Enterprise Transformation and the Customer Experience
Clients have realized it’s a new day: C-level management teams are realizing that the incremental, one-at-a-time changes of the past won’t deliver the type of results customers are now demanding. In more settled times, business leaders could take comfort in the notion that an incremental approach to change made sense: The division between developed and emerging markets was clear-cut, industries were stable and well defined, the economic environment was more forgiving. But not today—economic and political uncertainly have helped usher in a new era of consulting, one that requires a complete overhaul of the client and, ultimately, the customer experience.
Peter Bresler | North American Practice Leader, Health Analytics, Towers Watson
Randy Browning | U.S. Consulting and Markets Leader, Advisory practice, PwC
Steve Hasty | National Advisory Innovation Leader, KPMG
John Laursen | Managing Director, Huron Healthcare, Huron Consulting Group
Kevin McCarty | President, West Monroe Partners
Tim Moore | Vice President, Co-lead North American Life Science Practice, Capgemini Consulting
Mike Moorman | Principal, Go-to-Market Strategy and Transformation, ZS Associates
David Nichols | Principal, Advisory Services, IT Transformation Leader, EY
CONSULTING: One thing I’m really interested in is discussing how clients’ expectations have evolved over the last several years. Specifically, how do those changes impact consulting?
Mike Moorman: One of the biggest changes I’ve seen is around the expectations from speed to results. We live in a world where things change really quickly. A lot of it is technology driven but it’s not completely technology driven. I think what it’s created for clients is the expectations for a much more immediate impact around results. Certainly technology is a big part of it because it changes so quickly and our clients have customers whose expectations change so quickly. Clients’ customers are also changing and different customer channels create different expectations. All these pressures exist, and I think it just means you have to be more nimble than ever before.
David Nichols: I don’t think the fundamentals of our business have changed all that much. They hire us, basically, to do two things: Those things they don’t want to do, and those things they don’t do very well. But the services we take forward to them have changed dramatically. Fifteen years ago, for every $1 of software sales, there was $8 of services attached to it. Today, that number is .86 cents for every $1 of software sales. So, what that means is that we’ve had to re-invent our business, but more importantly, the expectations that clients had of us has dramatically changed. Speed to result is a very important piece of it, but clients also expect us to bring very specialized and specific services. They buy very differently. They also expect the consumption of our services to look very different. They expect the talent pool to look different. They don’t expect large, monolithic projects; they expect smaller, bite-size engagements… and it goes on and on.
CONSULTING: How does that impact the nature of consulting and the make-up your firm?
Nichols: For us, the definition of high-value consulting and the definition of commodity consulting has changed dramatically. It’s probably flipped, actually. You have to spend a lot of time trying to determine what the mix of business you’re going to take to your clients is going to look like.
McCarty: For us, we’re bringing a lot of IP to the table so we call it asset-based consulting. I believe there’s two ways people procure: One is ‘I’ve got the strategy and I just need arms and legs to execute.’ The other way they procure is by asking ‘what are you adding to the value proposition that’s beyond selling time and hours and labor?’ Not staff augmentation but a solution. Where have we done this before and how quickly can we get it done? And I think that’s the last thing we want to do. The world of procurement is going down the slippery slope of staff augmentation, and the more that we let clients borrow our people as opposed to buying our services, solutions, brain power and our IP. I think it’s a mistake for us to commoditize our people. Clients cut back on people and they know what they want to do and they know what their competitors are doing, and they need to get there quickly, but they just need the army to come in and build it. I don’t think we want to get into playing that game. Arms and legs at a low rate isn’t our business and it shouldn’t be.
John Laursen: Historically we’d bring our IP and drive a change drive a quality improvement or a bottom-line improvement, but now they are struggling to say what lever do I need to pull at what time? We’re helping to coach CEOs through that process right now. It’s difficult to define so we’ve had to refine some of our offerings.
Randy Browning: I think the relevance point is key. Clients really do want to get access to very specific talent. One of the things we did in the last six months or so was to launch an app called “PwC 365” and that’s all of our thought leadership and anybody can access it. What’s interesting is if you find a piece of thought leadership, you can click and access the thought leader directly. You’d be amazed how many clients are reaching out directly to people, and it’s empowering them without having to go through some account team or sales person or whatever internal process they have.
Moorman: From a macro perspective, we left the Great Recession and the emphasis shifted from cost cutting to organic growth. When I look back over the last 20 years or so, there was an M&A time period and then there was a cost cutting time period and now it’s about organic growth and innovation. In North America and Europe especially, consulting is very mature. And there are legions of ex-consultants within our clients, and I think that has led to more demanding buyers and it’s forced us to raise our game and elevate our expertise. There’s very heavy demand for deep expertise and expertise among different parts of your business and then ultimately, integrated expertise. The other big thing that we’re running into a lot is the notion of mixing and matching. We do a ton of analytics consulting—some of that is very high end and some of it is pretty close to a commodity. How do you think about very different billing rates when you’re creating mixed teams that bring high-dollar folks with the lower cost people when they can get the job done. There’s a lot of complexity involved in all of this.
CONSULTING: We’ve touched on this a bit, but I’d really like to dig down a little deeper into what this means for consultants and their role going forward. How is that changing?
Browning: I would say ‘trusted partner’ still applies. Our approach to the market is to build trust and build relationships with clients. This is a difficult time and we believe clients are looking to tackle different challenges. We believe they want to work with someone that can get them the right answer.
Steve Hasty: I think our clients are increasingly looking to drive change across the enterprise and that really requires all types of skills. If you look back five or ten years ago, I think our clients were driving change across specific functions of the organization. I think that worked at that time. But now clients are looking at strategy through execution and clients are looking to have communication skills at the C-level.
Nichols: The way clients use consultants is very different than it was 20 years ago. It’s very strategic; they know exactly how they want to use us. They are sophisticated and they understand what we can bring to the table. Quite frankly, every time they hire us they put their careers on the line. We are an extension of them and we can have a significant impact on them and their careers. So, they need people who understand their business, their vision, how to work with their organizations. The ones that do, tend to stay around for a while. The ones that don’t are gone.
Peter Bresler: One of the things we’re struggling with at times is the evolution of being an independent advisor and also of being a solution provider. How do you make that pivot? If you happen to offer that conclusion, it’s difficult to have complete transparency and to do that in a way that retains your trusted advisor status. We’ve tried to be very transparent and very agnostic with our clients. We believe we have some great consulting advice for you and, in some cases, we have a market-leading solution for you, but you need to do that very carefully and it’s a difficult balancing act.
CONSULTING: Has the profession done a good enough job of tackling this very issue?
McCarty: It’s what clients want a lot of the time, as long as you disclose it you’re fine. If a client finds out after the fact that you have a partnership with the technology vendor you recommended and you didn’t disclose it up front, I think you could be in trouble.
Browning: I don’t think strategy should be the tip of the spear. I think clients want value from the strategy, and I think clients want value from everything in between leading up to execution. Based on our acquisition strategy, clients do want a firm that can provide strategy through execution. It doesn’t mean that they’re going to buy it all, but they want a firm that can provide it. They may buy the beginning, the end or somewhere in the middle. But we think clients want those broad sets of capabilities.
CONSULTING: Why don’t we pivot a bit to tackle the big topic of enterprise transformation and how that has changed over the last few years. Thoughts?
Hasty: I think the thing that’s really a challenge is change across the enterprise. I think it was easier when we worked only with the C-level and any change was top down. Today, we’re working with change that goes across several C-level constituents and, depending on the organization, there might be more or less acceptance of that change. Companies aren’t run the way they used to be. Now we’re going across silos, across geographies etc. For us, I think the trick is that we have to be able to adapt—not all organizations accept change the same way. Very centralized organizations change in one way; decentralized organizations change another way. It requires us to be much more flexible.
McCarty: As a result, change management is coming back in a big way. We have so many clients that say their HR and their communications people can handle it. No, they can’t. You have to be able to cut across all the silos and an outside third party is the best way to do it so you don’t get caught talking politics or religion within the organization.
Browning: Our most recent global CEO survey, only about one-third of CEOs think they have the capabilities in-house to do the marketing and the sales and customer transformation that they need to do. So, they clearly aren’t ready for it, and they don’t think they have it.
Moorman: I’ve been doing large-scale transformations for 20 years and the big difference, I think, is that the client has gotten a lot smarter about transformations. I used to see a lot of top-down facilitated transformation processes, particularly out of the large general management firms. It can be successful but it can be a lot of pressure on the client organization to actually be able to understand and internalize and have specific expertise. We’re seeing now that clients want us to have very aligned objectives to them. Their success isn’t that we’ve ticked off the right boxes; their success is have we seen the business impact. An embedded transformation model is perhaps the way to go where you’re bringing both capacity and expertise around business processes, around systems, around knowledge transfer. In some cases, being able to plant your people in key roles for a period of time while
you effect that change can really make a difference in a transformation.
Laursen: I agree with Mike. In the healthcare space, with the level of change, I think executives are realizing that they don’t have the capabilities to manage that transformational effort. Part of our message is: We will train your people. And by the time our embedded employees leave, your people will be functioning at a higher level.
Bresler: What we’re realizing is that at some point, it gets down to individual people making individual behavior change. And we’re seeing a lot of use of techniques that have formally been used in an external customer concept being used internally. It’s my sense that there’s an increasing ‘consumerization’ of internal enterprise transformation that happening right now and that’s ultimately the key to success. Some of that is a generational thing, this next generation isn’t nearly as open to top-down change.
CONSULTING: You touched on something that I think is really interesting—there have always been generational divides in the workforce, but I think it’s more like a chasm today because of technology. How does that impact enterprise transformation today?
Nichols: I think change, the way you’re talking about, occurs in the margins. Companies aren’t all that worried about missing the big things, but many are worried about missing small things. Clients don’t want to miss the way customers want to communicate with the company, for instance. The big things, I think they get those but I think they’re looking for us to help them with the smaller things. And from a technology perspective, it’s really about the overall experience. The experience the employees have, the customers have and other businesses have will ultimately determine success or failure. Again, it’s those things more in the margin that will determine what companies are successful and what companies are relegated to the corner. For the first time ever, companies are not dictating what technologies they are using to communicate with their customers. Now, that’s being dictated by the customers, or even by the technology their own employees are going to bring internally. It’s retail technology that will determine all of this, and that’s the first time that’s ever been the case.
Browning: That same survey that we did with the CEOs revealed that 86 percent agreed that technology was going to transform their businesses over the next few years. They all don’t totally understand and they’re pretty sure they don’t have the capabilities inside to deal with it, but they certainly understand that they’re going to have to deal with it.
McCarty: We still see CIOs who thinks it’s about the technology instead of the process. The IT function can’t be about IT. They have to understand the business more than they ever have before. We used to just throw stuff over the wall to IT, but now IT has to work with the business and marketing to get the experience right. We still run into IT departments that really don’t understand what the business does and what the value proposition is. It’s amazing to me.
Hasty: There’s a whole set of C-level executives that are now working with social, mobile, analytics and cloud. When they were coming up through the organization, that world didn’t exist. Now, they have a responsibility, and a set of opportunities and/or challenges they didn’t before. Whether it’s a CIO dealing with cloud or whether it’s a CMO dealing with how you engage with customers. This world didn’t exist even five years ago, which is why were seeing Chief Digital Officer and Chief Data Officers in the C-suite, which I think is an opportunity for us as consultants.
Moorman: I think on the commercial side of the business, technology is a mega issue. It’s fundamentally changed the way buyers buy and interface with the company. It’s changed their expectations of what a salesperson is. The days of the sales person as information provider are dead. Buyers get their information off the Internet. It’s changed the degree of coordination and alignment that’s required between marketing and sales. This could be the burning platform that forces marketing and sales to finally collaborate. It permeates every aspect of business on the commercial side.
Nichols: I think there’s a paranoia about relevance from all of us in the room as well as from our clients. If you go back two years, companies were concerned about being relevant 10 or 15 years from now. Today, they are worried about being relevant two years from now. That’s not so different from our business, as well. If we can’t rapidly mobilize and deliver those services in a very short period of time, we become irrelevant pretty quickly. The next big thing that’s coming used to take years to develop and mature. Today it happens in months.
CONSULTING: So, how do you make sure you stay relevant in the face of all this game-changing technology? And how do you make sure your clients thrive in this new world?
Tim Moore: I’m not sure that the technology is the game-changer, but rather how companies figure out how to use it. We’ve seen plenty of companies put technologies in place and then never really figure out how to use it. So, for me, it’s can companies figure out how to change the people and the process side fast enough to actually benefit from the technology. One of the themes we bounced around all night is around the speed and acceleration. That’s why I think the consultant of the future will be able to look a little bit to the future and understand some of those trends and technologies that will be able to help a company change fast enough to get back to the relevance. Our clients are thinking three months and six months down the road are they going to have a job, not about some three-year SAP implementation. That’s not the reality anymore.
Bresler: Given the dynamic environment that we’ve been talking about, we’re realizing that we don’t have the luxury as a consultant anymore to get two years of data and three years of market analysis and we’re finding that we need to acknowledge to the client that the market is changing rapidly and there is often incomplete information. Can the industry make this change because I don’t think we have a choice. Consultants like that third decimal place and we’re suddenly living in a no decimal place world, and being able to operate confidently in that new world I think is a next generational competency for consultancies.
Moore: That’s often difficult when some clients are so risk averse while others are so much more visionary. I’m wondering if you think there’s a role for consultants to develop and coach at the C-level or if you think it’s more hardwired. My thinking is that by the time someone gets to the C-level, it’s an extraordinary and rare individual that’s still growing and changing at that point.
Bresler: I agree with you. I don’t think people at that level necessarily change, but I’ve met plenty of people who have realized that the environment has changed. The progressive leaders realize it’s a new environment where you can’t just be focused on a more traditional management style. That old way of thinking will not work in this new accelerated environment we’re in today.
Nichols: If you look at the type of people that are getting promoted to the C-suite, I think it’s a very different type of executive than it was a few years back. Not only does this person understand the industry, but they understand the trends that are impacting the industry, and often they’re not afraid to make the big decisions because none of them want to be irrelevant, and that’s a real possibility now.
Browning: They need to be able to solve current and future problems at the same time. Sometimes we need to help clients get up a hill, but sometimes we have to ask our clients if that’s the right hill to be going up.
McCarty: I think that part of being provocative and confident, often with incomplete data to Peter’s point, is key. Don’t wait for a client to
tell you that they want to take that hill. Be provocative and tell your client that this is where the market’s going, this is where your competitors are going, and you need to act now. That’s the role of consultants as trusted advisors.