Jim Moffatt, Deloitte Consulting's CEO, reflects on his first year at the helm
Jim Moffatt was elected chairman and CEO of Deloitte Consulting last May and things are going remarkably well for the firm. Consulting revenue grew 17 percent year on year and is generating $5.25 billion in annual revenue. Consulting now accounts for the biggest piece—44 percent—of the firm's overall revenue. Two years ago, that percentage was 34 percent. At the end of June, the firm will wrap up its fiscal year and Moffatt says he expects "significant double-digit growth" to continue. On his watch last fall, the firm unveiled Deloitte University, a $300 million state-of-the-art-leadership development and training facility. As he wraps up his first year at the helm, Moffatt sat down with Consulting to discuss the firm's success, strategy and what's on tap for the future.
Consulting: Where is the business now as you're about to wrap up your first year and the firm's fiscal year?
Moffatt: There's no doubt that we've been on a tremendous run; we've tripled in size and doubled our profitability since 2004. I think it's safe to say our model works and we've got a lot of momentum. During the downturn we actually grew more share in a down market. We made some tough decisions, but the investments we made worked well.
Consulting: How did you manage to come through the downturn in such good shape?
Moffatt: We are a very well run firm. If you think about the last recession, as a firm we took $500 million of non-salary costs out of our cost structure in advance of the downturn. We had been doing contingency planning for six years. We were prepared. That's why we were able to write a check for BearingPoint. That's why we were able to build Deloitte University during that downturn. We made significant investments.
Consulting: Under your leadership, advisory has continued its upward climb, and is now the biggest business within Deloitte, accounting for nearly half of overall revenue. Do you see that trend continuing?
Moffatt: Our positioning within the firm has definitely changed over time. It's one of the benefits of having a broad portfolio but consultative services have been the growth engine for quite a while. It's been significant double-digit growth. We've had a very, very strong run this year, essentially about $700 million in revenue growth in the U.S. We have a lot of wind at our back but there's still a lot of uncertainly out there. Growth has certainly been great but it's been lumpier than we'd like. In some practices, we have 25 percent growth and in others we have 7 or 8 percent growth. I think that's going to continue. The marketplace is at more of an inflection point than I've ever seen in my 25 years.
Consulting: Earlier, you mentioned Deloitte University. Is talent still your biggest issue these days?
Moffatt: People ask me what I worry about the most, and it's talent. I'm a U.C.L.A. guy and I love John Wooden. When they asked him about the competition, he said "I don't worry about them, I worry about my guys." Our talent strategy has shifted more and more to campus because the people that lead our firm tend to have long durations. If you are going to do that, you have to fundamentally think about how you are going to develop talent. We took one of our best human capital partners out of our business in consulting to focus on developing the D.U. curriculum. I think we all thought it would be really good, but I think it's exceeded our expectations.
Consulting: Do you see it as a differentiator from the other Big 4 when you're on campus?
Moffatt: D.U. is a huge advantage for us, no doubt. We all talk about how important people are to a firm's success, but D.U. makes a statement about our commitment that's hard to refute. When we go to campus I don't lump us in with the other Big 4. Our brand positioning is very different. If I'm looking for strategy and operations talent, I'm competing with McKinsey, BCG and Bain. If I'm looking for technology, it's Accenture and IBM. Those other firms just aren't there yet; to some extent they are still getting back in the game. They're still trying to rebuild consulting practices; we have an eight-year advantage on them and that's not easy to overcome.
Consulting: What do you see as the big business drivers?
Moffatt: I spent a lot of my first year thinking of the longer view. What's the next hill for us as we think out five or even ten years? One is around innovation. A lot of it is driven by what's happening with the pace of change with technology and how much that's enabling transformation. We've tasked one of our new leaders to run that for us and look for generating both adjacent and new types of business models that tie around our core. It cuts across all of our practices. Our leaders are so busy driving the day-to-day business that they don't always have time to focus on some of those new and adjacent things. And, by the way, that's a totally different skill set.
Consulting: What role do you see globalization playing in the future?
Moffatt: We're investing significantly in emerging markets and really connecting our global network in a way that we probably haven't focused on for the last ten years. We just created a new role in our U.S. consulting practice geared toward global and this person will oversee all of our investments in those markets. We're going to think about it differently as a way of accelerating our capabilities on par with not only where those markets are but where those markets will be in the future.
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