Today, digital expertise is not something that’s nice to have. It’s mandatory to stay competitive. Companies looking for an advantage are seeking experts to bring their operations into the digital age. To that end, The Boston Consulting Group has launched BCG Digital Ventures, with the sole purpose to partner with clients to help develop, launch, and transform their digital initiatives. The new firm will leverage BCG’s digital assets and resources, and has been staffed with a team of seasoned operators, entrepreneurs and advisors, helmed by Jeff Schumacher, former Managing Director and Cofounder of Booz Digital. Schumacher sat down with Consulting magazine to talk about the launch, the firm’s goals, and the next digital frontiers.
Consulting: What led to the launch of BCG Digital Ventures?
Schumacher: When the opportunity arose to create a new digital business within BCG, we all immediately saw the potential to extend BCG’s capabilities to the full digital value chain. BCG Digital Ventures is a first-of-its-kind business, bringing unique capabilities to create and grow disruptive digital products and platforms. Our areas of expertise are innovation, product development and commercialization. Building on BCG’s substantial experience and capabilities, we go beyond providing consulting, design, and technology services to form strategic venture teams with clients. We are not here to do cute design work, develop an iPhone app, or make a strategy look better. We’re looking to rapidly develop, launch, and grow transformational digital products, platforms, and businesses. We are a combination of what venture capital, design, and management consulting firms do.
Consulting: What are some of the goals for the new business?
Schumacher: One key goal is to drive true growth for our clients and help them to stay relevant in the digital era. Building new startups and strategic pivots for clients is a fundamental way that we are going to work with them going forward, where we have an enormous amount of flexibility to improve their businesses, beyond just consulting services. Another goal is to create a new environment for our people, where we not only build disruptive businesses and platforms for our clients, but also offer whole new career paths and opportunities for our people, where they are learning the operational aspects of building startups. A third goal is to create innovation in areas that can be helpful to the broader society. So whether it’s building digital platforms to help chronic disease management, or building platforms to improve safety in cars, or creating platforms to enhance retail experiences—all of these things are ventures we anticipate working on across the globe.
Consulting: Will BCG Digital Ventures be staffed from within BCG or will it be doing outside hiring?
Schumacher: Both. The way we think about it is, we are a separate business but we are a fully integrated offering, bringing the best of what both BCG and BCG Digital Ventures have to offer. BCG Digital Ventures will have a dedicated staff with expertise in specific digital-related areas, such as advanced technology, data virtualization, 3D printing, human-centered new product design, and product management.
It will also include colleagues drawn from BCG who bring the many other capabilities required to create and rapidly scale digital businesses – such as generating consumer insight, building organizations, designing operations and creating strong IT capabilities. In combination, we anticipate hundreds of colleagues will be actively involved in our Digital Ventures efforts around the world. Over the next three to 18 months, we will be scaling up the business through outside hires and acquisitions of small but related firms, as well as through seconding BCG employees from other parts of the company. BCG Digital Ventures is one of the fastest growing areas inside BCG.
Consulting: How will BCG Digital Ventures service clients?
Schumacher: We build startups for our clients. Full stop. We’re not making incremental improvements. We’re doing transformational things. We’re building platforms and businesses that have multiple paths associated to them. We’re co-investing with clients in a lot of situations. We’re bringing multiple clients together. So it is fundamentally a different way to serve clients, leveraging the heritage and capabilities that BCG has with all of the innovation and digital experience that BCG Digital Ventures has. We’re very similar to venture firms, where innovation is like seed capital, product development is like venture capital, and commercialization is like growth capital. We bring the best of what a venture firm does with the best of an ideation, product development and commercialization firm, all wrapped around a global leader in strategy. It is truly a differentiated offering in the market.
Consulting: What are some of the biggest challenges clients are facing making the leap to digital?
Schumacher: I think the innovator’s dilemma is the first one. Making the leap to digital requires different skill sets. It requires thinking a little bit outside of the box. Clients have to be able to balance operating their core business with trying to figure out new strategic pivots and opportunities. We think of our clients more as partners with these ventures. We feel equally responsible for the ventures’ success.
Consulting: What about headcount or revenue goals?
Schumacher: We can’t share all of our secrets, but I can say that we aim to be the largest and best digital ventures company in the world. Inside of BCG, we’re already at global scale and we will continue to scale up rapidly. We expect to double in size this year.