Brad Kitchens, president and CEO of ScottMadden, says being the tortoise has been the key to success. "We have not enjoyed some of the 1999-2000 30 to 40 percent growth that some firms enjoyed, but nor have we struggled with the subsequent 30 to 40 percent contraction that many of those same organization faced when Y2K and some of the ERP activity slowed down. We've been the tortoise versus the hare, if you will." The firm, with nearly 100 consultants and offices in Raleigh, N.C., and Atlanta, now marks its 25th anniversary specializing in the energy sector. He recently spoke with Consulting about some new ideas for getting ahead of those hares. Consulting: How did your consultancy find its niche?
Kitchens: Our founder, Peter Scott, in 1983 was a former utility professional so when he founded ScottMadden, he decided to focus primarily on the energy sector. And that was exclusively what we did for our first 10 years. And then we began a process of diversification and realized many of the things that we were doing for the energy sector were transferrable outside of that industry and into other industries, and that's when began to build our shared services practice. The government focus really is a byproduct of some of our shared services work and the sustainability focus that we have today is really a byproduct of our deep understanding of the energy sector.
Consulting: Energy—that's got to be a very hot industry right now.
Kitchens: It is. It's interesting because there's a lot of uncertainty as to exactly what needs to be done because there's no clear sort of rules or legislation in place today around climate change and greenhouse gas emission reduction. But we all believe that that's just around the corner, perhaps as early as the next administration. So there's a lot of activity really preparing for action more than taking action. So most of the clients I do work with it's in the former, it's preparing for action at this point.
Consulting: What do you anticipate?
Kitchens: Well, that's a broad question. We do anticipate that legislation will be put in place probably in the next year, certainly I would suggest not more than two years. There will be a period, a year or two, of actually writing those rules and determining what those rules look like. And I suspect compliance standards will be put in place in the 2012-2014 timeframe. Most people believe, and we do as well, that reductions will be accomplished through allowances and probably a cap-and-trade scheme. And we believe it will not just be focused on the energy sector, but more broadly, folks across the economy, if you will, and the various industries. So all companies will need to comply at some level, and we're trying to position ourselves not to just support the energy clients that we support today but really support Fortune 1000 companies on both the risks associated with climate change, but also the opportunities, because we think there will be a number of opportunities available to clients as well.
Consulting: So does that mean you have plans for expansion?
Kitchens: Sure. We do a fair amount of work with Fortune 1000 companies today with our shared services offering, but we believe that sustainability and climate change offerings will allow us to touch many additional clients. So yes, we think this represents a real growth opportunity for our firm. It allows us to leverage our energy expertise because at the end of the day, many of the issues are centered around energy consumption and those types of matters. Because we've concentrated on that industry for 25 years, we believe we posses a unique understanding of that industry and those issues and can translate those nicely to companies outside that sector. [Internally,] we anticipate at continuing to grow roughly 10 percent. We plan to add about a dozen folks each year over the next several years.
Consulting: Will that be through acquisition or though internal efforts?
Kitchens: Probably internal. Our model has been organic growth. We have entertained to a certain extent acquisitions, but have decided that it's not in our best interest. The consulting industry acquisition model is a tough model. We've entertained it; we've also been on the receiving side of entertaining opportunities and just have not felt that that's a good way to grow a firm or handle a firm, so we've chosen to remain independent and want to pursue growth organically.
Consulting: To that end, how do you hire?
Kitchens: We certainly look for folks who are smart and go to the very best schools. But we also look for a level of humility. We look for folks who are very respectful, both of our staff within ScottMadden and our clients at all levels. We look for folks who in all cases deliver on their commitments. And back to the notion of exceptional experience, we look for people who are just enjoyable to be around. We, like most consulting firms, are on the road three to four days a week and when we recruit folks, we want to make sure we're comfortable traveling with somebody and having dinner with them three to four nights a week.
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