says.
“To build that is a really big deal; it’s messy and no one else in the marketplace has been able to replicate it. It’s really difficult to do. And once you have it, no other company can go out and buy what you have off the shelf. That’s really the essential advantage any company can have.”
If Mainardi sounds excited, it’s because he is. Mainardi, who took over the reins from Shumeet Banerji as CEO at Booz & Company in April, is a big reason—and
perhaps the reason—that the firm goes to market with a differentiated approach of capabilities-driven strategy and capabilities building for its clients.
In his more than 25-year career with the firm where he’s served as Chief Operating Officer, Managing Director of the North American business and now CEO, Mainardi has been a principal architect in the capabilities-driven approach that he often refers to as “the essential advantage.”
So much, in fact, that he co-authored a book of the same name in 2010. The year before, he co-authored Cut Costs and Grow Stonger, a book that carried the subhead: “A Strategic Approach to What to Cut and What to Keep.” What to keep, it turns out, was a company’s key capabilities, not just its core competencies, but rather those few differentiators that define how a company truly competes. The Frito-Lay way, if you will.
The same principle, Mainardi says, applies to consultancies. “How many consultancies are geared up to take on that problem? If you have a model that’s all about high leverage, the inclination is for off-the-shelf solutions. And that’s fine, that’s great work and it’s important, but it’s not what’s needed to build an advantage capability system. Clients need to compete on what they have to do better than their competitors. And that means they need to build capabilities,” he says. “It’s not just strategy consulting, it’s strategy into outcome. That’s really hard to do.”
This, of course, is not new. Booz & Company has been on this strategic path for some time. What is new, or at least refreshing to see, he says, is the way the market is responding, “It’s been in our DNA for years, and the market is finally rewarding us for it. We’ve been on this path to differentiate in this world of premium consulting, and we’re seeing results and pretty attractive growth rates because of it,” Mainardi says. “We have a spring in our step and to have the world tell us that we have some big ideas. To see those big ideas being translated into impact for our clients and, as a result, growth for the firm, is a heck of a position to be in.”
Particularly, he says, as the firm emerges from “the worst economic downturn of all of our collective careers” in pretty good shape, particularly for a firm that was still finding its footing following the split with Booz Allen Hamilton in July 2008—right before the landslide of September.
“If you look at our results in the U.S. and what we’ve done since the launch of Booz & Company in 2008, it’s incredible,” Mainardi says. “The timing couldn’t have been worse to launch, but we still managed to grow 13.5 percent per year.”
Last year alone, the U.S. business grew 20 percent. “What’s happening is that clients are rewarding us for differentiation. It’s a bit trite, I suppose, to say that clients want outcomes, but in especially tough times clients really want outcomes.”
Where the firm has actually been able to implement its strategy, Mainardi says, Booz & Company has seen dramatic growth even through the downturn. Where it has not done that, he says, the firm has experienced the same dip as every other major consultancy. Add it all up and Booz & Company is a 3,000-consultant firm generating more than $1.3 billion a year, he says.
Looking forward, Mainardi says he doesn’t want to try to forecast the future of the global economy—and Booz has, incidentally, seen the same summer slowdown as other firms have—but “we have an aspiration to do no worse than the growth we’ve been able to achieve since we launched Booz & Company.”
Looking out a few more years, Mainardi says the firm doesn’t need to be much larger than it is today. “The aspiration is not around specific size but rather for Booz & Company to be large enough to be distinctive, powerful and unique,” he says. “And where we’ve been able to implement our strategy, we’ve seen incredible growth—as much 40 to 50 percent a year in some places.”
Places like Brazil, India and China grew at or near 30 percent clips last year, while North America and Australia have grown around 20 percent. “We’ve hit on something here that has allowed us to take market share—and we do have evidence that we’ve taken share—that has allowed us to grow despite what the overall market might be doing at any particular time,” he says.