The Age of Archstone

Now, five years after the fall of Ander¬sen, consulting leaders still persist in defining the current age by what it lacks rather than by the client opportunities it yields. It is the age of no big ideas, we have routinely been told. However, as with every other age of consulting, the present one is arguably best revealed by the clients consultants serve.

Listening to Clients

Ric Noreen, senior director of growth channels for Kraft, says that the company's current approach to working with consultants calls for Kraft executives to be more precise when defining problems up front.

"Manufacturers like Kraft are using consultants in a much more narrowly defined project scope, and the firms that can respond to this sort of pinpoint targeting of problem-and-solution are in a great position to continue to bill," says Noreen, whose company's growing appetite for narrowly scoped projects and more specialized services appears to be part of a larger trend on the part of industry, according to research completed by Kennedy Information, of Peterborough, New Hampshire (see chart, p. 20).

As narrowly scoped engagements grow as a percentage of overall consulting spending, corporate clients have more frequently been opening the door to smaller firms that now compete and win against larger firms that sometimes struggle to maintain their profit margins on smaller engagements, according to Kennedy Information.

"I see far more projects with narrowly defined outcomes or solutions initiated by Kraft over the last couple of years than I do the large, multidimensional, $2 million dollar engagements," says Noreen, who first agreed to be interviewed by Consulting Magazine upon hearing that our article was on a small but growing consulting firm known as Arch¬stone Consulting. According to Noreen, Archstone is exactly the type of firm that Kraft tends to do business with these days: focused, nimble, and with its seniormost people routinely involved.

Elise Klein, a vice president at Berlex Inc., shares Noreen's opinion of Archstone and believes that the firm is extra cautious when it comes to reusing content. "You never get the sense that Arch¬stone is recycling material, and if they are, they tell you," says Klein.

Suzanne Doft, Director/Team Leader of Oncology at Pfizer, believes that Archstone is highly attentive to individual client needs.

"They listen really well," explains Doft. "They listen and then they understand, and they not only understand the problem, they also understand our people roles very well so that they are able to adjust their content and allow the different disciplines to be able to digest it."

Defining the Age

Having captured 13 new clients in January of this year alone, Archstone appears to have specialized offerings whose appeal extends well beyond the above-mentioned clients. Archstone grew by 34 percent last year, while capturing $59 million in annual revenue and expanding its client portfolio to 150 clients.

Not bad for a three-and-half-year-old firm that was launched in the midst of a calamitous consulting sales downturn. In fact, the year before Archstone was launched, the global market for consulting services shrank for the first time on record.

Certainly, the idea that such a newbie firm has come to have a hand in defining the latest age of consulting is a notion that is rejected, not surprisingly, by larger, more established, consulting firms. "Archstone who?" is the frequent refrain echoed from one super-sized consulting rival to the next.

But, while Archstone may still be flying under the radar, the concept behind the firm already looms large. It's a concept that Archstone can now fully exploit, having been conceived at what might be deemed the perfect place and time — a junction where a confluence of market and regulatory forces pounded the profession's Big Four consulting organizations and helped to shake loose bushels of top talent.

"We had a concept that there was room in the market for a specialty consulting firm that was constructed with world-class professionals focused on critical client needs in certain specialty areas," recalls Paul Yovo¬vich, president and cofounder of Lake Capital Partners, a Chicago-based private equity firm that helped launch Archstone by investing $75 million in the firm in September of 2003. Archstone was the second consulting firm Lake Capital helped to start up within only 18 months, having invested $40 million in Huron Consulting of Chicago in March 2002.

Today, the seasoned consultants found within both Huron and Archstone confess that their firm-building ambitions are in part fed by discontent with their past professional lives. While the rise of Huron is viewed by many of its consultants as a vindication of their Andersen heritage (160 former Andersen consultants joined Huron on day one), the rise of Archstone is more a tale of emancipation rather than vindication.

And, unlike the tale of Huron's launch — a collective work writ by many — the story behind the rise of Archstone largely bears one thumbprint more than any other…..

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