Strategy at the Speed of Light

There is no doubt that every firm is scrutinizing its strategic skills and the way it delivers them, but there the similarity ends, as each develops the model and mantra it believes will lead to success.

"Business transformation requires three disciplines: technology; marketing and communications; and strategy. You can't do it by putting those disciplines in silos — only integration means true innovation," says Ian Small, chief strategist and knowledge officer at USWeb/CKS.

Small, who has an unusually varied background for a strategist (including a stint as an engineering manager at Apple Computer), believes multipart projects don't deliver fast enough. Instead, USWeb/CKS has developed a new model, "time-to-value," for its clients, which questions how quickly an initiative can make a dramatic impact.

Scient Corp., the two-year-old digital consulting upstart, is today preaching a similar game. "I think clients are a lot more time sensitive and are looking for a lot shorter cycle time," says Scient chief executive Bob Howe. "Performing six-month strategy studies to find answers is no longer in the client's best interest," he explains.

Not surprisingly, Small, Howe, and their digital consulting peers are not the only ones touting speed-to-market strategy offerings. Traditional firms have already begun reworking the delivery of their strategy offerings to better answer their clients' speed demands. Moreover, Scient, USWeb, and others are now being labeled "disruptive technologies" inside the consulting industry by Clayton Christensen, the noted Harvard Business School professor. Christensen coined the term to describe a new product or service that sneaks into an established market.

"The problem (strategy) firms face is that their methodologies have been so honed in existing client businesses that they don't have the processes that facilitate the discovery and definition of new businesses and new business models," explains Christensen, who believes the speed-to-market requirements of e-business clients are quickly becoming at odds with the "bread and butter" projects of the traditional strategy business — large projects with many billable hours. (See Christensen interview, page 24.)

"Other firms are rapidly realizing that our model is the way to go, but many don't have the culture to execute at digital speed. We think those who still believe that pure consulting is the future are wrong. It would be very arrogant to say that the writing is on the wall for the likes of McKinsey. There's still old stuff for them to do, but we're interested in the next Fortune 100," Small adds.

The Race to Deliver Speed

USWeb/CKS and Scient may be pioneering change, but others following in their tracks are not far behind as they realize the need for an integrated approach that can be executed at top speed.

"E-business will change the rules of strategy consulting. The annual plan has been shoved on a shelf and is being replaced by real-time strategy. Most clients need and want live strategy," says Barry Hedley, global practice director of strategy and financial management at Deloitte Consulting.

Like some of the other Big Five firms, Deloitte is structured as a matrix that meshes service lines, industries, and geographies. Strategy and financial management form one cluster in the service lines, alongside process, IT, and change leadership. But IT rarely works alone these days, a development that Hedley has witnessed moving particularly quickly over the past five years.

"Strategists aren't Renaissance people who know everything anymore. By definition, strategy is a specialty. I see strategy, process, IT, and change leadership as four arrows moving in parallel and working together. In relationships with clients, this means we have real ability to continuously develop the right teams of people. Clients need a team of specialists, not generalists," Hedley says.

At PwC, Strategy Means Change

In support of this integrated approach, Hedley is also an evangelist of knowledge management, both for the firm and for its clients. "Today, strategy always needs to be ahead of clients. Its role, increasingly, is to help clients see around corners and stay ahead. We need to be continuously informed about what is possible."

PricewaterhouseCoopers (PwC), which is gunning to have the world's largest strategy practice within two years, also favors the holistic approach. It has 275 partners worldwide concentrating on strategy, plus 3,000 strategy consultants —and it is continuing to invest.

"Our job is to create value for the client very quickly. We do big things for clients, helping them to change direction, build a global strategy, work in a high-speed networked world, and take big risks. Analysis is no longer enough, it's all about change strategy. That's why the market needs big firms to do the work properly," maintains Grady Means, the firm's global leader of strategy consulting.

Like Hedley, Means believes that starting with strategy before handing off to technology or process is no longer viable. "Work may be strategy-driven, but on Day 1 we bring in process and IT consultants. They have insight that is relevant to strategy and, if they can anticipate the direction of a project, may even be able to start developing a process model or IT solution before strategy is fixed," he says.

Andersen Consulting is taking a similar tack, linking strategy to process and technology, and normally turning down requests for one-off strategy projects. The firm declined to talk further about its strategy beyond saying that when it was formed in 1989, it considered whether it wanted to be a niche player or holistic service provider, and chose the latter.

McKinsey's Definition of Strategy

While the Big Five are, on the whole, maintaining strategy practices but fielding mixed teams of consultants to make bids and manage client work, what of the traditional "pure" strategy firms such as McKinsey & Co., Bain, and The Boston Consulting Group (BCG)?

McKinsey started a major rethink of its approach in 1994 under the Strategy Theory Initiative, which was designed to consider changes that the consultancy would need to make going forward. Having worked for many years with the

analytic approach — understanding the client's market, finding opportunities, and then combining that with what the client was, or could be, good at to reach a new market position —McKinsey saw that it needed to confront the market head on and claims that the Strategy Theory Initiative resulted in new perspectives on strategy and an understanding of how to compete in Web-based industries. Today, it defines strategy as "integrated actions that create competitive advantage."

Thinking about change is one thing, but following through has been more difficult. "Strategy has always been about looking forward, but it was easier to look forward in the past," says Hugh Courtney, senior strategy practice consultant at McKinsey. Courtney reports that both clients and consultants now take a more dynamic view of strategy, but he adds: "For the analytic folks, this all goes a little against the grain. It will be better when we all realize that the engineering approach to finding a fit for the client can't be done anymore."

While McKinsey has organizational and operating practices and a growing commitment to IT in the shape of Business Technology Offices, strategy remains its largest component and the firm remains staunchly wedded to the ideal of dealing only with top decision-makers. "Our whole structure is well-designed to continue focusing on a client's top three to five issues," says Courtney. "I don't know our competitors well and it doesn't matter, because our clients see us as offering a unique value proposition. That's reflected in our strength and growth."

Where Strategy's New Competitors Are

Others, however, are less convinced of McKinsey's future

potential. Says PwC's Means, "In terms of strategic content, we're as good as McKinsey at understanding the issues. We have similar tools and high quality people giving us parity in traditional strategy consulting. Our advantage is that we can move more quickly to implementation because we are much larger and have resources in process and technology around the world. We can install technology quickly on a global basis. McKinsey can't do that. Clients don't just want good ideas, they want value."

Deloitte's Hedley bears this out with statistics, saying that over the past two years the focused strategy specialists have tended to grow revenue at 10 to 15 percent, while the more

integrated Big Five firms have achieved higher growth rates. "IT is culturally alien to firms like McKinsey and BCG," says Hedley, who hails from the north of England and is based in Deloitte's London office. "I'm a bluff northerner, and I'm very suspicious of people who won't get their hands dirty. These days, clients want consultants who will. Anyone would be a fool to underestimate the power of the brand name of McKinsey, but I think it could be dangerous for some firms to get caught in the middle of the market."

If time is of the essence, the last word must go to the man often described as the father of time-based competition, George Stalk, senior vice president and chairman of the innovation, marketing, and communications group at BCG. "The conception of strategy is not that difficult, but conception is no longer enough — it must be deployed. Strategy must be more dynamic to make organizations change rapidly," he says.

As strategy firms attempt to transform themselves to deal with e-commerce, Big Five contenders reach out to lure clients with their armies of systems consultants, and digital consultants play short on strategy but long on creativity, is there room for all in the new digital economy? Concludes Stalk, "Now, yes. But the traditional business model says there won't be room for everyone in the future. The systems guys will pay the price."

Sidebar: Power Points:

• In recent years, traditional strategy firms have seen their revenue grow at 10 to 15 percent, while the more integrated strategy practices of the Big Five firms have grown by 20 percent or more.

• The methodologies of traditional strategy firms have been so honed in existing businesses that they don't have the processes that facilitate the discovery and definition of new businesses and new business models.

• Traditional strategy firms are now reworking the delivery of their

strategy offerings to better answer their clients' speed-to-market demands.

• While McKinsey has enlarged its commitment to IT in the shape of Business Technology Offices, strategy remains the largest component and it remains staunchly wedded to the ideal of dealing only with top decision-makers.