The People, the Piper, and the Paranoia

For any MMGer who ever sauntered across an MBA campus, Steiner's words brought to mind one person in particular — Will Riordan, one of the firm's founding partners and the person credited with giving MMG its extra sizzle on campus. Using a presentation that was one part company promo, one part history lesson, Riordan's pitch struck a chord with students that few consulting recruiters ever hit or even knew was there. He planted a seed inside their young minds still fertile with campus idealism, and led them to embrace the notion that not unlike medicine and law, consulting was in every way a profession and worthy of the best and the brightest.

He regaled his young audiences with the consulting profession's short history — a trail of historical stepping-stones, each one occupied by a consulting giant whose contributions to the world of business had largely gone untold. According to Riordan, industry was in debt to such principled men as McKinsey chief architect Marvin Bower and A.T. Kearney founder Thomas Kearney, two people he credited with helping originate the consulting profession, and beside whom Riordan now brashly laid MMG's own stone. And this stone, Riordan said, was not occupied by any one individual, but by the ideal of responsible freedom — a principle which promised individuals an enchanted space in which to do the best work and best thinking of which they were capable.

"If you're afraid to roll up your sleeves, then MMG might not be for you," was the signature admonition Riordan would add as he neared the conclusion of each presentation. The seed germinated, and between 1994 and 1998 hundreds of the best and brightest would leap to Riordan's enchanted stone. Once on board, the young consultants would quickly enjoy the fruits of a youth-oriented culture, where responsibility could be assumed within hours of joining the firm and where work never seemed to exclude fun.

It was only after a number of months that different recruits recall becoming aware of some of the more peculiar parts of the firm's character. By their second year, MMG consultants admit to having begun to harbor certain thoughts — ones that first surfaced as a nagging nit of cynicism, but later became a bold revelation. In words: "If this is a firm that was founded using the principles of Bower and Kearney, something has gone very, very wrong."

For the hundreds of recent grads who annually entered MMG in pursuit of a higher calling, the reality that was MMG often became a harsh lesson on an industry whose lofty promises of greater professional freedom often undermine the control systems of organizations, and bestow upon leadership few rules or professional standards. Whether it was the bizarre allegations concerning the firm's in-house shrink or the steady stream of frat house humor that seemed to routinely cascade downward from the firm's executive suite, there's little doubt that in the end, the Mitchell Madison story's most enduring lesson was meant for the profession it called its own.

The Boys Who Did Sourcing

"When we first split off from Kearney, our immediate goal was to become a 'type two' firm. So, we needed to get to 500 to 600 consultants to be credible," explains Steiner, who today frequently boasts of MMG's unparalleled leap into the ranks of "type two" consultancies.

Having recently witnessed the disintegration of marchFIRST — the firm MMG ultimately became part of after it wed USWeb/CKS, MMG's managing director routinely revisits the question of whether the firm could have taken a different path — one that would have positioned it beside consulting's "type one" triumvirate of McKinsey, BCG, and Bain.

"There are about a half a dozen 'type two' firms — Arthur D. Little, Booz-Allen, Roland Berger, A.T. Kearney counted among them — and we called these guys the wannabes because of their shared aspiration of becoming a 'type one' firm. The problem is, it takes a long time and a sustained effort to move up, as well as a real commitment by the partnership," explains Steiner, who estimates that it took Bain ten years to get the talent that MMG did in only five.

Of course, when it came to placing bets on consulting products, few firms were as single-minded as MMG. Credited as being one of the primary architects of MMG's sourcing practice, Vikas Kapoor today says that MMG was at first helped by the reluctance of certain strategy firms to pursue client work in the sourcing arena.

"McKinsey was initially very reluctant to get into sourcing, and kind of thumbed its nose at it, but they then got into it in a big way. Booz-Allen and Bain also followed us," says Kapoor who, partners say, became a member of the firm's inner circle — a coterie whose consultants ultimately became the backbone of the firm's leadership.

One former MMG partner who worked within the firm's European operations today recalls how sourcing was viewed by those working with clients outside the firm's primary practice.

"A lot of people had begun latching onto the sourcing fad, and suddenly all these new competitors began to undercut the pricing. They rode it for all it was worth. We were just hoping that it would lay down a path of growth that would support us to do other things. There were sort of the boys who did sourcing and everyone else," he explains.

Today, many former MMG partners agree that while sourcing provided MMG with the octane it required to soar into the ranks of "type two" firms, the practice's domination of the firm's client portfolio made it susceptible to a litany of ailments. Besides siphoning resources from other client offerings — and thus undercutting the number of available career paths for its people — the rapid growth of MMG's sourcing practice overwhelmed the control structures of a firm whose leadership, partners say, frequently circumvented what little infrastructure existed.

The Magic of a Profession

Asked to identify what principles MMG's founding partners used to establish their consultancy, former MMG partners seldom speak of the so-called "six guiding principles" published in the booklet investment bank DLJ used in 1999 to lure potential buyers. Instead, they speak of a number of meetings and retreats that were held shortly after they left McKinsey, where they allegedly conceived of the notion of a true and independent partnership culture existing within A.T. Kearney.

It was at one such retreat in June 1992 that partners recall receiving a copy of a five-page text titled "The Book of Common Prayer." Authored by former McKinsey consultant Kevin Mellyn, the short composition was the cradle of the firm's principle of responsible freedom — the ideal Riordan later used to enrapture audiences during his campus crusades.

It read: "The rewards for professionals in consulting should be the same as for those in older learned professions such as law or medicine. … We all share equally in the responsibility for making this partnership a success and keeping it true to its ideals. A key responsibility is that of dissent and maintaining honest and independent viewpoints on these issues."

Just as MMG's "Common Prayer" might have encapsulated the nuggets of wisdom necessary for MMG to attract the best and the brightest, it might also have inadvertently exposed what some partners now argue triggered the firm's dissent. Again, it read: "We de-emphasize hierarchy and control structures as far as practical necessities allow. We are still in the process of developing our structures of governance, but our objective is to focus the energy of our people on the professional excellence as reflected in the demonstrated client impact."

MMG would not be the first consultancy to pay a price for its client-centric zealousness, but today many of the firm's former partners believe the consultancy's fate can be more directly linked to that component of the leadership's character which liked to bend the rules.

The Consultant Who Loved Loopholes

It was a component largely influenced, partners say, by the firm's renegade leader. Thomas Steiner, they say, has a gift for identifying and exploiting loopholes. Whether it had to do with his clever alternative to service in Vietnam or the cross-registration feat that helped him garner both an MBA and law degree simultaneously from Harvard, Steiner loved to share stories with friends and colleagues about the "systematic glitch" or covert option he identified and subsequently leveraged to his advantage.

After working a number of years as an attorney with the New York law firm Mudge Rose, Steiner landed at McKinsey's New York office, where partners still talk about the idiosyncratic consultant who somehow skirted the firm's expense account policies and awarded himself the palatial perk of daily door-to-door car service. Today, partners say, Steiner's gift for leveraging loopholes was somewhat wasted given the emphasis the profession places on delivering results to clients, rather than offering them dividends extracted from "fine print." At MMG, his so-called gift lent itself more to the governing aspects of the firm than it did client work. Today, partners credit him with helping create the firm's shareholder agreement — the document that would help the firm's managing director thwart a boardroom uprising and ultimately helped put the partnership up for sale.

"A lot of the ways of getting around structures of governance and knowing what something appears to say, and what it says legally, is something Steiner had totally over us intellectually," confides one partner.

As one MMG board member put it: "The shareholder agreement was a document written by lawyers to be read by businessmen, who wouldn't understand what actually was being said — in other words, a lot of the things in there that were added to offer comfort to the partners were meaningless legally."

The firm's leadership's disdain for traditional control systems and policies was made visible, partners say, by a string of controversial appointments such as when Steiner's sister-in-law was hired as the firm's in-house legal counsel, and an office assistant, with no previous HR experience, was promoted to head up the 800-employee firm's HR function. Other related afflictions that were, perhaps, more subtle but just as telling include the firm's controversial cash management, allegations of sexual misconduct, and of course the mysterious services of Bruce Forester, MMG's "in-house shrink."

The Importance of Being Bruced

It's an allegation that at first blush seems stratospheric or even planetary — but it's one anyone attempting to tell the Mitchell Madison story would be derelict in omitting. Too many partners echo the same observation. Too many consultants say they were coaxed to sit on the chair … er, couch.

"The belief was that a shrink was rearranging some of the partners' mental furniture so that it coincided with what Tom Steiner wanted. Whether this was true or not, I'm not sure, but there was a definite correlation between the people who were going to see him and the firm's inner circle," says a former MMG board member.

While the "work-related" services supplied by the psychiatrist to MMG partners appear somewhat mysterious in nature, there is no mystery as to the identity of the doctor himself: Bruce Forester is a psychiatrist engaged in private practice on Manhattan's Upper East Side. He also writes murder mysteries, his latest being about a Manhattan-based psychotherapy group whose male patients are being murdered.

Today, Moses Ma, an MMG senior partner who served on a number of MMG's executive committees, says that he visited Forester at Steiner's insistence only once, and became unnerved when the doctor began drawing comparisons between a situation in Ma's personal life and a situation recently faced by one of the members of the firm's inner circle of partners.

"When I went to see Forester, I decided I'd talk only about my personal life, because I had been hearing some weird things and feared that if I talked about work it would get back to Tom, and so, while I was telling Forester some things about my own life, he mentions that Vikas had a similar situation. That's when I knew that the allegations were probably true," says Ma.

According to MMG partners, Forester first supplied services to Tom Steiner, as well as to MMG founding partner Arnab Gupta, while they were both partners at McKinsey & Co. When the two men, along with 25 other McKinsey consultants, defected to A.T. Kearney, the doctor followed.

To the consternation of A.T. Kearney management, Steiner incorporated Dr. Forester's services into what became known as Personal Skills Development — a program that, according to Steiner, would help enhance a consultant's ability to deal with stress as well as to interact with their teams and clients.

Nonetheless, when the doctor's bills began to arrive, they befuddled the firm's management, including A.T. Kearney managing director Marv Schiller, who in a memo dated April 12, 1994, implored Kearney's newly inducted partners to answer the following questions: "What are these counseling services? Who authorized them? How long has this been going on? Are these for individual counseling sessions or group sessions or both? If Dr. Forester is a physician, why aren't the individuals who are receiving this service claiming it on their health insurance?"

While Dr. Forester refuses to discuss the nature of the services he supplied to A.T. Kearney and later to MMG partners, he has in the past described himself as a physician specializing in business/industrial psychiatry and has claimed to have several large Fortune 1000 companies among his clients.

Besides helping consultants address problems originating from the stressful nature of their work, Dr. Forester allegedly offered MMG consultants guidance in assessing and managing client executives — a service that by its very nature would seem to raise troubling questions for a profession that pledges to guard the trust and best interest of its clients.

A.T. Kearney management's agitation over the elusive facts behind Dr. Forester's role would end only months later, when Forester severed his ties with Kearney, along with 135 consultants who exited the firm to form MMG. At MMG, Forester's services were again engaged by Steiner, who persistently encouraged the firm's top partners to visit with the doctor at his Upper East Side address.

According to Ma, Forester was paid directly by the firm and not by individuals. "I know it was all paid for by the firm. It came out of a sort of a kitty which obviously came out of our profits. No one questions whether he was on the payroll," says Ma. Today, three former partners familiar with the firm's bookkeeping say that Forester's fees became a line item on the firm's general ledger, an item that within one 12-month period is alleged to have amounted to more than half a million dollars.

No matter what the actual nature of Forester's services may have been, his impact on the firm was undeniable. The question "Is he being Bruced?" became a popular joke inside the firm's New York office, but humor was only a relief valve for the pool of paranoia that seemed to now afflict the firm's management. Going forward, as MMG's board became fractured and an inner circle of partners emerged as its leadership, one trait the firm's new leaders largely shared was a desire to continue the firm's skills development program, or more specifically the services of Bruce Forester.

The Young and Restless

For the young business analysts joining MMG, there was no more social setting than the firm's New York office. Having recruited 40 to 60 recent graduates from New York schools alone, large pools of new business analysts annually flooded the different floors of MMG's Madison Avenue address.

"In New York, it was really just a continuation of college for most of them. Each new class arrived with a kind of built-in social program, and if the weeks were long, the beer cart would go through every Thursday night so the kids could get drunk together," recalls one partner.

While the Thursday night beer cart was seen by many consultants as a minor merrymaking perk for MMG's new recruits, not all was as innocent within MMG's partner ranks.

"The biggest change I saw in the guys was when they had kids, when a partner would say their wife was pregnant and I'd say, 'Thank God!' — because I knew they would need to become more responsible, and a bit more respectful of females in the organization," says a woman partner regarding MMG's New York office.

The frat house humor that multiple woman consultants say they encountered inside MMG's New York office was, perhaps, only a symptom of a greater management flaw — the failure of MMG to endow its HR function with a ranking partner to marshal its agenda and amplify to all partners the consequences such bawdy behavior could someday trigger.

No incident perhaps underscores those consequences better than the allegations of sexual misconduct raised against MMG's chief financial officer, John Hogan, by the firm's former director of human resources, Susan Bourne. Today, Bourne is not able to speak about her allegations, according to an accord she's allegedly signed. However, as one partner put it, "If HR was getting the support from management it needed to enforce such policies, would the person supposedly hired to help enforce them be making allegations against the CFO?"

In May 1998, MMG's HR administrator, Carol Schwartz, exited the firm, at which time Hogan helped advance Susan Bourne, an MMG office assistant, into the role of human resources director. Bourne had little or no prior HR experience. Certain partners argued against the appointment, but it is said that Hogan dismissed all suggestions of possible mismanagement and quickly promoted Bourne into the spot.

The later allegations made by MMG's HR director do not stand alone. Recently, the Equal Employment Opportunity Commission filed a lawsuit against MMG/marchFirst and Hogan on behalf of his former secretary, Bozena Vicioso. The lawsuit charges Hogan with terminating her after she disclosed she was pregnant. The former MMG office assistant has also separately filed her own complaint against Hogan.

Besides disclosing her allegation of pregnancy discrimination, Vicioso's complaint promotes an array of other sexual misconduct allegations against Hogan. Just as damaging to MMG may be the complaint's inclusion of a letter of reference board member Will Riordan had written on Vicioso's behalf. Dated January 1998, Riordan's recommendation read, in part:

"Sadly, Bozena has been working daily with several of our more emotional and mercurial personalities, whose behaviors — based on my own personal observation — seem to have deteriorated rather than improved over the past many months. … In short, if Bozena can handle us, she can handle anybody — but frankly, she deserves better."

The Piper's Fee

As one of MMG's founding partners, Will Riordan in 1998 would join the ranks of MMG boardroom insurgents — a band of six board members who fought an ill-fated battle to capture control of MMG's board from an inner circle of partners led by Steiner. Today, that coterie can't escape its share of responsibility for a merger whose subsequent fallout includes a hefty tax lia-bility for MMG shareholders and the liquidation of MarchFIRST.

As the firm's star recruiter, Riordan enjoyed a popularity across the firm with both its partners as well as its more junior members. According to partners, he would emerge as one of MMG leadership's most outspoken critics. Whether it was the procurement of Dr. Forester's services, the firm's lax cash management, or the abbreviated HR function, partners say, Riordan spoke up. His most ardent battle, arguably, was a fight to preserve the firm's founders' fund — an equity stipend for founding partners designed to ensure that Riordan, as well as the firm's other founders, would enjoy a handsome bonus for having helped establish the firm.

It would be a battle fought in vain, and one that in some ways ultimately split the partnership's opinion of Riordan. Today, while some view Riordan as a shepherd of the profession's higher calling, others view him as just one more piper looking to extract a fee for an enchanting bit of magic.

It's magic, Riordan would likely be the first to point out, that belongs not to any one person or firm, but to a fledgling profession known as consulting.