How to Keep a Happy House

"It's how you hit it off with the individual," House tells Consulting. "This is really about people, not about companies. It's what your impressions are of the people you interview [in selecting consultants for a project]. Not the sales team, not the management team, but the people who will actually work on the project."

Whether he is working with a consultant from a Big Five firm or an independent contractor, House insists that the person be candid. "I don't want someone who is going to tell me how good I am, because I wouldn't need him if I was that good. I want someone who will tell me where my problems are."

House and his executive team use consultants recommended by internal sources based on their personal experiences and from referrals. "We are probably well known for spreading the wealth," comments Tonnie Karle, worldwide manager for Nortel's global consultant business sector. "We use lots of different firms for what they specialize in."

David House points out that Nortel generally will go with larger, well known firms on big IT projects. "You want somebody, where, if they get into trouble, they can call up the reserves, with extra resources and a broad range of capabilities," he says.

As an example, House cites the work performed by Andersen Consulting on installing an SAP system about three years ago. He calls it an unusually successful implementation.

"We are kind of like the poster child for SAP and Andersen Consulting," he adds.

Says Tonnie Karle: "The whole project for SAP was implemented in about nine months, which was unbelievable. It also brought us a very high return on investment."

A Nation of Contractors

But while House and Karle may be effusive in their praise for some large firms like Andersen Consulting, House, in particular, has a vision of the future of consulting that may be at odds with the views of the Big Five: "What we are seeing in general in industry is that there will be increased use of consultants, but we may not call them consultants."

He sees several factors working in concert that will bring enormous change to the face of consulting. First is what he calls the "disintermediation" taking place in the business world today. "It's unlike anything we've seen before, in that companies are narrowing their focus down to their expertise. They are outsourcing things that are not their key strengths or strategic advantages," House observes.

He cites as an example the fact that in the electronics business factories are using contract manufacturers to do a lot of their assembly and testing. Nortel Networks recently announced a restructuring in which the firm is in fact selling off factories to contractors.

"Whether it's outsourcing the IT functions or outtasking functions within IT, human resources, or marketing, companies across the board are outsourcing and outtasking more often," says House.

In a major effort to shake up a sleepy giant, House relied in part on the services of small, independent contractors such as Pat Bashaw of Bashaw & Associates. When House first came to what was then Bay Networks (prior to the 1998 merger with Nortel), he instituted a dramatic research project that led to a restructuring. His aim was to find out what employees, customers, and suppliers considered to be the firm's weaknesses and strengths. Bashaw was instrumental in helping with the employee survey.

A major driving force toward more outsourcing and the use of independent contractors rather than searching for and hiring full-time talent is the Web. "The Web speeds up time. It shortens time intervals and makes it not only impractical, but impossible, to gather the expertise you need," he explains.

Another factor fueling the independent contractor boom is the fact that voice and data networks are eliminating distance. "It used to be that we hired a lot of people and moved them to the same city. We'd have them all work in the same building or campus so that we could talk to each other and communicate," explains House. "Today, the network eliminates distance and time and it becomes possible to work from wherever you are."

As geographical barriers come tumbling down, people who were once executives and other professionals tied to one company and one locale can now work from anywhere and function as independents. "Basically," notes House, "we are moving to what has been referred to as the 'virtual corporation,' where everyone is a contractor or a consultant or a temporary employee and there are very few permanent employees or facilities."

Surveys seem to confirm what House is articulating. Recently, Kelly Services, the huge staffing company, found that nearly 11 million individuals are ready to bail out of their regular jobs and enter the workforce as "free agents."

Are these independent contractors or free agents "consultants," as partners at Andersen or McKinsey might define the word? Probably not. But if clients such as Nortel Networks president David House view them as consultants, then it may be time for all consulting firms to take notice.

Sure, the reputation of a firm counts. But House's message is consistent. "I put 90% of my emphasis on the individuals who will be working on my projects, and 10% on the firm."

Sidebar: David House: Portrait of a President

Dave House hails from Muskegon, Michigan. After earning a B.S.E.E. from Michigan Technological University and an M.S.E.E. from Northeastern University, he joined up with Raytheon as a computer designer. The year was 1965.

Following stints with Honeywell and Microdata, House signed on with Intel and his career took off. It was there that House led the development of a now-famous family of microprocessors: the Intel 286, 386, 486, and Pentium processor. Over the 13-year span with House as manager of its microprocessor division, Intel's revenue grew from $40 million to almost $4 billion.

Dave House is also credited with a bit of marketing magic: launching the memorable "Intel Inside" advertising campaign.

But after 22 years at Intel, House felt that it was time to move on and landed as the head of Bay Networks, a leading technology company in transition. He restructured the firm, acquired new top-level talent, revamped marketing, and set out to acquire firms with new networking technologies. Heralded by BusinessWeek as "Captain Adrenaline" for reviving Bay Networks, House navigated the 1998 merger with Northern Telecom that created an $18 billion company now operating in 150 countries. Talk about a House call …