Rogers: If you'd asked me what my greatest challenge was in any of the four preceding years of the five that we've been in business, I would have said that it is to continue to build our brand, continue to build out revenue, continue to build out our revenue channels. Ask me that question today, and I will say that it's around resources.
In conjunction with our challenges in our formative years, we really need for our message to resonate out there. We have to bring true vertical expertise to the game. And, quite honestly, when the bubble burst some of the best people in the consulting industry tended to be a bit more risk adverse. When a lot of the layoffs happened in the big firms in 2001 and early 2002, you tended to have more resumes on the market, but you tended to have fewer good resumes out there. So what we did was that we went out and we basically had a unique founding group. It was about eight of us who came together, most of us being ex-Accenture. Then we actually used our industry network and peer relationships in companies that were in industries similar to our own. So we kind of culled through that to get the tier 1 consulting pedigree — that was required — and then you also had to be in a position of responsibility within an industry. And we kind of culled our relationships, got together a very unique team of people that had extraordinarily deep personal qualifications, and then we set out through our personal networks to build our firm's qualifications.
And today, we find actually that our biggest challenge from a resourcing perspective has shifted from the leadership perspective. We've had great success in building our leadership team. We have a terrific officer group. Now we have to make sure that we get that content through every level of the organization and that we can meet our growing demand.
CM: And this has everything to do with the growth you continue to enjoy?
Rogers:: Our first quarter, we're going to have our first $18 million quarter. To put it in perspective, a year ago we did 10.6 or so. We're in all likelihood setting ourselves up for a $20 million second quarter. So we need to make sure that through that level of growth we maintain the quality of work that got us to where we are today. Our challenges arise because, as with many organizations today, we have more of diamond-shaped organizational geometry. So we're really building the second half of the diamond, if you will.
CM: How has Adjoined succeeded in getting traction inside large enterprise accounts?
Rogers: I think that our founding charter was really around being vertical industry experts first and technologists for process optimizing second. In other words, we needed to really be able to speak the language of our client industries. And our clients are generally the captains of their industries, and that original charter perhaps came down from my experience in industry itself. Having had the experience of sitting on the other side of the table as the client, you gain a great degree of appreciation for non-hard-asset-based capital spending. It can make or break you.
In a hard asset spend, you have warranty. When you're buying knowledge capital and it doesn't work, it generally has an accelerated negative effect on your P&L. So the thing that we did was, as we structured ourselves and competed against the largest brands out there, we fashioned ourselves as a vertical expert, as opposed to a horizontal technology player. We weren't necessarily an SAP shop or business object shop. We understood consumer packaged goods, and so we launched with packaged goods, retail, and pharma, and have now branched out into half a dozen verticals that include financial services, telecommunications, travel, and leisure.
CM: How old was the firm when you branched out?
Rogers: We started with two launch verticals and then we added pretty much a vertical a year. And we're at six today. When I was at Accenture, I had the experience of being a pure seller of consulting services … and having the frustration at times of not really being able to put my hands on a true industry expert. I had to do a distribution network strategy in the Northeast that involved trucks and freight cars and I needed somebody who knew Conrail. I could get busloads of generalists, very strong MBAs. I could get all the early-stage technologists I needed, but it was very difficult to get that particular expertise. We set out within our own industries and within the subsegment industries, where we have a good degree of proprietary knowledge. For instance, we understood how perishable foods behave in a supply chain and how technology can thus support that.
So let's say we were to compete, as an example, at a large data warehousing and business and intelligence project at, say, Burger King, and we're competing against maybe IBM, AnswerThink, or Capgemini. What we would first go in and do is communicate how this technology is going to actually make the business better. Instead of focusing on the actual data warehouse, we would focus on the business processes associated with managing, say, sales promotions more effectively and then we would build up the technology to support that. We always have to bring the technology expertise to bear. You have to be experts in your technology field, but what we are able to do is kind of make that technology, if you will, work most efficiently in our clients' industries. And that's how we've won.
CM: What size is the firm today, and should we expect it to grow?
Rogers: We have about 350 people. We'll be at about $75 million in revenue this year, somewhere in that neighborhood. We have about 30 officers, or what is our equivalent of partner, as we're a C corporation.
About three-quarters of the management group actually runs a significant P&L in our industries, and as officers we all are centric to one or maybe two industries.
And so when we're out competing in an engagement, we have the luxury of saying, "Here's what I did when I was in your shoes as a client. Here's how I optimized my cash. Here's how I optimized my cash flow within my supply chain to optimize my balance sheet relative to inventory movement." And in this way we kind of marry that with the horsepower, integrity, and methodology that you bring to a tier 1 consulting experience. And it's been a bit of a unique combination for us in that time.
CM: Part of that success you attribute to the firm's careful watch over corporate spending?
Rogers: Yes, well, if you remember back in early 2000, just about everybody was pursuing an e-business. It was a very technology-oriented professional services offering — a bit of a horizontal play out there. We raised $25 million of capital back in 2000, and you can imagine that we got our money with about ten minutes to spare. We said that spend would rotate from basically what was consuming most of corporate spend today, which was building out new revenue channels using the Internet as the medium to do that. We said that spend would rotate toward rationalizing the capacity of those new revenue channels and automating the supply chain that fed it. And it's a much more cerebral spend. It's a much more challenging consulting proposition, if you will. It's much easier to understand how to paint the Web site than it is to fundamentally drive cost reduction in a sophisticated supply chain — using either process optimization techniques or technology techniques. So we went for the toughest stuff we possibly could, and it worked.
It worked for the reason that we focused on that, and also for the reason that the market changed so dramatically. We in a sense called the bubble. We didn't call it as precipitously or as downright violent as it happened. But the original charter that we were formed around basically adhered to the tenets of the way the spend has rotated in the industry over the last five years.
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